It’s not you, it’s us: a case for forking the Ethereum codebase for the music economy
The promise of programmable money has yet to have been fully realized, but it does seem that in the long term the substance is going to match the hype. While finance is still the only industry to have exploited the benefits of what the Ethereum ecosystem has to offer, many other industry verticals may also reap equal or greater benefits but have not taken the plunge to embrace it.
While I couldn’t speak for industries in which I am not involved, after five years of being on the frontlines between cryptocurrency and the music industry I feel I can speak rather competently as to the objections given all of the potential benefits. I can also speak to the solution to these problems which I am going to implement in the coming weeks.
Why You Should Pay Attention
About six years ago I started my exploration of the music economy and how cryptocurrency, and its underlying blockchain technology, could assist artists and creators in retaining greater rights and claiming a greater share of the profits from their labor. My company and business partners are involved in the music economy daily and at every level: from the legality of rights management to production to songwriting. We have a $15,000,000 4,500sqft studio in North Hollywood where we produce some of the biggest hits of the last 20 years.
We know how music is made. We know how music is monetized. We know the business of music because that’s what we do.
You can disagree with the points made in this piece, but you must accept they are true and accurate. There is simply no better qualified opinion than this.
A Little History
Music publishing is a 500 year old industry which began with the printing press, and it hasn’t changed much in that half millenium because it hasn’t had to: the means of distribution and the media of publication may change, but the underlying demands have never changed.
The tough thing to consider for those bent on disruption was that the process was already as efficient, decentralized, and as equitable as could be conceived. But technologists wanting to re-examine everything came to the bizarre conclusion that because there was no one-size-fits all flowchart for music monetization, that all music should therefore be free. This is the “wikipedia” approach, where creative content is its own reward. However such an approach to music monetization doesn’t help pay rent and, even worse, disincentivizes one of the most powerful facets of musical creativity: the collaboration.
The music industry in general also suffers from an amount of fatigue from the unfulfilled promises of technologists in the last 30 years who came bearing gifts of apps which bore promises of a more egalitarian, open music economy and yet delivered something which only pays lip service to such ideals or, even worse, simply helped folks to steal. Nobody really wants to listen to outsiders making promises anymore.
Those are simply the rough edges of the issue. Let’s talk specifics.
The Music Economy Is a Special Case
Programmers hate edge cases, and the problems which plague the music industry are nothing less than a gigantic collection of edge cases. While blockchain technology isn’t ready for tackling the mainstream data needs of the music industry, it is good for the edge cases. Before we explore those edge cases where cryptocurrencies and blockchain technology does work, let’s talk about why it doesn’t work for the bulk of the industry.
What Doesn’t Work At Scale
- Micropayments — This is a long time favorite use case of cryptocurrency proponents, but to apply it to the music industry at large would render any blockchain network to unsuitability with the first global hit. Here’s an example: the global hit single “Dance Monkey” has accrued over 1 billion streams worldwide on Spotify, alone. That’s one song, on one platform. There are more than 8 rights holders to the song which deserve a proportional share of mechanical royalties according to BMI, and that represents only 43% of the total rights allotments.
If you’re playing along at home you might already notice that’s a minimum of 9 billion transactions for one song on one platform. This doesn’t mean degraded performance for just the music economy, but also for decentralized applications also running on the same chain that have nothing to do with the music economy. There is no plan for scaling Ethereum which currently addresses this volume of transactions. There is no blockchain technology yet conceived which could handle this transaction volume, so it’s not even the fault of Ethereum.
- Cryptocurrency Idealism — The music industry is there to sell music, not the socio-political-economic idealism of cryptocurrency supporters. Let me be clear: nobody in the business of music cares about anything but selling music. If what you are proposing doesn’t have a direct, measurable, positive impact on the bottom line…nobody cares about your decentralized utopia.
- Drama — This one is really nuanced and is going to be difficult for cryptocurrency people to reconcile as a result. The music economy does not like any drama which they did not create themselves and therefore cannot manage. No record label or celebrity with a brand of any significant value is going to trust that value to people who have concerns other than the value of that brand. Should Ethereum care about celebrity brand value? Absolutely not. Ethereum should care about pushing envelopes and experimentation. It should not determine such paths by a consideration of how failure might be perceived by the public and how that might damage the market price of brands it represents. This is a sophisticated value concept which is ubiquitous in entertainment related industries but not well expressed in cryptocurrency… because it doesn’t have to be. The DAO hack is a great example, as in adjacent economies which do not pay attention to the latest in the Ethereum development roadmap, such an event would create an overall loss of confidence in the music economy which the cryptocurrency space would otherwise … and did … simply shrug off.
What Does Work Holds Amazing Promise
- Demographic Data — Understanding your fanbase maximizes the profit potential of any artist. This includes the ability to identify weak points in monetization models as well as performance data within specific demographics. This helps an artist build a deeper understanding of who their fans are and what it is the fans truly value in the artist.
- Bonding Curves — The popularity contest of ratings and rankings are now wholly quantifiable, transparent, and auditable. Numbers can be relied upon in ways that are currently impossible and would reveal trends currently obscured.
- Merchandising — A token which bears the official likeness and brand of an artist is merchandise. The sale of such tokens are as easily accountable within the existing music economy as t-shirts. It requires no sacrifice of rights by the artist to monetize, while unlocking a free market value which was never before quantifiable. The career of an artist is the story of building an economy around the creative works of that artist. Branded tokens go beyond the collectible, to the fungible when integrated as payment rails or coupons within those economies.
- Decentralized Finance — This is the true promise of an Ethereum built specifically for the music economy. While at the same time avoiding the risks and pitfalls of Ethereum itself, a version specifically for music can evaluate the success or failure of any given design within the perspective of “is this good for us?” An excellent example is the recent bZx event which has been deemed as a “hack” or “attack” as it employed a strategy which in financial markets is seen as “cheating,” however within a brand-representative music economy it may not bear the same stigma. It is not always what is good for finance is bad for music, but at times what is bad for finance may be good for music.
Per Aspera ad Astra
Notice that only one of three reasons stated are a function of technological design or innovation. It is our intention to not only lead the music economy towards a more sustainable, egalitarian future, but also to help lead the cryptocurrency industry towards a greater respect for the economies they wish to serve. This is the road less travelled, but it is the road which must be travelled for the promises we have made to be fulfilled.
Music industry stakeholders do not want your opinions of their profitable, successful business models. They do not wish to listen to how you think they need to change to fit your world view. This includes artists who have for generations been made every promise one might conceive and have been continuously let down and stolen from by the next big thing. Efforts which continue to demand that artists give up rights through newly securitized token markets. This is not innovation.
Furthermore, the allure of the legacy music economy is undeniable and unassailable and there is no philosophical or monetary argument which can overcome this.
In short, the music economy must disrupt itself and it does not need or want anymore help from anyone on the outside, and certainly not Silicon Valley.
There is little choice but to do what we are about to do: create an Ethereum which is just for the music economy, which cares only about the music economy, and is only dedicated to serving the music economy.
Taking Action
In 2016 I launched the first independent blockchain for the music economy, Tao. In the last four years, every single reason I have outlined above has justified this decision. While the chain currently operates on a Bitcoin-based proof-of-stake codebase, it is itself insufficient to address the complex needs which the music economy demands.
A better platform is needed.
It is my intention to begin with the Ethereum codebase and incorporate the best technologies that have been created for it which align with the goals and desires of music economy stakeholders, both large and small. Our team will borrow the best ideas cryptocurrency can offer and integrate them in useful, meaningful ways which enhance and enrich the lot of artists and the music economy. The current Tao chain will be migrated to preserve existing value, but any applications built upon it must be upgraded accordingly.
This will mean that if in some future the desires of the cryptocurrency space and the music economy align, it will be easy to bring them together around a common framework and language of understanding. However there is no need to wait for this to happen when we have it within our power to take the lead and build those bridges to begin that process of positive change.
This is the new direction we are going to take the music economy, and we look forward to participating in the greater Ethereum family of technologies as cousins, if not friends.
