Problems with the Corporate Music Industry
Anyone familiar with the music industry knows there are royalty systems in most countries. This is how musicians and artists are paid for the use of their music. But for an artist to benefit from these systems they must be a member of a recognized rights performance organization (e.g. SOCAN in Canada and SoundExchange in the US). The problems with the corporate music model are described in “Fair Music: Transparency and Payment Flows in the Music Industry,” a report from the Rethink Music. The report outlines several issues, including:
- It is hard to trace who owns what musical performances and as a result “20–50 percent of music payments don’t make it to their rightful recipients.”
- The music industry has a complicated money flow not well understood by most artists.
- Record and publishing companies deliberately try to obscure what they owe and pay what they own very slowly.
- Independent artists are left out of the royalty system altogether.
- Online radio networks have monetized music using subscription systems and advertising to offset the costs of royalty payments.
Blockchain Challenges the Current Model
While no single blockchain solution has been able to tackle all of these issues, there are some interesting beginnings. One example is a partnership between Cyber-FM Radio and Mainstream for the Underground (MFTU). Using blockchain technology, Cyber-FM and MFTU are fusing into one platform listeners’ access to music and the payment of artists’ royalties. The project is not profit driven. It is focused on helping artists benefit from the value of their performances.
For the past ten years, Cyber-FM Radio has been bringing independent music to listeners all over the world. The new project with MFTU rewards artists for each song broadcast on its station. Artists join for free and get paid when their music is broadcast on Cyber-FM. Membership in MFTU is not limited to those registered with a performance rights organization. Independent artists can equally join and have their songs aired to hundreds of thousands of people around the world.
MFTU and Cyber-FM use a two-token structure to operate globally while also complying with government regulations. The CYFM token is used for payment to government agencies. The CYFM token is not totally decentralized because it must conform to laws in different countries. The MFTU token is similar but it is decentralized and represents a truly international royalty system. Both tokens were distributed free through sign ups and airdrops. There was no ICO.
Disrupting the Corporate Music Industry
The MFTU and Cyber-FM partnership could disrupt corporate control of the music industry. It addresses some of the problems outlined in the Fair Music report mentioned above. It is easy to track who owns what performances using blockchain technology, so artists can be paid what they deserve. Blockchain also makes the flow of money transparent so it is impossible to hide how much artists are owed.
Importantly, the partnership provides a way of protecting artists’ rights across the globe while they maintain local royalty registrations. It also gives independent artists the chance to be paid royalties as well. This hybrid approach will comply with government regulation while helping to usher in an era of decentralized royalty payments outside of corporate control.