It's Time To Change the Rube Goldberg Royalty Payment Setup

The Berklee College of Music's 29-page report, Fair Music: Transparency And Money Flows In The Music Industry, has laid bare the simple fact that royalty distribution systems are in a mess.

Berklee's report is unambiguous and the central message is that something's gotta change, as reported on in FYI yesterday.

It's hard to believe a multi-billion dollar industry that trades in songs like banks trade money has no database of who owns what. The result is billions of dollars go unaccounted for.

If you haven't read the report, do so. It can be downloaded free of charge here.

Two info graphics eminating from it that are paricularly worth noting as follows:

And where does the money go?


The diagram may be only half the story, as the accompanying story in Bloomberg News points out.

Determining when songs are played and who should be paid is one area with plenty of room for improvement. Performing-rights organizations have traditionally been in charge of figuring out when, say, a radio station in Brussels or Boise, Idaho, played a song and then making sure the songwriter got paid. It's a labor-intensive process probably best handled by robots. The PROs would still cut deals through collective bargaining, for example, but such a change could affect the price they can demand for their services.

To replace this whole Rube Goldberg setup with modern technology, you'd need a system that tracks when music is played and who owns the various rights to each song, something the music industry has tried and failed to create in the past. And you'd need a way to link that to a payment method.

This is where the blockchain—the technology underlying Bitcoin—comes into play.

By keeping a public tally of each transaction that takes place, the blockchain lets people who don’t trust one another do business without fear that they’re getting ripped off. (This is why it has been so popular among drug dealers.) Such a system would automatically divide each payment into the proper piles and distribute it immediately. Like Bitcoin itself, it's clever, in theory. Still, it’s far from clear how an industry that has traditionally been less than savvy when it comes to technology would make a transition to the impenetrable world of Bitcoin.

Selected Fair Music Project Coverage:

Bloomberg - Your Streaming Payments Are Going Where?

Billboard - What a Mess: New Report from Berklee Looks to Fix an Aging Business

The Guardian - Could blockchain technology solve streaming music's payment rows?

NPR Music - Is Transparency the Music Industry's Next Battle?

Music Ally - Rethink Music puts focus back on music-industry transparency

Boston Globe - Berklee report says musicians missing out on millions of dollars

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