Impact on international royalty collection

In addition to music streaming technology, which is changing the recording and distribution of songs, another digital technology, blockchain, is also potentially likely to affect another part of the industry value chain, i.e. the collection of revenues from music. As noted above, copyright owners and performers receive payments for the playing of recorded and live music overseas through an international system of collecting societies.

With the significant increase in the playing of digital music worldwide, the complexity of the current system has come under increasing scrutiny, and the possibility of simpler and more efficient systems for administering the royalties from digital music has been proposed. According to some music industry commentators, "there has been only a partial implementation of digital technologies in the music industry, creating a tremendously mismatched ecosystem in which we have surface-level, profit-generating elements without the proper digital infrastructure to support them” (Rethink Music, 2015). Pentland, Werner and Bishop (2018) predict that blockchain and AI are the next major technological advances in global networks and that the combination of blockchain and AI technology could offer- powerful solutions to many unsolved issues around copyright and rights management by supporting a new infrastructure to support the new digitised and globalised industry.

Royalties can take years to reach the bank accounts of rights holders, sometimes funds are paid to the wrong parties or are tied up as the rightful owner cannot be determined and, when the rights owner eventually receives the funds, he/she may find the amounts substantially reduced owing to the administrative fees charged by the various collecting societies through which the funds need to be channelled (Rethink Music, 2015). A technology which promises to overcome such problems is blockchain technology. Originally developed in 2008 as the technology supporting the digital currency Bitcoin (Nakamoto, 2008), block- chain is a decentralised, peer-to-peer (P2P) network that acts as a distributive ledger which records transactions among parties. All transactions carried out in the network are encrypted and broadcast to the entire network, thus enabling both security and transparency. As the system operates through a decentralised, global network of servers, such a technology, if widely adopted, would obviously greatly simplify the process for rights owners to receive funds from anywhere around the world and eliminate the need for many local performing rights organisations and, according to some commentators, possibly even other intermediaries such as record labels, by enabling rights owners to directly receive payment from consumers (Heap, 2017). However, at the time of writing, existing players in the music industry have shown reluctance to adopt blockchain technology, and the technology faces considerable barriers in gaining widespread adoption (Mire, 2018).

For example, as Baym et al. (2019) discuss, a standardised system for digital music like ISBN in books is required to support the foundation of digital music. Until the music industxy can create standardised metadata and a system that can incorporate copyright issues of ownership and contractual requirement, a global database supported by a protocol such as blockchain will not work in practice. Some moves towards this vision have been seen, for example in the “Open Music Initiative for royalty sharing across the music industry” (Pentland et al., 2018). However, there have been many previous attempts to create some kind of centralised universal database (Baym et al., 2019) which have all failed owing to the highly complex labyrinth of micropayments, copyright law, trade agreements, non-disclosure agreements, contracts and royalties, so it remains to be seen if this utopian vision can be realised.

Future developments

The full potential of digitisation has yet to be realised, and more changes can be expected in the music industry. Emerging technologies such as semantic technology, Al, Internet of Things (IoT), wearables and interactive technologies are enabling new experiences in music such as personification and context-based cultural forms. There are many new approaches to how musicians and the industry are designing and producing music products based on these new technologies. New formats are being released and prototyped around collaboration and interaction with audiences using mobile apps, virtual reality albums, 360 videos, gesture- based products, controllers and wearables like brain interface controllers. New start-ups and businesses are rapidly emerging. Examples include machine-learning analytics platforms, audience experience works, and blockchain-enabled “collectables” (Wang, 2020). Based on the examples of previous technologies, how these new technologies develop and are adopted globally will also impact global music consumption and music exports.

 
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