So how does a decentralised distribution ecosystem work?, what does it look like? and is it possible.
All entertainment types are somewhat different so let’s start with music as the first type to tackle. The music industry was the first to really get disrupted. No, let’s say blown up, by technology. In fact, I would argue that the music industry was left changed forever. The entire polarity of stored value was reversed. Twenty years ago, the product was the recorded music. The artist created the recorded work. It was marketed, promoted and sold and supported via a series of global tours, which were all timed around the release of the recorded product, with view to sell more of the ‘recorded product’. That was back in the days of the HMV megastores. How things have changed.
In the age of streaming, where music is commoditised into a universally consumed sensory accessory to all types of architecture, the value has completely switched from the recorded work to the artist themselves. The recorded work seems more like a promotional vehicle for the artist, solely to promote their live performances and derivative works. It’s through the delivery of live performances that most artists are able to earn a living. Not through streaming royalties for most of them. Yes, there is always exceptions to the rules, but I am talking about the vast majority of artists.
From my time in Asia, I would say that the Asian music labels and Artists had embraced this system years before western artists. Piracy was always such a huge problem, it was extremely difficult to secure revenues streams from the recorded works, so instead they had to be extremely creative about how they generated income. In the Asian recorded music business, the recorded work was the promotional vehicle, not the core product. As a result there was usually more of it. Two or three albums a year was not uncommon. The artists would then tour, appear in television dramas and endorse commercial products — all as a way to generate an income off the pirating of their recorded works. A very different approach than western artists whose albums appeared annually.
Fast forward twenty years and now we have Spotify as the major global distribution platform for music and, as a consumer and someone who uses the platform frequently, I can say that it works very well. You would almost have to say that Spotify is a very solid case for centralised distribution, given its popularity and simple ease of use.
But why do we have Spotify in the first place?
There are several reasons why Spotify exists.
a) STANDARDISATION: There are many ways to pack an audio file. The consumer doesn’t want to have mismatched loudness and compression settings in their playlists, so having a single centralised platform to police the file types and compression standards to ensure that consumers receive a consistent product is important.
b) TRUST: Copyright owners need to trust someone to collect their income on their behalf. A third party has always played this role, be it publishing companies and or record companies. Spotify accrues all the play information and divvies up their subscription fees and allocates it to the artists accordingly. Without Spotify — as an artist or copyright owner — who would you trust?
c) CONVENIENCE: Once your work is loaded into the platform its now immediately available in all corners of the globe that Spotify services and the work ready to earn royalties and promote the artists live performances and other derivative works.
Spotify delivers on these points however there was another music service, all be it deemed illegal at the time, that delivered on the main point of these, and that was c) the convenience and efficiency.
The new Napster
Everything old is new again, and convenience and efficiency can make a comeback. The reason Napster failed so miserably was not because it wasn’t convenient or wasn’t efficient. It’s widely accepted that peer to peer networks are the most efficient way to move files from person to person, computer to computer. What was missing from the early peer to peer environment was a solution to govern the first two points and that was a) Standardisation, or a way to tell the files how they need to behave and b) most importantly, Trust — a way for the file to report back to the owner how and when and under what conditions it was being used.
As discussed in an earlier article, the blockchain was purpose built for the administration of and the capturing of value, and that value can easily be a copyrighted work such as an audio file or song. The underlying technical ability of the blockchain can limit the use of the copyright work to the owner’s specific wishes, utilising smart contracts attached to each block. The smart contracts also can work to govern the behaviour of the asset and the standardisation of the asset under various conditions as related to the use of the file.
Most importantly, and this is where there is great immediate value to the creators of the copyrights, is that the application of this technology can be implemented in the initial stages of the creative process. For example, when creating the save file in the software (e.g. Pro-tools) used to make and organise the composition. This not only serves as the foundation of the usage rights of the material in a decentralised distributed ecosystem, but also creates a record of the creation of a copyright work which in turn moves the burden of proving ownership of the said work from the artist — to any potential infringer of the copyright. The copyright now has a “creation date’ in the public record that cannot be argued or altered for any purposes. A large improvement to the current state of copyright administration, or the lack thereof.
So, if we can solve Trust and Standardisation of file type using new technology such as blockchain, then I would argue that old school peer to peer networks would provide the most efficient infrastructure to allow for secure decentralised distribution. The only part of the equation that service providers such as Spotify need to supply is the indexing services.
As tabled previously, the value of the recorded work has changed significantly over the past twenty years, it’s now almost a promotional tool, however there is still royalties and fees attached to the consumption of the work and artist should be paid for it. In a decentralised environment there is no operator like Spotify to actually charge you a fee for accessing the service. Therefore, there needs to be another way to collect revenue for creators and ways to pay as a consumer. For decentralisation to work there needs to be payment solution attached to the chain where the copyrighted works are linked and where the smart contracts are related.
A centralised distribution network would argue that its role was to smooth out all the inconsistencies in the charges for the copyright works and make it easier for consumers, however decentralisation would argue that not all works are created equally and therefore should be free to insist on different levels of charges for the work. This is essentially what the free market is there to serve.
It is by no means a complete circuit ready to replace Spotify just yet, but the future has promise of putting the distribution of copyrights back into the control of the copyright creators and allowing those creators access to the end users via search engines with view to finding the maximum amount of potential global audience interested in the creators style of output.