The Problem

Part One: Very Broken

The music industry is laboring under a structural regime that is one hundred years old and no longer fit for purpose.

The infrastructure that underpins the music industry dates back to 1914

Think about that for a moment. The pipes of the music industry are one hundred years old. Just two years before the Performing Rights Society was formed in the UK in 1914, Titanic perished during her maiden transatlantic voyage. The staff of PRS and its US counterpart ASCAP - separated by the Atlantic Ocean - would have to wait another decade before they could speak to each other on the telephone. And yet, these century-old structures still define the way we do business today - in a world where information travels around the world in milliseconds.

Digitization and globalization may have radically altered the way we listen to music, but the internal plumbing of the music industry is unchanged. The pipes - most of them at least - are now digital, but royalties still leak out into the hands of intermediaries who may have been necessary in an analogue, regional system, but ought by now to be redundant.

Imagine you are a US-based songwriter and your song has been used on TV in Japan

Shouldn't it be possible in a digital world for the royalties to come directly to you, instead of through a slow, inefficient, and opaque chain of collection societies and publishing administrators? The level of complexity and intermediation is unacceptable. We need a system that delivers value for creators and users, not for the owners of the process by which they transact.

At the same time, the landscape of music rights ownership has been severely complicated by both the cyclical consolidation, break-up and reconsolidation of music companies and catalogues; and innovations in the creation of music - sampling, remixes, remote collaboration - that have seen credits lists growing ever longer. The result is that an entrepreneur who comes up with a new model for monetizing music content must seek the approval of a long list of stakeholders around the world in order to license a single track - a major obstacle to innovation that does nothing to help incumbent record and publishing companies develop solutions for their problems. The entrepreneur, the film company, the performance venue and the radio station all want to license the track.

Let's make it possible (and affordable) for them to license the track, not the 25 different copyrights associated with it.

There have been multiple attempts to get around these issues.

The grandly named "Global Repertoire Database" - a proposed single point of works registration supported by music publishers - was scrapped last year after funding and patience ran out. More entrepreneurial attempts to pre-negotiate bundles of music rights have merely added another intermediary to the value chain. Both suffer from the same weaknesses: 1) an attempt to arrive at a new solution without addressing the structural limitations of the incumbent system and 2) a centralized approach that requires a utopian level of consensus among stakeholders with differing and often conflicting perspectives and goals before it can succeed and doesn't incentivize individual stakeholders to make the first move.

What is required is a decentralized system

that incentivizes individuals to act unilaterally; automates the management of royalties and rights around the world; allows users to license tracks in a single transaction; rewards participants for value-creation rather than structural incumbency; and reduces distortions and friction in the market. As the debate over the future of the music industry intensifies - and becomes more public on the back of interventions from Taylor Swift, Jay Z and Radiohead's Thom Yorke - a new generation of technologists and entrepreneurs have begun to address the challenge with a different set of tools based on transparency and collaboration. There has been mounting speculation as to whether Bitcoin and the blockchain might provide a technological solution. That speculation is partially right, but incomplete.

And that's where the article usually ends, right? Not this time. The music industry is laboring under a structurtal regime that is one hundred years old and no longer fit for purpose.

We are building a solution.

It is a work in progress. But it could - should - will - unlock unimaginable value for anybody creating or using music in the future. We are looking forward to sharing it with you. We are a team of entrepreneurs, musicians, software developers and music industry professionals spread across three continents. Perhaps you have something to contribute. If so, please contact us.

Stay Tuned