Five ways blockchain technology can protect artists' rights
Blockchain, which was developed as the underlying enabling technology for Bitcoin, has the potential to provide several features that could be leveraged for use in the creative economy.
In this economy, blockchain can redefine how artists are remunerated by acting as a platform for creators of intellectual property (IP) to receive value for their work, according to a report from McKinsey Consulting.
An increasing complaint from artists is that performance-rights organisations and intermediaries such as Spotify and YouTube are inserting themselves into the value chain more and more, with artists then receiving smaller cuts in revenue and having less of a say in how their work is priced and advertised.
For instance, on Spotify it would take between 120 to 170 streams for rights holders to receive their first penny from the music streaming service.
However, McKinsey has identified several features of blockchain that can serve to address these issues.
One – blockchain can enable “smart contracts” that will help manage digital rights and better allocate revenue. According to McKinsey, royalties could then be designed to be more inclusive and offer fairer terms and conditions.
Two – blockchain can establish transparent of peer-to-peer transactions.
The ability to see how much revenue work is generating at any given time will allow stakeholders to have a better sense of the overall value of the work, all in the form of a digital ledger provided in the blockchain.
In addition, the use of blockchain technology will make it clear who owns the creative material.
Three – with blockchain technology tracking the demand for creative content, pricing of said content could become more dynamic, in addition, artists could control and have the ability to set prices themselves without having to go through intermediaries.
Four – using blockchain, smaller pieces of creative works could be made available for a price, for example, a few seconds of a song for use in a film trailer, rather than a consumer having to purchase the entire piece of music.
This kind of "micrometering" works by having the blockchain record the precise components of the creative work that were used, defining the smallest consumable unit of creative content.
Five – blockchain technology can enable producers and consumers of creative content verify one another, in a move that could promote better collaboration and better behaviour through the promotion of cooperative terms for producers and consumers.
However, despite the above, it is clear that a number of challenges remain for the technology including licensing issues, storage, artists promotion, and governance.