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Please Vote for SXSW Panel Picker “Getting to Beta Without Getting Beat Up”

August 8, 2017 Leave a comment

We have proposed a panel for SXSW in the Panel Picker with some great speakers I’ll be moderating.  “Getting to Beta Without Getting Beat Up” will emphasize the importance of licensing strategy milestones that overlay a music-tech startup’s product development strategy milestones.

A well-executed licensing strategy is every bit as much a part of the supply chain logistics as any other element of product development, if not more important.

A buggy product can usually be fixed.  Failure to execute a bespoke licensing strategy can subject the entire company to crippling and endless copyright infringement lawsuits.  In fact, if you are unlicensed or insufficiently licensed, one thing is a pretty sure bet:  The more successful you are, the more likely it is you’ll be sued–a proposition ripped from the headlines.

That scenario can waste the stockholders’ money, be defocusing in the extreme for management and severely damage relationships with the creative community–the life blood of any music startup.

On the other hand, “over clearing” while less costly than litigation still syphons off resources that for the most part lie fallow.

Our panel are all experienced hands in the licensing and metadata world and are themselves entrepreneurs:

  • Keith Bernstein, Founder, Crunch Digital
  • Rahul Rumalla, Chief Technology Officer & Head of Product, Paperchain
  • Alan Graham, Co-Founder, Technical Architect, OCL 

Please consider voting for our panel in the SXSW Panel Picker at this link, we’d really appreciate your support!

 

 

The MTP Interview: Alan Graham’s Artist’s Guide to Blockchain, Open Music Initiative, Smart Contracts and Dark Social (Part 1)

July 26, 2016 Comments off

Chris Castle: Tell us a little bit about your background and your company.  How did you come to be involved with the Open Music Initiative?

Alan Graham: For 25 years I’ve worked as a technologist, author, editor, designer, and producer. I became active in technology because I believed it could be force for equality, however the idealism of my 20’s has taken a more pragmatic view. I feel the desire to free ourselves from gatekeepers has only created more gatekeepers.

Three years ago I had a moment of inspiration via a conversation with my friend and co-founder, the legendary Producer/Artist/Songwriter Rupert Hine, on how to solve the issues around user-generated content. Billions, if not trillions of improper uses of all forms of creative works occur every day, a majority of which have no proper tracking or monetization. This lack of accountability creates massive animosity and distrust between citizens, rights owners, and developers.

That needs to stop. We need to unify and bring a balance between all the parties involved. We need to be partners, not adversaries, and that requires more than technology, it needs new methodologies. We need to question the accepted models we’ve found ourselves in, because we’ve failed to find the balance we need. We cannot simply continue “business as usual,” because business is bad.

Since the music industry never had any of their own technology that tech companies could utilize (or wanted), they did a Faustian deal with YouTube which set a precedent we’re all still paying for today. This deal was stating that instead of letting tech companies be tech companies, we made them gatekeepers of rights, and we said…”advertising is how we’ll pay for everything.” How’s that working out? Every year the music industry has to work twice as hard to make the same dollar off of advertising.

Conversely, there are millions of developers out there who want access to creative assets. The majority have no venture capital, nor the knowledge or time to secure the necessary licensing. Even if they had the time or money, they don’t have the expertise or knowledge, and they in fact should not be in charge of determining how to handle rights.

One thing a developer understands is paying for services, if only creative assets were packaged for them as a service. But you’d need a mechanism that could grant permissions, deliver media, handle accounting and payments for disparate rights owners with different assets across millions of apps.

If you could do that there’s hundreds of millions in revenue sitting on the table today for rights owners that is not being collected. Why? Because no one has a unified mechanism to collect it. You have vastly fragmented industries of disparate rights and owners, all trying to solve these issues individually, and they can’t. I once calculated it would take a team of 1,000 people 8 years to negotiate and approve of just 10% of the apps and platforms out there now. When you think about that you quickly realize that no label or publisher can handle this type of volume, and without a united technology and methodology that allows them to work together, you’ll just see more improper usage because you can’t get developers into an approved program. That means stagnate development and a lack of innovation. That’s a major reason why there are no sustainable and successful music startups.

We’ve built a framework called TOTEM, to give rights owners their own technology that solves all of the above, and we’ll ship that code in 2016 for rights owners and developers to use together. No more safe harbor or DMCA hassles, no app takedowns, no improper use, and new markets and ecosystems for both developers and rights owners to explore together as partners.

As for the OMI, I heard of it from Jonathan Taplin who knew of the work we were doing with our project. Typically I’m skeptical of projects like this, but as complex as the issues are surrounding the music industry, you have to start somewhere, and facilitating a dialogue between many stakeholders is a good place to start.

Castle: Most people have no idea what “blockchain” refers to.  Without getting into any particular application to our business, what does “blockchain” mean?

Graham: Let’s skip the rabbit hole and dumb it down as much as possible.

You can’t talk about blockchain without mentioning what gave birth to the idea, and that’s the cryptocurrency Bitcoin, which I’m sure everyone has heard of to some degree. The blockchain is in essence a “chain of blocks” of data written into an immutable public ledger. It describes the transactions that occur surrounding bitcoin. This ledger is distributed across multiple computers around the world, all of which hold an duplicate copy of the data. Because of this model of distribution and immutability, somewhere along the line, a few clever people started to think, what if we used the blockchain to record other types of transactions, like the record of an occurrence or the validity of an asset or ownership?

Eventually people got around to talking about using this to record music rights ownership in such a way so that this data would serve as the solution that the GRD was intended to become. In fact it was likely the failure of the GRD which led to this idea.

Castle: What is a smart contract and how would a smart contract work as a license, i.e., a “smart license”?  Is the license smart enough to operate for writers or artists who do not want to participate in the smart license for whatever reason?

Graham: Again, to dumb this down to the basics, a smart contract is really just an autonomous program designed to mirror the function of an agreement, and therefore can be made to self execute based on the requirements of a third party, whether that is a person or another smart contract or “bot”. So say a music service like Spotify could interact automatically with a smart contract to gain access to a track for their user, and then simplify and automate the process of accounting and payments. You might also use this as a mechanism for user-generated content. This entire process might be done via a relationship to a blockchain or running in a layer above one.

As for the second part of this question, is the license smart enough to operate for writers or artists who do not want to participate in the smart license, the short answer is no.

I’ve been studying these issues for three years, and while I’m generally optimistic and support a lot of the ideas around blockchain technologies (we use a lot of blockchain cryptography), I’m skeptical on smart contracts in music and rights.

The idea of using a smart contract as a licensing mechanism has been proposed by many people who look at the mess involved with managing rights and being able to automate the process of granting rights for any use imaginable. It sounds like the perfect utopian execution of how we should be doing things, but anyone who really has worked on both the personal and data sides of music know this is just not feasible. The reason is that in order to build effective and powerful smart contracts for the music industry, complexity is required and complexity increases the possibility that something will break. Complexity is also the enemy of security.

As an illustration of this, you only need look as far as the recent hack on the smart contract known as the DAO which was built to run off the Ethereum blockchain, where someone was recently able to exploit the code in the contract to make off with over $50M in cryptocurrency. This was not officially what you might consider a hack, as it simply took advantage of the way the contract code had been written.

http://uk.businessinsider.com/dao-hacked-ethereum-crashing-in-value-tens-of-millions-allegedly-stolen-2016-6

I’m sure many in the music industry will now likely look at this exploit with concerns over smart contracts while thinking, what if that were my royalties? It took the Ethereum crowd nearly a month to solve the issue. Imagine if the music industry just shut down for a month.

The music industry is all about people and anyone who understands the “people” side of the music business, get that this is an ecosystem fraught with nuance.

Bots and AI aren’t good with nuance, and artists aren’t typically good with contracts, smart or otherwise. Perhaps eventually this can be worked out and I’ll be proven wrong, but I don’t see that in the immediate future. We’re years away.

Castle: It seems that blockchain and smart contracts will still require negotiation, rate setting and rulesets.  How would blockchain facilitate negotiation?

Graham: Let’s just break down an argument I often use to illustrate the complexities involved with automating “negotiations”. In this case let’s just tackle one user who wants to create a UGC video using a song with footage from their 4th of July BBQ and post it to YouTube.

As we all know, we’re talking about a sync license here. For the sake of argument we have two songwriters representing the work, and five band members representing the recording. We’re already at seven individuals with multiple expressions of rights over this track, and at the very least have moral rights.

You’d have to have a smart contract(s) that could consolidate and approve usage between each of the parties, but then also be able to clear that usage for the UGC use. So let’s complicate things a bit.

What if one of more of the rights owners:

Doesn’t want anything on YouTube?

Doesn’t want their music associated or connect to advertising or a brand?

How about one of the rights owners is vegetarian, so no videos with meat in them.

We’re talking about a sync, but what’s the rate everyone has agreed to?

What about special circumstances (charity)?

Politics and political use of music or a cause?

And the ultimate…what if the video contains visual copyrights you need to clear as well?

So you’d have to work out a process whereby all of these things can be automated, considered, and cleared in a span of seconds, just so someone can post a fan video. And it is likely the social media app and the platform would also have to interact on some level with this system.

So if the idea is simplification…

I think most people who look at this idea are thinking about the atypical singer/songwriter, who might in fact own 100% of their compositions, so in this case it would be easy, but that’s not the world we live in.

There are over 100 writers credited on Kanye West’s last album. Imaging having to work out how to encode all of the moral rights alone with all of those works. 

Continued in Part 2

Guest Post: Bad Medicine, No Spoonful of Sugar

June 20, 2016 Comments off

By Alan Graham of OCL

Let’s get real. There’s a lot of talk about data and transparency and blockchain these days when it comes to the music industry. This will solve everything!

However, there are issues no one seems to want to discuss that also need immediate attention. So let’s open up and take a very bitter pill.

Copyright Isn’t to Blame

Rights owners and rights users have always had a symbiotic relationship. With the rapid advance of technology there’s been an incorrect assumption that copyright itself has created a chasm between these two parties making them adversaries. But this isn’t the case. Copyright isn’t to blame for the distance between rights owners and rights users…it is in fact apps and platforms.

Now before I lose the tech side of the audience out there, I’m not laying blame solely at their feet, because there is plenty of blame to go around. This was a societal shift and a series of bad decisions based on no good decisions available at the time. But we need to be smart so that we can correct this before it gets further out of hand, or it will hurt everyone.

Tech companies, platforms, apps should all be focusing on doing one thing and that’s creating great experiences for their users. They should be building best of class technologies that makes all our lives better. But when it comes to music they can’t. Because in the past decade we decided we would make them the arbiter and gatekeepers of rights. We should never have done this. It shouldn’t take a team of lawyers and millions of dollars to make a decision on music use in an app, and it is therefore understandable that developers would find the process complicated and mystifying.

Only Do What Only You Can Do

Developers are completely unqualified for this task. They don’t have the knowledge or qualifications, they can’t issue a proper sync licence, none of them (and I mean none) have proper tracking methodology or technology, they spend inordinate amounts of time acquiring rights and negotiating advances borrowed from their venture capital towards royalties for deferred payments on future use.

I’d wager 80% have no idea where they are going to even make money yet, because they generally don’t have a working business model, and if they do it is the unsustainable scraps from affiliate revenue or the ever nebulous, “advertising”. I’ve even been party to some behind the scenes knowledge of some small app developers who wanted music so badly in their apps, they have signed some truly egregious contracts that doom them to failure on day one. I don’t see the value as a label of owning a piece of a company destined to fail.

We put at their feet the responsibility of solving issues they (in reality) cannot solve and that have instead further exacerbated the issues. This has given some of apps/platforms who have massive audiences and cash more power, and in many cases allowed further abuse.

Add to that there are tens of millions of developers out there, a large percentage of whom would be interested in incorporating music and other creative assets into their apps. Since this cannot efficiently be handled and there is no unified method to deal with payments, tracking, granting permissions, delivering media, accounting, reporting, and payments…it would be an impossible task for the music industry to manage any of this.

I once calculated it would likely take a team of 1,000 people over 8 years to negotiate and licence just 10% of the apps/platforms out there today, all while smartphone adoption heads past 2B+ units in the next year or so. Without a unified solution to handle this, there is currently app stagnation, a lack of inspiring or interesting use cases, and instead only a select handful of developers and platforms who are even allowed to play with music in their apps or platforms because they have lots of money.

All facts. That’s where we were and where we are.

Now, where are we headed?

The Dark Social and the IoT Will Make Content ID Pointless and Takedowns Irrelevant

Recently it was reported by RadiumOne that over 82% of mobile sharing is occurring in what’s called dark social (http://digiday.com/publishers/80-percent-mobile-sharing-done-via-dark-social/). According to them, this “dark traffic” (behind the walls of apps – where you cannot see) means it becomes very hard not just for ad companies, but for rights owners to have any knowledge of how their works are used or even to monetize them. This problem becomes massive once adoption of point to point encryption becomes commonplace. At that point, all the investments and companies who are based on fingerprinting technologies (that includes YouTube’s Content ID) become pointless, because fingerprinting an encrypted file is impossible.

Add to this the fact that decentralized and ad hoc networks comprised of the Internet of Things (IoT) and smartphones that generate a mesh of connected devices make ISPs less relevant. This means people will easily be able to share whatever they want, whenever they want. No ISP, no takedowns.

The Next Big Thing May Be Unlicensed

Already, someone alive today, will launch in the next 2 years what is essentially the most powerful free music sharing service akin to a Spotify-like service, except unlicenced, because it will enter the world anonymously as part of some likely combination of blockchain technology, magnet links, torrents, smart contracts, AI, and so on. You can’t take it down and you can’t sue it because no one owns it or operates it. You can’t file suit against a bot and you ain’t seen “free” until you’ve seen what this thing will do to the entire market.

If there were such a thing as a singularity of copyright infringement and piracy, I’d say we were at the Outer Event Horizon, nearing the no escape zone.

Another major issue is frankly that the music industry has failed to prepare for what is likely to be a giant issue in the next year or so as streaming growth booms. You cannot remove a recording from a streaming service and embed it into a file that is essentially a sync licence. While we all pat ourselves on the back for how great streaming growth is, we fail to realize we’ve cut off each of those users from doing something they love…making stuff with music. Streaming platforms are bound by agreements from allowing this to occur, so when you hit critical mass, what will that mass do? They’ll streamrip the files. We now head back to massive piracy again.

So all doom and gloom…

Disrupt the Disrupters to Avoid the Cultural Black Hole

Well maybe not. I gave a version of this talk last year at Midem and I said that in order to prevent such a thing from occurring you need to disrupt the disrupters. You need to out-innovate. This is a time to trail-blaze. Regardless of the current trajectory it is not in YouTube or Spotify’s best interests to see their own markets vanish. But they need to step out of their own comfort zones and work with creators to forge an alternative that’s better than the above. That means questioning things we’ve become very accustomed to in the past 15 years. This is a team effort.

We can avoid a cultural black hole.

For one thing, we need to move beyond or evolve the idea of ContentID. As illustrated above, the problem is that Content ID is a flawed system based on the premise of allowing something to occur that should in fact never have occurred, which is the infringement of the work of another person. It is a retroactive payment system based on rewarding improper use.

Generally it is thought this is acceptable because there is a payment made towards music rights holders. However there are billions, maybe even trillions of visual copyright violations against visual artists, like illustrators and photographers, of which there is no Content ID system in place. In a way it means that the music industry accepting money from YouTube is doing so while other artists are being exploited with no remuneration at all.

Musical artists have incredible access to media sympathetic to their voice, while no one seems to give much lip service at all to their brothers-in-arms on the visual side. But if they ever do get organized…watch out. Musicians in fact should be unifying with other types of artists for change. 

I make this point because it has been suggested (to me in fact on more than one occasion) that a solution to the data problem is simply for YouTube to open source the data in Content ID so anyone could use it. Now if you got this far, you know that it is reliant on waveforms and hopefully a submitted ISRC. But, it likely doesn’t have the publishing data.

And even if that is there, you cannot compare a waveform fingerprint to an encrypted file. So what might work on YouTube doesn’t necessarily work on other platforms. Are you going to fingerprint 500 trillion messaging exchanges and posts per year? Any clue on the CPU cycles and energy that wastes? And the thought that Facebook is developing their own version of this, just increases the complexity of accounting and reporting and monitoring all of this usage. Is this what you want? 

This doesn’t need to happen, but the pieces have been falling into place the past 3 years. We need to make a concerted effort to solve this issue universally across the entire industry, regardless of nation or region, or we’ll find ourselves with a bigger mess that no blockchain or smart contract can unravel.

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