Music Technology Policy

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