Spotify Turns to Blockchain Technology to Pay More Royalties to Artists

Spotify has announced its acquisition of blockchain technology company Mediachain Labs to help it reward online content owners with royalty payments.

The news, first reported by VentureBeat on Wednesday, was relayed via a Spotify press release which has since been removed from its website, explaining that the purchase of the New York-based startup was aimed at facilitating Spotify's "journey toward a more fair, transparent and rewarding music industry for creators and rights owners".

Mediachain is responsible for the creation of an open source peer-to-peer database and protocol for registering, identifying, and tracking creative works online. The blockchain component aims to help creators and rights holders prove they are the owner of a piece of work and receive due payment.

Spotify has faced legal trouble in the past over its failure to pay artists and publishers, which is said to be down to difficulties it has had in working out who to pay, a problem which relates especially to smaller artists and labels.

Last month, Spotify reached a $30 million settlement with a publishing group over unpaid royalties and agreed to put in place a system that guaranteed a "reasonable effort" would be made to match all music streams with creators and rights owners.

Spotify recently passed 50 million paid subscribers. The Mediachain acquisition deal – the terms of which were not disclosed – appears to be part of the company's plan to gain wider support from the creative community as it gears up to become an initial public offering on the stock market sometime next year.

Tag: Spotify


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31 months ago

Yeah, it doesn't add up, so something is probably missing from the story. Usually these cryptocurrency systems are designed to let many individuals contribute arbitrarily small amounts of money to things easily, securely, for cheap/free, and sometimes anonymously. It's a neat concept that I'd like to see implemented if they can get rid of the anonymity, but I've only ever heard of criminals and ultra-geeks using it, and I don't see why Spotify needs it.

Blockchain is ground breaking technology that forms a distributed ledger, every company will be using some form of it in the future. Read up.
Rating: 7 Votes
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31 months ago
I didn't realize that you need special startup technology to figure out who wrote the song your service is streaming. Other streaming services must really be struggling to figure out who wrote what. I just assumed Spotify just wasn't paying fairly. Silly me.
Rating: 6 Votes
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31 months ago

I didn't realize that you need special startup technology to figure out who wrote the song your service is streaming. Other streaming services must really be struggling to figure out who wrote what. I just assumed Spotify just wasn't paying fairly. Silly me.


One needs to see the much bigger picture here. Blockchain technology has the potential to cut away big parts of the licensing jobs the labels, distribution companies, royalty collection agencies etc. are doing now and will eventually bring artists a bigger piece of the revenue cake since there will be less other parties involved in between the artists and their audiences.
Rating: 4 Votes
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31 months ago

It's a neat concept that I'd like to see implemented if they can get rid of the anonymity, but I've only ever heard of criminals and ultra-geeks using it, and I don't see why Spotify needs it.


You've got it backwards. Blockchain isn't anonymous at all. If you want to do money laundering, you do it with cash or gift cards. Those are completely anonymous and untrackable. Blockchain is easy to track - every unit is clearly labeled with every person who has ever had possession of it.
Rating: 3 Votes
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31 months ago

Huh? Increased transparency and speed of tranfer of what? I hope it isn't payroll. The only person who should be getting licencing fees from art are the content creators. I'd even be so bold as to say most members of a band don't deserve royalties either. There is no other industry that does this crap. The company that made Vanna White' s fillings doesn't get paid every time she smiles.

This is a horribly bad take, and the Vanna analogy is even worse since White doesn't get paid every time she smiles. It completely ignores the realities of the industry. The record companies take the majority of the royalties. In general, for artist to get more they need better deals with the labels first. That's not on Spotify. Even if Spotify pays more royalties, that's no guarantee the artists are going to get more since the labels don't have to pass that windfall down to the artists. Trickle down economics never worked anywhere else, no reason to think it would work here.

Band members don't deserve royalties? Uh, I got nothin'.
Rating: 2 Votes
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31 months ago
Blockchain does two things - increased transparency and speed of transfer. In this case it would probably be implemented for increased transparency. This is not a stunt as some people are suggesting. Blockchain is quite powerful and has several use cases apart from crypto-currency.
Rating: 2 Votes
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31 months ago

How fair Spotify could pay those content owners? Same level as Apple Music? Or just bare minimum?
Personally don't really like Spotify but if it is gone, I will have no free streaming service to use.


Search and you shall find:
"For instance, the latest RIAA report showed ('https://9to5mac.com/2017/03/30/music-streaming-artist-payout-rates/') that while Apple pays between $12 and $15 per 1,000 streams, Spotify pays around $7. YouTube, however, remains the worst at around $1 per 1,000 streams."
Spotify aiming to solve its unpaid royalties problem with acquisition of Mediachain startup (https://9to5mac.com/2017/04/26/spotify-database-rights-holders-acquisition/)
Rating: 2 Votes
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31 months ago
So now an artist only need their song played 200,000,000 times to equal the salary of the average Spotify worker
Rating: 1 Votes
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31 months ago

Blockchain does two things - increased transparency and speed of transfer. In this case it would probably be implemented for increased transparency. This is not a stunt as some people are suggesting. Blockchain is quite powerful and has several use cases apart from crypto-currency.


Huh? Increased transparency and speed of tranfer of what? I hope it isn't payroll. The only person who should be getting licencing fees from art are the content creators. I'd even be so bold as to say most members of a band don't deserve royalties either. There is no other industry that does this crap. The company that made Vanna White' s fillings doesn't get paid every time she smiles.
Rating: 1 Votes
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31 months ago

Are other streaming services struggling to figure out who to pay for the songs they're playing? Is this information so uniquely hard for Spotify, and Spotify alone, to come by that they needed to buy startup tech to figure it out? Something just doesn't add up.

According to this article it apparently does affect other services as well:

https://techcrunch.com/2017/04/26/spotify-acquires-blockchain-startup-mediachain-to-solve-musics-attribution-problem/

"According to the NMPA, Spotify had failed to obtain mechanical licenses – which refer to a copyright holder’s control over the ability to reproduce a musical work – for a large number of songs on its service, The New York Times had reported ('https://www.nytimes.com/2016/03/18/business/media/spotify-reaches-settlement-with-publishers-in-licensing-dispute.html?_r=0'). The issue could impact other streaming services as well, the NMPA said, estimating that as much of 25 percent of the activity on streaming platforms is today unlicensed."
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I don't get how a company adds music to its servers and then makes millions of copies of the songs available to its customers without knowing where that music came from.

The attribution problem is a bit more complicated if you have millions of songs and serve dozens of countries all with different licensing situations, all the while the rights to music are sold and resold between publishers all the time. Blockchain is a public ledger system that allows tracking transactions (such as the selling of music rights) in a verifiable way. So if for example multiple publishers claim the rights to a song, a blockchain could prove who is right. Conversely, if nobody claims the rights, the chain of transactions should allow identifying the current owner.
Rating: 1 Votes
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