‘A publicly accessible platform on which anyone can make undeletable, tamper-proof assertions about their ownership of or contribution to music sounds like the foundations of anarchy’ – Music Business Worldwide

The following MBW op/ed comes from Mark Douglas, Chief Information Officer at PPL, the UK’s music licensing company for over 130,000 performers and recording rightsholders. He argues that, behind the buzz, blockchain is a technology that doesn’t address, let alone solve, the industry’s main data issue…

As a solution to all ills in the music industry, blockchain first raised its head back in 2016.

There wasn’t a week that went by without another seminar, blog post or industry journal heralding this new transformative technology and how it was going to reinvent the music ecosystem.

By 2019 this fervour was starting to ebb, and all went quiet for a few years. Many of the start-ups that were going to lead this transformation shut up shop and moved on to something new. The rest of us got on with our day jobs.

Then, in 2021, NFTs broke through into the mainstream and re-awoke the blockchain fan base. The noise levels around how blockchains are going to transform our industry are now rapidly rising to their 2017 levels.

Even the Worldwide International Property Organisation (WIPO) have joined in, releasing a white paper titled ‘Blockchain Technologies and IP Ecosystems’, which sets out the many and varied ways in which blockchains will solve a broad range of problems in the Intellectual Property domain.

Depressingly, the 189 pages read like an advertorial for blockchains. Perhaps that should come as no surprise. WIPO set out in their introduction that the contents of the paper have been created through desk-based research, a survey of companies playing a role in the blockchain industry, and interviews with ‘relevant’ actors in the IP and blockchain industries.

As with many commentators on blockchains, the whole premise of the white paper seems to me to be back to front. The questions it seeks to answer are framed in terms of: I have a blockchain, what can I do with it? The proverbial hammer looking for a nail to hit.

In all my years of designing and delivering technology systems, I have found the best approach to be to first get to the bottom of what the problems are, and then design the solution to best address those problems. Picking a solution first and then seeing how it can be manipulated to try and address the problem usually leads to failed projects.

It is at this juncture that it is worth understanding the mechanics of a blockchain. By examining how they function, we can better understand what benefits they may provide, and then determine their relevance to solving the data challenges we have in the music industry.

Imagine I want to create a public database of all sound recordings, the party that owned the original copyright in each of those recordings, along with the recordings’ release date. Let’s take Welcome To Hell by Black Midi as a recently released example.

The original copyright in that recording is owned by Black Midi, and it was released on 9 May 2022. Following database best practices this data should be expressed using appropriate identifiers. For the recording, that would be its ISRC (International Standard Recording Code), and for the copyright owner, let’s use their ISNI (International Standard Name Identifier). For my Welcome To Hell example, that gives us an ISRC of GBCVZ2200020, an ISNI for Black Midi of 0000 0004 7629 4420, and a release date of 09052022.

I now have the data that I want to store on my public database. If I choose to use a blockchain for this, I now must create what is called a hash. It is the hash that makes the data tamper-proof. A hash is no more than a mathematical function that takes any string of characters as its input and then generates a fixed-length character string as an output.

Hashing is used in many situations. The last digit of your credit or debit card number is a hash, calculated by putting the first 15 digits through a hashing function. In many blockchains, the hashing function used is SHA-256. This function can take any number of characters as its input and will always generate a 64-character value as its output.

The combination of the data I am trying to store, along with this hash, forms the ‘block’ bit of a blockchain. The hash is critical to blockchains as it makes the contents of the data tamper-proof. If you change just one character in the data, a very different hash value gets generated.

These ‘blocks’ are then made into ‘chains’ by linking this new block to the previously written block. This is achieved by including the hash value from the previous block into the new data that is being hashed. In this way, any attempt to alter the content of a block or to alter the sequence of blocks is immediately discoverable by recomputing and verifying the hash. This is the cryptographic bit of blockchains that renders them tamper-proof.

“Our problem has never been not having a tamper-proof place to store that data, it has been one of data management.”

So, you might rightly be asking yourself, how is any of this distributed, tamper-proof data storage technology in the least bit relevant to solving the data challenges in the music industry.

A big part of the answer to this lies in the fact that blockchain is just a specific name for the more general concept of Distributed Ledger Technology. The accountants amongst you will know that Ledgers are ordinarily used to record accounting information and comprise both debits and credits, two sides of the same coin that all net out in a balance sheet.

And indeed, in a business situation where you can get both sides of a transaction to agree to its nature and value (borrower and lender, punter and bookmaker, buyer and seller), then the data they agree on can indeed be written to a blockchain, and the tamper-proof nature of this indeed makes it a trustworthy record of what happened.

Importantly for many in the blockchain movement, it is this very removal of the need for a middleman that underpins their passion.

But this key attribute of blockchains doesn’t address the challenges we face in music data. Our problem is that the necessary data is not being captured in the first place. Our problem has never been not having a tamper-proof place to store that data, it has been one of data management. For several decades, we have been able to store data in relatively inexpensive technology that prevents amendment without an audit trail and that makes the data available 24/7, anywhere in the world.

Some will argue that a publicly open, distributed database is the very thing we need to allow the data to be captured at the right point in time. This totally misses the point on a couple of levels. Firstly, it is a fundamental shift in behaviours we need. We need artists, and those around them, to understand the importance of data management and to then follow good processes to make sure that it is captured and passed on.

“the cryptographic bit of blockchain doesn’t tell you anything about the veracity of the data; it just tells you it hasn’t been messed with since it was added.”

It is tools like Session, SoundCredit, VEVASound and Creative Passport that enable this. It is integration with studio tools that enable this. It is data standards such as the DDEX RIN that allow this. It is services such as RDx that enable this. Blockchains are, at best, a distraction.

Secondly, the absence of a counterparty to verify the data that is being added to a blockchain is a problem. So much so that the primary strength of a blockchain becomes its massive Achilles’ heel. You may have noticed that the cryptographic bit of blockchain doesn’t tell you anything about the veracity of the data; it just tells you it hasn’t been messed with since it was added.

With that in mind, a publicly accessible platform on which anyone can make undeletable, tamper-proof assertions about their ownership of music or their contribution to a composition or recording starts to sound like the foundations of anarchy.

The typical response to this is that it wouldn’t be a public blockchain, it would be a ‘permissioned’ blockchain. That’s fancy talk for there being a middleman that controls the blockchain, and who determines who can and cannot add things – a bit like the Collective Management Organisations we have today! The CMOs that request evidence to be provided before they amend data that will cause money to flow. The CMOs that are fundamentally data management organisations, cleansing and augmenting the data from the past seven decades of popular music, and verifying and resolving the new data that is delivered to them.

You see, when someone advocates for permissioned blockchains, they aren’t really advocating for a public, non-centralised solution for the greater good. They’re advocating that you shift to a very inefficient technology platform that they control, and that will generate a return for their backers. So when I read articles claiming that Elon Musk is heading our way with a blockchain to solve all of our data problems I grab a very large pinch of salt and start asking myself hard questions about the motives behind such an assertion.Music Business Worldwide