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What Is Bitcoin, Blockchain's Future in the Music Industry?

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What Is Bitcoin, Blockchain's Future in the Music Industry?


"Blockchain technology is coming like a tsunami," says Dot Blockchain CEO Benji Rogers. "Every business in this space needs to start thinking about a Blockchain strategy."


A specter is haunting the music business -- the specter of Bitcoin. To be more specific, it's the Fear of Missing Out on Bitcoin, which is only natural given the digital currency's climb from a value of about $1,000 to more than $19,000, before it settled at about $15,000. Suddenly, a business that has spent the last decade making it more convenient to pay for its products is experimenting with digital cryptocurrencies that are technologically innovative, mathematically secure and actually fairly inconvenient to use. What is to be done?  


In November, Bjork began selling her album in Bitcoin and three other digital currencies. (The first major artist to accept Bitcoin seems to be -- go figure -- 50 Cent.) Ghostface Killah got involved in issuing his own cryptocurrency, which seems uncomfortably close to the Chappelle's Show's "Wu-Tang Financial skit that shows the hip-hop group offering investment advice. In early December, a team involved with the cryptocurrency Monero announced Project Coral Reef, which allows consumers to buy merchandise from Mariah Carey, G-Eazy, Fall Out Boy and other artists who have deals with Global Merchandising Services. Now the DJ Gareth Emery plans to release, sell, and pay royalties for music using both digital currency and the blockchain technology that it often runs on.


Digital cryptocurrencies like Bitcoin could be transformative and they're rising in value so fast that they're impossible to ignore. (Even J.P. Morgan Chase CEO Jamie Dimon turned around.) At the same time, the only person I know who has ever actually bought anything with Bitcoin is my former neighbor in Berlin, who ordered LSD by mail from the online Silk Road marketplace for illegal drugs. It's not clear how much this will help the music business, however, since rising Bitcoin transaction fees are making the currency so impractical that even a bitcoin conference stopped accepting them.


As cool as cryptocurrencies are, it's still not clear what problem they solve. Consider Monero, which offers users even more privacy than Bitcoin by obscuring the identities of payers. That has potential and it makes sense for businesses to accept whatever currency their customers want to use. "It's what we want to do," says Christopher Drinkwater, Global Merchandising Services' head of e-commerce. "Make things as easy as possible."


The customer is always right and Drinkwater says purchases made with Monero are increasing. Once the novelty wears off, though, isn't it just easier to buy things with a credit card? Sure, anyone who's embarrassed about their love for the Backstreet Boys can now buy a T-shirt in secret. Wearing it will still be a giveaway, though.


So far in the music business, there are more serious discussions about the blockchain technology that Bitcoin is built on, since it can store information on a database that's distributed widely online -- and thus both open to read and impossible to alter in secret. "The blockchain is real," Dimon said recently. Dot Blockchain Media wants to use this to replace the industry's many, old, incomplete rights-holder databases with a music file format that contains rights information along with recordings. Theoretically, at least, this would solve the problem of streaming services not being able to identify or find the rights owners for the songs they use. Which some say has the potential to change the business. Theoretically.


"Blockchain technology is coming like a tsunami," says Dot Blockchain CEO Benji Rogers. (Why are digital technologies always compared to destructive weather events?) "Every business in this space needs to start thinking about a Blockchain strategy."


Some have. In April, ASCAP joined with SACEM and PRS for Music in a venture to explore the potential of the technology to track rights ownership. "The same real-time update and tracking capabilities that make blockchain attractive to the financial industry also make it an attractive option for the music industry, where accurate, real-time ownership data will grease the wheels for the money to flow to songwriters and copyright owners with less overhead," says ASCAP CEO Elizabeth Matthews. "It is not a panacea to solve the music industry's problems, but we see potential in the future as one of many data initiatives the industry should be exploring."


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