Christian P. Pewitt Blogs: Key To Widespread Artist Adoption Of Blockchain Could Be Via Esoteric Copyright Law [George Howard]

Wednesday, April 26, 2017

Key To Widespread Artist Adoption Of Blockchain Could Be Via Esoteric Copyright Law [George Howard]

Blockchain technology has been embraced by many smaller independent artists, but widespread adoption has been slowed by a lack of participation from major labels and publishers, although an ancient copyright clause could provide a solution.

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Guest post by George Howard on Forbes

After having written at length over the past several years about blockchain technology, I'm delighted to observe what appears to be growing consensus that this technology could become a core tool in facilitating the creation of a music industry ecosystem in which there are more winners than losers.

Without throwing cold water on the party (I am, indeed a blockchain true believer), I do have concerns that the pace of adoption by important stakeholders will be slower than we desire unless certain things occur. Blockchain technology is currently like a great engine that does not yet fit into any car. Specifically, while an ever-increasing number of emerging or independent artists may avail themselves of this technology, there is a vast category of artists who are walled off from the potential advantages of this technology: artists whose copyrights for their sound recordings or musical works are controlled by major labels or publishers.

Absent participation from this cohort, one has to wonder about the pace of widespread adoption of this technology.

What makes this situation both tantalizing and frustrating is that there is a way for these artists to participate and engage with emerging technologies -- blockchain or otherwise -- that would rebalance the present-day dynamic in which there are more losers than winners to one where there are more winners than losers, and thus redefine the music industry ecosystem via:

Identification of rightsholders
Direct exchanges of value between those who create musical works and those who desire to consume and utilize those works at free-market defined rates
Incentivized fan engagement and participation

This path forward for established writers and performers relates to the Thirty-Five Year Copyright Reversion Clause. Essentially, Congress determined that after 35 years a termination of transfers of copyrights from creators to companies that occurred during or after 1978 can occur. This was a gesture to avoid situations in which labels essentially “owned” works that they did not create in perpetuity -- often without exploiting them in any way that provided value to their creators.

This clause means that beginning in 2013, certain works that have been assigned to a label or publisher for 35 years can be reclaimed by its original author(s). There are a vast number of recordings and compositions, therefore, that should now have returned to their creators (or the estates of the creators who have died).

Should these creators reclaim their works, it would de-tether from their labels or publishers who had heretofore “negotiated” on their behalf in an exclusive fashion, and, of course, frequently in ways that maximized the institution's profits, with little-to-no regard for the long-term (or short-term) interest of the creators themselves.

Via reclaiming the rights to these works, these creators would have the ability to not only set prices (and other terms of use) on their own behalf but do so in a transparent, machine-readable and permanent manner, and -- via attaching these assets and related rules ("smart contracts") to a blockchain -- facilitate not only an abundance of new opportunities for exploitations at market clearing price and on terms that the artists set themselves, but also create systems which empower and reward fans to do what they do naturally…share and expose the works of these artists whom they love.

To paraphrase what Union Square Venture's Andy Weissman succinctly said of blockchain technology in an interview I conducted with him: we should not have four or five dominant streaming services, we should have four or five thousand individualized streaming services, in which fans are rewarded for their passions.

These streaming services -- and many other applications -- can be powered and facilitated by blockchain technology, but this will only have a massive impact when those artists who are currently not in control of their own destiny are able to reclaim this control. The 35-year reversion clause is the vehicle in which this can occur, however, it must be more widely adopted by artists and enforced by courts.

Fortunately, this reclamation of copyright conversation is gaining some needed traction. Not only is it a key prong of the music education and advocacy site Music2020's work, but it will be a topic of a panel at this year's Music Biz Convention in Nashville. For full disclosure, I am a principal at Music2020 and will be one of the panelists at the Music Biz event.

In order for blockchain or any other technology to have a massive impact, widespread adoption is necessary. Currently, a vast percentage of artists are walled off from participating. More awareness and utilization of the 35-year reversion of copyright act may be the way to finally fit the car to the engine.