How Afro-Tech Sistas Can Leverage Blockchain Technology to Disrupt the Music Recording Industry with Instant Royalty Payments and Micro-Licensing

sistalawn In this article, we giving respeck to the Afro-Tech sistas by covering blockchain and distributed ledger technology and believe the sistas will understand the blockchain by the end of this article. We are going to show our Afro-Tech sistas how to create disruptive music industry solutions using the blockchain. The first step we want sistas to realize is understand the benefits of the technology. The two major benefits of blockchain technology where the great opportunity lies is with payment settlement and black and Hispanic urban communities. Many current payment settlement workflows involve a lot of middleman entities taking out fees and taking time before payment reach the destination and the final payment is smaller due to the fees deducted. The blockchain reduces significantly the amount of time and cost to settle a payment transaction between two parties. Keep in mind black and Hispanic communities have constantly been the target of institutional discrimination by financial institutions, insurance firms and many of our black/Hispanic organizations filled with loose spending and corruption. The blockchain allow the creation of financials models that allow parties to enter transactions with each other and also create a shared ledger that can be inspected by many people in real-time to insure integrity, reducing corruption and graft at many organizations claiming to support blacks and Hispanic causes. afrotechsista The blockchain capabilities is already exciting a lot of the Afro-Tech in Africa and here in the America, blockchain technology has more than enough empowerment use case and destroyer of status quo possibilities to declare cryptonomics as the solution and everything else obsolete. Let’s look at some use cases to give examples. Credit Reporting. The black community no longer need to rely on FICO or credit checks that are historically negative towards the African-American community. Instead, we can look at the blockchain ledger of someone in the community and see if they are spending within our community and offer peer-to-peer loans, rent and other necessities like car rentals based on their economic contributions to the community they live in, not if they pay a major credit card on time. Insurance. The African-American community can now create a mutual organization where the community can pay into a system and claims are added to the blockchain. The data gathered from the claims can be used to educate the black community on how to be safer, how to make roads safer and reduce risk in our black community as an education tool, not as a discrimination tool major insurance firms are leveraging against the black community. Sharing Economy. The African-American community can create new business models and paradigms that allow us to create smart contracts with each other to share common resources. We can efficiently create homesharing services that resemble AirBnB, ridesharing services that resemble Uber and other business model like reserve banquet halls and rent furniture and clothing in a peer-to-peer fashion. The blockchain is so disruptive, it can obsolete current business models as we know it such as the pawn shop model, the multi-level-marketing silliness – the blockchain is more powerful as a distributed network than a bunch of cats smiling next to a leased Bentley talking about they network marketing or whatever. And for this article, you sistas are going to realize the blockchain is going to flip the script so hard on the music industry that it will be changed as soon as you finish reading this article. African-Americans and the Music Industry African-Americans have always been short-ended and harmed creatively by the music industry. Black musicians 100 years ago would create a style like ragtime and their music is lost forever or the music labels back then stole the music and never gave the original black artist credit. Later, when black music artists actually had the chance to get big, they were cheated out of their royalties and died penniless as a result, even while their songs are still celebrated by hipsters. Then let’s go to modern times where black artists sign bad record deals where they given money upfront and have to “recoup” that money from sales even through the label did little or nothing to promote their album. So these artists cannot release any new material trying to get out of a bad contract. But the worst is self-inflicted damage where so-called black radio stations play negative and misogynistic music promoting drug dealing, black on black violence and disrespeck of black women in our community. The black radio stations then try to rationalize this is what the black community want to hear and we already have the data and fact that statement is a lie – common sense should tell you no people on this planet want to hear audio-based negative reinforcement all day - that is what black radio stations are pushing down on the black community by their own accord. So the biggest casualties are positive and black music artists who do not get the exposure or growth deserved and music genre like house music and acid jazz that are based in our black culture, being denied by these black radio stations claiming to support the black community. So let’s do this – we want the Afro-Tech sistas to leverage the blockchain to disrupt this whole music industry system by focusing on two areas. Create Micro-Licensing on the Blockchain. We would like sistas to enable music publishers and artists to move their music to the blockchain to be micro-licensed only via crypto-transactions. Meaning if a streaming service or radio station want to play the song, they can get a micro-license that permit them to play the song during the 12pm hour or 5pm hour. Create Instant Royalty Payments via Smart Contracts. As soon as the micro-license is paid, the music publisher and/or artist can receive instant royalty payment directly to their account and do not have to wait for royalty checks from BMI/ASCAP. Artists do not have to recoup – they make the song and get paid immediately if they put it on the blockchain and allow smart contracts to handle the micro-licensing aspect. So as you see, by implementing the two areas on the blockchain, a lot of music industry entities will be obsolete and eventually wiped out like a video rental chain. The reason why is because the blockchain and real-time payments empowers upstart radio stations and Internet radio streaming to compete on better margins than encumbered radio stations as well as make music labels and artists happy to receive instant payment for play and manage micro-licensing of their works. Performance Rights Organizations. There is no longer a need for BMI/ASCAP as the music publishers and artists will have a direct smart contract with the music licensee and broadcasters via the blockchain. The royalty payment will happen in real-time bypassing PROs altogether and whatever fees they have. This is a win for publishers/artists and also a win for upstart music services who can work directly with publishers/artists on getting fresh music out to their listening audience. Existing Radio Stations. Existing radio stations will be encumbered versus upstarts who can leverage the blockchain quickly to build a catalog that can cater to different demographics. Black radio will suffer the most by having the reputation for playing negative music while upstarts focus on subgenres that target the African-American and other communities and take away advertising dollars as a result. Actually, we highly predict negative-reinforcing black radio stations will be destroyed outright and quickly and I’m personally praying for this outcome as well. Existing Music Streaming Services. The existing music streaming services have established deals with record labels that pay pennies on the dollar royalties to stream music and filled with debt and VC funding that is not delivering a return on investment. The blockchain allow instant royalty payments and can leverage analytical data models that will allow blockchain music upstarts to maintain profitability each time a song is played from the very beginning, killing the current rationale for existing services paying pennies on a dollar royalty payouts. Music Labels. An artist no longer need to be signed to a music label and can just publish to the blockchain and don’t even need to publish to digital music services and be forced to accept 99 cents download rates for their works. The artist is paid directly through micro-licensing their works immediately and there is no limits or constraints. Just like the Web has search engine optimization, there can be robo-analytics that can assist music artists on where the demand is at for their music and robo-advise music artists on their music career, no need for A&R or promoters when blockchain data and smart contracts for micro-licensing handles promotions and payouts. So the Afro-Tech sistas can leverage the blockchain and totally ruin all those cats currently in the music industry day, real talk. But the Afro-Tech sistas can also empower independent music artists, smaller record labels and upstart music streaming services and get good music like house music, acid jazz, Reggaeton out to their intended audience and help cultivate a healthy and rich diverse music culture that we all deserve to listen to today. To accomplish this let’s go over the blockchain cryptosystem. First, Understand Blockchain is Part of a Cryptosystem professionalsista There is a problem with the “blockchain” phrase as blockchain is loosely used in tech media as the holistic solution when the actual blockchain piece is just one component of the whole cryptosystem platform. In cryptosystem platforms, the core of the system is establishing an ecosystem that all parties can trust, that is the core, not the blockchain or any other specific technology. The most important part is everybody can trust the overall system and the measures in place to ensure that trust. For example, people trust the US government will honor the US Dollar because everybody else trust and accept it. The same goal is to be kept in mind with cryptosystem platforms, you need several mechanisms and process in place where everybody involve can trust the system to perform transactions with each other. So with that said, let’s look at the following encryption and techniques to establish collective trust in a cryptosystem: Public and Private Keys. These are scrambled and unique text, number and symbol characters where the public key is used to encrypt data and the private key is used to decrypt data. The public key is published for others to encrypt a message they want to send to the person who published the public key. The private key is actually a digital asset that is critical to be secured like a bar of gold and the “currency” used in cryptosystems. With the private key, only the receiver of the encrypted message can decrypt the message that was encrypted with their public key. Digital Signature. A digital signature is a process of creating an encrypted hashed version of the message where the other party can verify the hash encrypted message match the encrypted message. This secure exchange between two parties to verify the information allow the actual transaction to occur because the two parties are verifying each other information with no third party involved in the process. Hash and Checksum. A hash is a way to scramble a message into a set of numbers and is one-way. Once a message goes into a hash, the message cannot be decrypted. The only way to use the hash is to re-enter the original message and see if the re-entered message hash matches the original hash. A checksum is the match of two binary or hash to verify the original document match the current document. This technology is used where downloaded software has to be verified if it came from the original publisher or if it is an altered/fake copy. Decentralization. Instead of having one point of attack like a database, decentralization is a strategy that create copies of the asset to be distributed among multiple parties on the Internet. Each of the independent parties can update each other information in a peer-to-peer fashion. So if one independent party is attacked, the other independently parties can instantly provide redundancy and also instantly detect one of the independent party members is not right and respond quickly to an attack to protect their base. A cryptosystem is managed by entities and roles using encryption technology to establish a culture of trust, verification and a record. Blockchain Network. This entity controls and own the ledger. Their job is to enter data and hash the blockchain as well as distribute the ledger to nodes. Time Stamp Authority. Third-party like notary service that stamps the time of the digital transaction. Data Miner. This entity does the work to queries the blockchain to validate transaction for account balance, other unconfirmed payments, etc. Key Generator. These are services that generate the public/private key and address for end-users. In some cases, these can be physical cards with a key assigned to it. Address Owner. The end-user that can be a person or bot with an address to conduct transactions with digital signature. Nodes. These are the independent hosting service of the distributed ledger that allow miners to query and compare to verify a transaction on the blockchain. officesista Now with these definitions, let’s put it all together and show the Afro-Tech sistas how to exactly use the blockchain to disrupt the music industry. Establish a Mutual-Benefit Nonprofit Corporation. The goal here is to help the facilitate micro-licensing and instant payments of royalties. There should be some kind of a membership fee to participate in the blockchain system you sistas are creating. Also, keep this in mind – you are not a money service business as you are a software provider and you are collecting licensing fees on behalf of a music artist. Create a Key Generator Service. This allow record labels, music artists and upstarts like streaming services create an address and their private key. This is their ID to send payments and receive payments and transaction recorded on the blockchain. Define the Smart Contract Rules. The smart contract rules can be simple or complex in many forms. For example, the terms of the micro-license can be only for radio play. Another license can be only for a nightclub DJ set. By the way allow regular people listening to the DJ or radio station be able to check the blockchain to see if that specific DJ or radio station has purchased a license, if not, they can be reported and reward the reporter while fining the violator in real-time. Help Publishers and Artists Upload their Catalog. The music label and artist can upload their title of the song, not the actual MP3 but the identifier to your text-based database. On the music label or artist web site, they can refer to the address of the song and your service give the option to allow someone to buy the song as a consumer or license to play at a public venue or private establishment and issue a micro-license for that one-time play. Broadcasters Operate on a Prepaid Basis. A broadcaster cannot be billed but have to have a prepaid escrow account of their choosing and just deduct the funds during a micro-license transaction that will pay the publisher or artist directly in real-time. It is your job to interrogate the blockchain or “mine” the blockchain to see the transaction and ratify the transaction to be entered officially on the ledger to be fulfilled. This means making sure the broadcaster has a balance and the blockchain has integrity and not compromised. The transaction will work in this fashion. The music broadcaster such as a radio station, streaming service or DJ or establishment will search your catalog or search the music label or artist catalog and display their address, maybe as a QR code. Probably can make a QR code DJ pool sheet list of heavily rotated songs, just dropping stuff in your ear right now. The broadcaster will initiate obtaining a micro-license by getting the public key of the song they want to play, sign a hash of the request message with their private key and send the encrypted message to the music artist or label directly, not your service but to them directly. The music label or artist can verify the message and digital signature and accept issuing the micro-license which is then submitted to the unconfirmed ledger. Your service data mine both unconfirmed and confirmed ledger to look for transactions and validate the digital signatures are valid and a contract been created and execute the contract by sending it to the blockchain ledger as official record. At that point the broadcaster has the micro-license to use the song and the smart contract immediately pay the publisher or artist from the broadcaster account. The blockchain solution quickly get artists and music labels paid for their recorded works to re-invest in future works and keep putting out music to their fans. The blockchain solution quickly get Internet radio and music streaming service new life and momentum to get up and running bypassing the headache of dealing with multiple Performance Rights Organizations and help them manage their royalty payouts in a prepaid manner. But best of all, black radio playing negative black music for too long can be marginalized and ran out of business (yay!) by a diversity of black music now empowered by the blockchain to bring the beautiful, positive and uplifting black music back to our community. Note: I noticed one of these ladies pictured as an avid reader of this blog and appeared in the comment section in the past and just going to give her a shout out. Won't say who she is but definitely on her self-branding mission

5 thoughts on “How Afro-Tech Sistas Can Leverage Blockchain Technology to Disrupt the Music Recording Industry with Instant Royalty Payments and Micro-Licensing

  1. In hours of publishing this the revolution has begun.

    Let me say from conversations that this technology allow pop-up radio stations or pop-up streaming service where a station can start off on weekend broadcasting or Saturday night mix broadcasting.

    Second – this allow musicians and publishers to instantly establish global cross-border licensing and royalty payments – I was told this is the major benefit I missed as BMI/ASCAP cannot reach Vietnam but this blockchain can – and that is a massive game changer.

    K-Pop, A-Pop (African pop) and Latin/Caribbean music will see the biggest benefit…

  2. Music is just the beginning it took years for change like this to happen this will only months to be in full effect great article Ed.

  3. Enjoyed the article. I am understanding block chain more and more. Thanks for breaking it down. This will definitely benefit the indie artists.

  4. What would a sample royalty rate via a smart contract be for an upstart internet radio station? I ask because for years now, there’s been debate over what internet radio stations should pay for performance rights royalties. Apparently, many internet radio stations have been unable to make substantial profits in their business models–in short, many claim they can’t afford to pay, so I am curious about what a potential royalty rate would be in this disruptive model.

    1. The royalty rate could be the full scale payout.

      What made Internet radio expensive is the 24/7 stream where this model is pay as you go micro-licensing. In addition additional revenue models can be built on top or charge micro-subscription rate (.015)to listen at a profit higher than the micro-license (.007).

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