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Spotify wants to use blockchain technology to better pay artistes

By Marcus Wong - on 27 Apr 2017, 3:01pm

Spotify wants to use blockchain technology to better pay artistes

With a growing subscriber base of more than 50 million paying subscribers, Spotify has been going all out to gather support from music labels and artists. A new agreement with Universal Music Group (UMG) allows bands to limit album releases to Spotify’s premium subscription for two weeks, and a similar deal has also just been signed with Merlin, adding thousands of indie artists and labels to its portfolio.

With the number of artists under its label growing rapidly, it’s easy to see how it would benefit the Spotify to find better ways to track and pay them, lest they face more legal action over unpaid royalties. That’s where the recent acquisition of Mediachain should help.

Blockchain technology essentially uses a distributed database where participants follow a set of protocols to record ownership of tokens of value and their exchange. In the case of music, these tokens would be the songs and the artists who own them. As Mediachain explains in their blog, an open metadata network shared and created by the various music labels would go a long way towards finally solving the problem of “who to pay”, which would then enable people like Spotify and Apple Music to work out “how to pay”.

As Mediachain cofounder Jesse Walden says, “A music blockchain would be a single place to publish all information about who made what song, without having to trust a third-party organization.”

Spotify has been the subject of much scrutiny over royalty payments lately, and will definitely need to do better to maintain negotiations with record labels in light of strong competition from Apple Music. Apple pays between US$12 and US$15 per 1000 streams while Spotify offers just US$7. YouTube however, remains far behind, offering just around US$1 per 1,000 streams. 

Sources: Spotify, Mediachain blog, 9 to 5 Mac, VentureBeat, Billboard

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