Can Bitcoin Get Taylor Swift to Love Spotify?

NEW YORK (TheStreet) — Musicians aren’t particularly happy with any streaming music service — Apple‘s (AAPL – Get Report) Music, Pandora (P – Get Report), Spotify or Rhapsody, Tidal or Rdio.

But a solution may be found in that much-maligned digital-currency known as the Bitcoin. By partnering a cryptocurrency with a central database of music rights, a streaming service such as Apple Music, Pandora or Stockholm-based Spotify could accurately and promptly divide a payment for a single streamed song, according to music industry experts. A system that combines efficient tracking of payment rights with the immediate transfer of money owed could lead more artists to make their music available on streaming services, ultimately boosting their use and value.

Currently, tracking music rights payments is so convoluted that songwriters, backup musicians, publishers and superstars such as Taylor Swift can’t determine whether they’re being paid fairly, or at all. Streaming services have exacerbated the problem. Low payments were one reason Swift cited for holding her music off Spotify last year.

“The [current] economic system is no longer viable,” said Panos Panay, a researcher at the Berklee School of Music in Boston. “The more we looked into it, the more we thought… Bitcoins could really work.”

Bitcoin attracted enormous attention following its 2009 launch when adherents declared that it could fix the global banking system by providing an efficient way to transfer funds between people and businesses.  Bitcoin eventually fell out of favor due to a lack of adoption, high volatility and a few high-profile snafus that smelled of improprieties. A single bitcoin is valued at around $288 these days, well off the peak of over $1,000 just two years ago.But its underlying functions are being touted as a means of facilitating instant and transparent money transfers between musicians and labels on one end and streaming platforms on the other.

Why shouldn’t it be possible for that money to make its way to me, not in 18-24 months which is the average right now, but in two days, three days?” Panay said Because of the complexity of the payment structure as well as inefficiencies in the process, 20% to 50% of streaming fees don’t get to songwriters, labels and artists, according to the Berklee report. Musicians often complain of streaming being opaque, a “black box.”

Bitcoins, or a similar digital currency, could resolve these problems, said D.A. Wallach, a musician and investor in the cryptocurrency company Ripple Labs, and author of a widely-shared essay Bitcoins for Rockstars. Wallach said that a cryptocurrency payment system would record transactions on a verified ledger and, while the identity of recipients would be hidden, everyone could watch the money flow from service to musician and label.

The service could create apps to tap into this overarching ledger, showing an artist how often they’re getting paid and for which songs. Payments could be recorded in Bitcoins, or some other cryptocurrency.

Molly Neuman, interim president of the American Association for Independent Music, said she’d like to see such a system implemented to spur debate about how best to oversee music streaming.

“I am excited that there is a real conversation happening in the industry around somebody’s great ideas,” Neuman said in a phone interview in New York. “We could finally get some traction and support from the artist community, the label community, and some of the services to improve these transactions and the “black box.”

The three largest music labels, Sony Music, Universal Music Group and Warner Music Group, have yet to say anything publicly about the Berklee report, and didn’t respond to a request for comment. Neither Taylor Swift nor her label Big Machine Records immediately responded for comment.

“You have anonymity with this openness,” Wallach said. “You don’t want your pay stubs on the Internet for everyone to see, but there is a certain promise to letting those transactions live out in the open.”

Via:http://www.thestreet.com/story/13222675/2/can-bitcoin-get-taylor-swift-to-love-spotify.html