Around the world, music professionals are losing millions, if not billions, of dollars in royalties. This is not just an oversight or technical flaw. This is a fundamental problem within an industry that wants to prevent its evolution in order to maintain profits.
Does that seem extreme? Now, the recent lawsuit filed by Limp Bizkit against Universal Music Group (UMG) shows how serious the problem is. The world-famous band claims UMG is using loyalty software that is “deliberately designed” to hide payments. And if it's that bad for Limp Bizkit, imagine how bad it will be for upcoming artists.
But a solution could finally bring clarity to royalty calculations and payments. Let's dig into the details and find out how we can make the music industry a better place for everyone involved.
Metadata isn't always accurate no matter what you're told
At the heart of the royalty payment issue is metadata. The music industry typically represents it through credits that appear on streaming platforms like Spotify and Apple Music. However, it also includes all the important details related to the song, such as the title, songwriter, producer, publisher, and record label.
This data also needs to be reconciled across multiple databases to ensure everyone is credited and paid every time a song is played. Unfortunately, this is not always the case. As a result, many talented people are missing out on their fair share.
You may be wondering why it's so difficult to enter the correct information for a song. However, the music industry has faced ongoing challenges with metadata for many years. There are no clear standards for how music metadata is collected or displayed, and there is no need to check the accuracy of this information before publishing. To make matters worse, this data is not stored in a single, central location. Instead, it is distributed across countless databases around the world.
What's even more worrying is that Limp Bizkit isn't the only group complaining about this issue. SoundExchange, a US organization responsible for managing performance rights, has filed a similar lawsuit against AccuRadio. AccuRadio is an Internet radio platform that allows digital broadcasters to use their recordings as long as they pay the royalties.
SoundExchange, which has been appointed by the Library of Congress to collect and distribute these payments, alleges AccuRadio is in default of its financial obligations. This lawsuit is just one example of how deeply ingrained these royalty issues are in the music industry, and how they affect everyone from big stars to up-and-coming singers. .
Eliminating “errors” and excuses is possible, but many industry giants don’t want to do it
The sad reality is that the problems with today's loyalty systems go beyond late payments and missed checks. These systems rely on outdated technology that is prone to mistakes, both human and software errors. Additionally, there is always the possibility of intentional manipulation. As a result, artists often have no idea where their payments are coming from or whether they are actually receiving what they are entitled to.
One technology you are probably familiar with may be blockchain, which is a more reliable solution. It provides a transparent and decentralized network for storing data. This mechanism is not so complicated that it is difficult to understand. Every time a song is played, that action is recorded on the blockchain, creating a permanent record that cannot be changed.
Like any emerging technology, blockchain also has its drawbacks. These include slow transaction times, limited adoption, and high initial investment. However, I believe these are minor compared to the losses to artists due to continued “technical flaws” in the existing system. The giants of the music business would actually be interested in such a solution, since each lawsuit costs them a fortune in reputation.
It’s a mistake to delay innovation — the music industry must evolve towards its own future
Furthermore, we believe that upgrading royalty payments via blockchain will be beneficial for artists and music investors. An open and secure tracking system ensures accurate royalty calculations, increasing confidence in the marketplace. When stakeholders have confidence in the data supporting their investments, the music industry becomes more attractive and promising to them.
That's exactly what Ripe Capital aims to accomplish by leveraging blockchain to tokenize music royalties and allow fractional ownership of these assets. This approach opens opportunities for small investors and provides artists with more transparent information about their income.
Similarly, Audius is changing the rules of the music business by eliminating the need for intermediaries between singers and audiences. This project will allow musicians to share their songs directly with their fans. Finally, initiatives like Myco provide artists with a platform to monetize their music independently, transparently, and fairly.
It's so exciting to see so many projects with a common mission. History has shown us that we can find the best solutions faster by collaborating. Therefore, instead of competing, we should focus on providing diverse solutions to the problem of royalty miscalculation. Together, we can create real change.
final thoughts
The royalty payments situation highlights a flawed aspect of the music industry. The Limp Bizkit and SoundExchange lawsuit revealed millions of dollars in losses and highlighted the need for urgent reform that most music giants prefer to ignore.
Blockchain offers a more transparent alternative within this web of outdated systems and hidden royalties. Establishing a transparent, decentralized framework can eradicate many of the errors that have plagued royalty payment systems for years. Although there are hurdles such as start-up costs and widespread adoption, the potential for fair rewards is worth the effort.
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