When was the last time you bought a CD or a record? Chances are, you’re listening to more music than ever, but buying less of it. In 2012, for the first time, digital sales of songs – such as iTunes – surpassed physical sales. More likely still is that you were on YouTube or Spotify, which host hundreds of thousands of songs, played billions of times. It’s a golden age for music.
Except plenty of musicians don’t agree. Over the last year or so, there’s been a growing public chorus of complaints from artists themselves, who have reached a tipping point of dissatisfaction about their industry. One of them, Imogen Heap, who’s “fed up of hearing herself complain”, is trying to change it instead.
Heap is renowned for being inventive. She’s an award-winning songwriter and performer, having released four solo albums that have enjoyed commercial success in the UK and the US. She self-released her 2005 album Speak for Yourself long before it became popular to do so. She’s also the only female artist to have won a Grammy for engineering, and over the last six years has been designing and producing some musical gloves, along with the rest of her MiMu team, that allow the wearer to sculpt and manipulate sound on and off stage with gestures.
But these endeavours are likely to pale in comparison to her current project: to bring to life an entirely new landscape for distributing and monetising music and all its related data and content. Spurred on by the technology originally designed by libertarians to create the crypto-currency bitcoin, she’s releasing her next song, Tiny Human, as an event and an experiment. What she hopes to emerge is the core of a revolutionary system she refers to as Mycelia. It could completely transform the music industry.
Music is in many ways a bellwether for the digital revolution. The products of many creative industries – art, music, books, papers, films – which were once solely physical objects, shipped, bought and carried home, are now digital files available on demand at next to no cost. Because digital files can be reproduced and shared infinitely and easily, the result in almost every industry has been more consumption and lower average returns, fuelling fears about how the people who make this stuff – the writers, artists and musicians – will get paid for it.
The modern music industry was created at a time when it made economic sense to produce a million copies of one vinyl record, and copyright could be successfully enforced. But as the industry went digital, the whole way music was made and sold changed. In the early 00s, many feared the music industry would soon wither away as free streaming services and pirated content made music, de facto, free.
Spotify, iTunes and YouTube, to their credit, came up with ways of monetising music again, turning pirates into paying customers. Spotify charges premium users a monthly fee to listen to everything on its catalogue (non-paying users have to listen to adverts) and then shares out 70% of its income to whoever holds the copyright. YouTube, which has many more users but no paid-for premium service, came up with something called Content ID. Videos uploaded to YouTube are scanned against a database of files that have been submitted to the company – and the copyright owner gets to decide what happens to his or her content: whether to remove the material, “monetise” it by allowing advertising to be shown alongside it and accepting some percentage cut, or leave it and collect data about usage. This has breathed new life and money into the industry. Spotify has paid $300m (£196m) in royalties in the first three months of 2015. YouTube has paid out more than $1bn (£654m) since Content ID started seven years ago.
But the streaming and revenue-sharing deals that are now so important for the industry have also brought into sharp relief just how opaque and complicated the whole system is. The structure of modern music production is Kafkaesque. An artist might sign a deal with a record label. In between them and the music fan there could be the label’s parent company, distributors and hundreds of music services, each taking a cut. There are sync rights, mechanical royalties, performance royalties. Consumers and music services pay different amounts for streaming, downloads and physical sales, and different amounts again to songwriters via collecting societies and publishers. Different deals can be struck in different territories. Add to that a mild obsession with non-disclosure agreements and it can be close to impossible for musicians to work out what they are owed.
There’s no single bad guy here – it’s just not in anyone’s interests to make it easier. What should be a simple transaction looks more like a derivatives and futures market. According to Heap, “more and more third parties jump on board to help the artists, or labels, navigate and collect feedback or money, but it just adds to the noise and confusion, further widening the gap between fan and artist and the journey of their music. I feel digitally torn apart; and in the data-driven era, the movement of music, money and feedback should be frictionless. A total rethink is in order.”
The more layers of bureaucracy, the more finely sliced the cake, especially as a growing proportion of money is coming from streaming services. David Byrne, of Talking Heads, estimates that only 15-20% of Spotify’s payments make it through to the artists.
There is money to be made if you can accumulate enough viewers, of course. When Gangnam Style reached more than 1bn views on YouTube, its makers, PSY, were believed to have made an estimated $800,000 to $2m in revenue. But that’s the exception. The brave new world of streaming and advertising might work for some, but there is a very long unprofitable tail. According to the website Information Is Beautiful, for a signed US solo artist to earn minimum wage from streaming, their songs would need to be heard more than 1m times.
But what constitutes a “fair” amount under the revenue share model? No one really knows. Although YouTube doesn’t release figures detailing how much ad revenue it receives for specific artists, it maintains that the rights holders always earn more than the company does. What’s more, people have been predicting the death of the creative industries for at least 15 years, and yet US Occupational Employment Statistics suggest there are still plenty of artists out there. It’s just that they are finding new ways of making money. According to Jeremy Pritchard from Everything Everything, eight years and three albums into their career, they still haven’t made any money from their record sales. They get by thanks to live shows. “We did 130 in 2013,” he tells me. And spend five minutes on Bandcampcorrect or YouTube and you’ll notice a remarkable amount of interesting, innovative and exciting new sounds and songs.
Either way, most seem to be able to agree that, even if musicians are not on the breadline yet, the way music is currently distributed and paid for is complex and inefficient. And it’s about to get worse, according to Alan Graham, co-founder of OCL, a company that provides technology that allows users to legally create new works while compensating artists via micro-payments. He’s been working in technology for more than 20 years, and has noticed that increasing parts of the net are “walled gardens”, private networks protected by encryption and privacy tools: “And if you can’t see infringement, you can’t enforce it.” (Earlier this month, Facebook promised to do more to crack down on video piracy on its site after it was found that the majority of the videos are shared without the copyright owner’s permission.)
Moreover, says Graham, what happens if ad blockers get more popular, or are introduced as default into new browsers? Or – and there are signs of this – if people just stop clicking on adverts? The entire advertising revenue model is out of the window. Perhaps this is one reason that YouTube plans to roll out a trial paid-for ad-free subscription service later this year.
Every centralised effort to resolve this sclerotic mess always seems to flounder. Last year, the Global Repertoire Database, an ambitious attempt to build a single online copyright and information portal for all musical works, collapsed after six years and £8m in investment. Last month, the rights group PRS sued the streaming service SoundCloud for not paying its members royalties. (SoundCloud claims it doesn’t need to, since it merely hosts, not owns, the content on its platform.). “It’s all egos,” one industry insider told me.
These twin concerns – opaqueness and a general sense of unfairness over pay – are what seems to be sparking the artists’ rebellion. When Apple Music announced it would allow users a free three-month trial of its new streaming service – and that artists wouldn’t be paid for those three months – Taylor Swift threatened to pull her music from the store. Apple quickly backtracked. Other well-known stars, such as Prince, have pulled their music from streaming services, claiming it to be unfair. A number of new technology firms have sprung up, spotting the opportunity for new revenue models for the industry, such as Kobalt, which allows artists to access a database that records every time their work is streamed, broadcast, sold, reused and publicly broadcast.
But Heap is taking another line: using her latest song as a test case to try something completely new. “I’ve reached a point in my career where I can take risks,” she tells me in her home-cum-recording studio. “And as life does in nature, music will find a way. We are in a tricky transitional phase, especially for new talent, and I want to help move things along so we don’t miss a generation of great music.”
Following the release of last year’s album, Sparks, Heap began mulling over some ideas on releasing future music. She wanted to be able to simply upload a single authenticated version of a song or album that everyone could draw from in one place, instead of supplying her song to multiple services and locations. She also felt there was more than just the music to share: cover art, credit information, brands of instruments used, licensing information. She got chatting with a musician friend, Zoë Keating, who was similarly frustrated, and Keating mentioned blockchain technology. “I started researching the tech,” says Heap, “as I realised that the building blocks for a sustainable, useful ecosystem for music was coming into view. So I decided to release my new song in the way I think things should go, and help build the place I want my music to be a part of.”
Hardly anyone outside a smallish group of programmers and tech geeks has heard of blockchain, but those who have are unusually excited about it. To learn more, I met with Vinay Gupta, who’s part of a group called Ethereum, which is developing blockchain technology. Last year, Ethereum founder Vitalik Buterin won the world technology award for IT software. In practical terms, Ethereum does two things. First, it’s building a new web out of the spare power and hard drive space of millions of connected computers that its owners put on the network. Because it runs with strong encryption and the network is “distributed” across all those individual computers, it’s more or less impossible for anyone to censor or control what’s on it.
Second, it allows people to create immutable, public transaction records. The problem with digital records is that they can be copied and so are not really owned by anyone. Borrowing the idea from the digital currency bitcoin, Ethereum records information on a public database in a chronological way that prevents copying, tampering, fraud or deletion. It’s a new anonymous, decentralised, uncensored internet, and a new way of controlling and storing digital information. It’s not designed for music – it’s designed for whatever people want to use it for. One key aim is to create purer, more efficient markets. But it just so happens to be perfect for what Heap is planning.
When Heap heard about Ethereum, she arranged to meet Gupta and others to discuss how it might work for music. I asked if I could join them, as I have been following the development of blockchain technology closely since my last book The Dark Net. I suspected that Heap and Gupta might actually come up with a plan, and I wanted to document it. In a series of late-night emails after rehearsals, she sketched out a vision of how a new blockchain model, which she called Mycelia, might work for music. Gupta, a tech scene veteran who’s hard to impress, told me her ideas were “as impressive a piece of engineering imagination as I’ve seen from anybody in years”.
Because Heap now produces her own music independently she’s not contracted to release her song via the usual route. Instead, she will be placing the studio-recorded song, video, live performance and all Tiny Human-related data as files on her website, open to those developing new tech for the blockchain. All the taggable associated data that could interest fans or potential clients (film and TV, brands, other artists), such as the lyrics, photographs, the instruments she used, the musicians who played, etc (“I think I’ll add this article too,” she told me) will prove inspirational, she hopes.
Crucially, she’ll also include simple contracts, revealing under what terms the music would (ideally, as this is an experiment) be downloaded or used by third parties, such as advertisers, and how any money earned will be divided up among the creatives involved. All payment received – using crypto-currencies – will be routed to the recipients, as set out in the contract, within seconds. (It typically takes between weeks and months for royalty payments to work their way through the chain at the moment.)
Taken together, this means transparency and clarity can be introduced into the music industry; a decentralised registry will make it easier to locate the owners of the song to obtain a legal licence to use it; money can be quickly sent where it needs to go with far fewer intermediaries; and there will be a far richer ecosystem of data and information around each song.
Heap is a technology whiz, but she knows this isn’t something she could tackle on her own – its success depends on diversity and collaboration. Indeed she’s inviting techies and hackers to spend the day with her to collectively build Mycelia, or something similar, using Tiny Human as the test case.
“I want hackers to take my song, and then try whatever they want, to use it how they want, and to work out what we can do. We’ll see what they come up with, and take it from there – working together to build an open platform for everyone.”
Where “there” is exactly is not quite clear, although Heap is ambitious. “One day, I hope a Mycelia-like place will exist: huge, beautiful, rich, colourful, loved, tended for; holding all music-related information ever recorded anywhere; connecting artists and fans and enabling the artist to be the best at their job, with incredible feedback loops, connecting dots that exist in ways we can’t even imagine today.” (The name Mycelia refers to the enormous thread-like vegetative part of fungus that can stretch for miles underground.)
When she tentatively mooted Mycelia online, it struck a nerve. She has already been contacted by dozens of tech companies small and large who are currently developing services on the blockchain and are prepared to try and build something with her.
Phil Barry is one of them. He founded a platform called Ujo earlier this year, which uses the Ethereum blockchain to allow stakeholders to record their rights, to publish policies on how they want their music to be used (what price, what terms and so on). Ujo’s specific trick is creating smart contracts that automatically send payments to rights holders. He was introduced to Heap by Gupta when it become clear that Barry was working on something similar to what she had dreamed up. Barry suggested to Heap that she should let different platforms, including his own, try to build Mycelia, with the hope of creating a single, open, free platform – which led her to releasing Tiny Human this way. (He has a team of people already working on it.)