ISSUE 407 | 26 JULY 2017

Contents thereport 16–17 Beyond Music – TV 18–19 Need to know 20 Data dive: SoundCloud 21–22 Country profile: Norway

Block ‘n’ roll The new kids on the blockchain 1

ISSUE 407 26.07.17 COVER FEATURE Block ‘n’ roll The new kids on the blockchain very music industry conference Definitions aren’t hard to find. We has its blockchain panel. Every liked lawyer Sophie Goossens’ take Estartups contest or accelerator has at Midem: blockchain as a database its blockchain company. Every discussion maintained collaboratively by a number about the future of our industry alights on of participants, with a “consensus the blockchain sooner or later. mechanism” used for agreement on how There’s a risk of people getting to update that database, and complex blockchained out, which is simultaneously cryptography to ensure that agreed understandable yet bizarre, given how modifications are made unchangeable. early we are in the process of figuring out (We’ve seen this boiled down even more what blockchain technology means for to “a public, distributed ledger” or more music, let alone actually doing it. questionably, “like Excel spreadsheets, but It’s just two years since Berklee more secure” – suffice to say, 10 minutes College of Music’s Rethink Music initiative Googling will bring you up to speed, along published its Transparency & Money with related concepts like smart contracts, Flows In The Music Industry report, which Ethereum and initial coin offerings – ICOs.) included, among its recommendations, A more important point: blockchain “the investigation of blockchain It’s become easier to sort the is an underlying technology, like the technology and cryptocurrencies to internet. Understanding its core workings manage and track online payments hype from the genuine potential is, arguably, about as necessary as being through the value chain directly from fans of this technology” schooled on the internet’s Transmission to music creators”. Control Protocol/Internet Protocols That was the first time many people in And yet… 2017 feels like quite a embracing people and ideas with real (TCP/IP). the industry heard about blockchain healthy time to be talking about substance. Experimental pilots are up and It’s what people are doing with it technology; but in the months blockchain. As more people running; partnerships are being forged; that counts. There is no such thing as after that report, if you were within the industry have and the various uses that blockchain can a standard “blockchain music startup” still trying to get to grips gone to panels, read up be put to are being mapped against the any more than there is an “internet with what that technology on the workings, talked actual problems that the music industry music startup”. was and how it worked, to startups and thought faces – some of its key failings included. Some of these companies are working even as in some quarters about the implications, We can’t allow ourselves to become on Bandcamp-style D2C platforms for it was being loudly it’s become easier to blockchained out: we need to keep talking artists, while others are Spotify-style evangelised as the latest sort the hype from the about all this stuff. Part of that involves streaming services. Some are trying to industry saviour, it was genuine potential of this getting beyond the ‘I don’t know what crack the age-old industry problem of a

report hard not to succumb to a technology. blockchain is or how it works’ issue. And global database of rights, while others blend of defensiveness and The industry is more able not just because that’ll free up a good 10 hope to encode those rights into the cynicism. to call out blowhards while minutes on those conference panels. music itself, akin (although this can be a the 2

ISSUE 407 industry should be doing about it are full 26.07.17 COVER FEATURE of sparks. That’s a good thing, and we can learn controversial point) to a DRM wrapper. as an industry from every element of And these are just the ones we have blockchain’s philosophical spectrum. obvious existing non-blockchain examples Many of those ideas being touted by the to compare them to. purists, which might seem unworkable, One of the hopes for blockchain nevertheless shine a light on some of the technology is that it will provide the base failings of music’s current value chain. for a whole bunch of new startups that The blockchain also reminds us we can’t conceive of yet. Trying to predict that many of those problems aren’t them in 2017 is like standing up in 1991 at technology-related puzzles, but are more the dawn of the world wide web and trying about the disorganised and sometimes- to predict Facebook. squabbling humans putting the data into The key thing is to engage with this the system in the first place, whether world, which is what music:)ally has been those systems are legacy software or doing for this issue of our report. We’ve shiny new blockchain-based databases. talked to eight people or companies from If music:)ally had to boil down the the blockchain space, not just to find out advice we’d offer to the music industry on what they’re doing, but also how they see blockchain, it’s this: take every meeting the world. with startups in that world; read every That’s hardly definitive: there are article about it; go to the conference many other companies and people we panels, even if their description feels a bit could have also talked to – and will in same-old; and talk about this technology the months ahead. But it’s a snapshot of and these ideas to anyone who’s ideas: what’s happening now and what Blockchain purists foresee – and indeed interested. this technology could lead to in the are already building – a world powered by But also: when you interact with people future. smart contracts; where music (or access from the blockchain world, ask the hard Some conclusions we’ve drawn to it) is paid for in cryptocurrency; where Blockchain pragmatists aren’t questions, and ask what may feel like already: it’s important to understand that artists are in full control of their rights; trying to replace the middlemen: stupid questions, but which often turn out blockchain provides not just a spectrum and where everyone gets paid instantly they want to partner” to be the hardest and best questions to be of technologies, but also a spectrum of for usage of that music, according to their asking. philosophies. rightful share. What problem are you actually solving? It runs from what we’ll describe as Blockchain pragmatists aren’t trying behind them – they are just as excited Is there really a business in this? Who is ‘purists’ at one end to ‘pragmatists’ at to replace the middlemen: they want about that future, but they think it may this creating value for other than yourself? the other. Purists are the most exciting to partner with those entities – again, take longer to realise, and that there is Does this need to be on the blockchain at evangelists for blockchain, but also the collecting societies in particular, but good work to be done in the meantime. all? most intimidating for many in the music also publishers – to solve their problems, Across this spectrum there are The startups that have legs – the ones industry. particularly around bad metadata and its forthright characters with strong opinions. that will have a meaningful impact on These are the people and companies knock-on effects on royalty collections. While shade-throwing about which the future for musicians and the music who believe that blockchain could You don’t have to be in one camp or startups are and aren’t ‘proper’ blockchain industry – will be able to answer these

report automate many of the music-industry another: in fact, a lot of the blockchain can feel a bit ‘death to false metal’ from questions. Blockchain music startups middlemen out of the value chain – pragmatists admire the projects being the outside, the debates about what aren’t so different from non-blockchain collecting societies in particular. built by the purists and the concepts blockchain is good for and what the music music startups in that regard really. the 3

ISSUE 407 26.07.17 COVER FEATURE

BLOKUR: “THE TECHNOLOGY ON ITS OWN IS NOT THE WHOLE PICTURE…”

A reminder that the Venn diagram of ‘music people’ and ‘blockchain startup people’ is not a pair of separate circles. Phil Barry, founder of British startup Blokur, was a professional artist making electronic music as Mr Fogg before setting up his own independent label. Barry went on to lead the team of consultants working on Thom Yorke’s 2014 project to release his Tomorrow’s Modern Boxes as a BitTorrent bundle, before 2014 after £8m (at least) of investment – founding blockchain startup Ujo Music, have highlighted the difficulties involved. overseeing its work on Imogen Heap’s ‘Tiny Although it’s also fair to say that those Human’ project. challenges were not just about technology, A parting of the ways with Ujo followed, manager at Universal Music Group, and but about the interplay between the with Barry founding Blokur to continue that head of business development Emma collecting societies involved. work. He stresses the company’s desire to McIntyre, former head of music publishing “It’s based around bridging the “The technology on its own is not be as down-to-earth as possible. partnerships at 7digital. siloes between different sources the whole picture. That said, blockchain “Blockchain technology comes from a “We think we have the best technology creates new opportunities of rights data and reconciling the weird mix of computer science, quite out- understanding of the music industry, which we haven’t had before, for new ways of there political ideas, and quite out-there is why we’re so focused on solving its real claims that exist” collaborating, and new ways of piecing economic ideas,” he says. “There’s been problems,” says Barry. together data from different siloes. That is something of a gap, historically, between While Blokur isn’t quite ready to talk to reconcile the differences of opinion a new thing,” says Barry. the people working on the technology and in depth about its plans, they focus on on different claims on rights. Plugging in “If you think about the GRD, a any user that there might be for a product partnerships with some of the largest these different sources of rights data and centralised solution would require you to based on that technology.” collecting societies, publishers and artists. comparing them with some state that is on have a whole question about who owns the He adds, “What we’re interested in at And the problem to be solved is well- the blockchain.” database and what are the rules. If you do Blokur is whether we can make a product known. Barry, like a number of his peers, thinks things in a more distributed, decentralised that solves a real problem. We have lots “It’s based around bridging the siloes that many of the music industry’s surface way, you can bypass a lot of those of excitement for the potential of this between different sources of rights data problems – from piracy to artist complaints problems.” technology over the next five or 10 years, and reconciling the claims that exist, so we about streaming royalties – boil down to Barry also says that one of the frequent but we have to build something that people can have a complete and accurate picture “boring, prosaic, complicated database worries about a blockchain-based can use now. It’s true that there’s a tension of rights data,” says Barry. problems which are actually quite difficult successor to the GRD – the question of there.” “It’s solving the problems of, ‘If your to see from the surface”. whether proprietary, sensitive data (for

report Blokur currently has a 10-strong team, rights aren’t represented somewhere, Past efforts to tackle those problems example songwriter splits or label deals) will including CTO Andres Martin-Lopez, you don’t get paid’ as well as cutting the – most notably the collapse of the Global be made public – is misleading. formerly senior product innovation costs of resolving disputes – an algorithm Repertoire Database (GRD) project in “Yes, behaviours will need to change the 4

ISSUE 407 appreciate the variety of new 26.07.17 COVER FEATURE applications and businesses that could be involved. slightly for this to happen, but it’s a “Ultimately, we’re talking misconception to think that, for this about an underlying, solution to work, we need lots of data that fundamental technology that is currently secret to be made public. That can be used for all kinds of is a red herring,” he says. different things in all kinds Barry’s former company Ujo Music is of different industries. Like open (elsewhere in this issue) about its you can use the internet, or low opinion of collecting societies and Amazon Web Services, to do traditional music rightsholders. Yet his new all kinds of different things,” he startup clearly sees those entities as its says. key partners. “Blockchain does not lead to “We’re still in the early stages of any one specific ‘solution’ for development of this ecosystem. But we the music industry. It leads to believe we are going to come up with a new set of possibilities, and a model that makes more value for the new business models, and new industry,” he says, stressing the importance opportunities for the music for blockchain startups of proving their industry.” worth, rather than just threatening a storm Drawing on his own of disruption. background as a musician and “All the startups have to prove we’re label owner, Barry also says doing things of value: we shouldn’t expect that blockchain technology some God-given right to have a place in the can be seen through a positive ecosystem unless we’re creating value for lens of growing income somebody and serving creators,” he says. own music, or for clients, or startup ideas, (and creating new income streams) for That said, Barry thinks that the PROs you come across these barriers relating to musicians and songwriters. and publishers can also play a positive role licensing, which also can stop you getting “We have seen huge changes in the by embracing the potential of blockchain I would love music publishers, funding,” he says. way content and information is distributed technology and engaging with the startups rightsholders and musicians to “We need to unleash the full potential of around the world, but we haven’t had the who have ideas for how it can be used. get to grips with the technology” music by radically simplifying all of these same transformation in the flow of value “I would love music publishers, processes […] For the price of music to go back in the other direction, to the creators,” rightsholders and musicians to get to up, we need more streaming services, not he says. grips with the technology and small digital marketing today.” fewer.” “I can upload my music to YouTube in experiments,” he says, before widening out Barry paraphrases a partner who This is a recurring point among the seconds and have it viewed all over the to the bigger picture. previously held a senior role at one of the blockchain community, and one you’ll world, but it might take me years to collect “In my opinion, understanding this largest music companies as believing that see reiterated elsewhere in this issue: all the money I was due.” technology is going to be important to all in the future, music licensing in general will that blockchain – in the words of industry “The motivation and mission of Blokur is kinds of businesses in the next five-to-10 be handled through the blockchain, and veteran Jeremy Silver speaking at a music:) to complete the potential of the internet for years,” he says. that this is a “totally uncontroversial” idea ally blockchain event in May 2016 – could creators, if that doesn’t sound too grand. It’s

report “It will be strategically important even for the biggest rightsholders. fuel “a thousand flowers blooming” in the half done: we’ve got the ‘content out to the to understand it in the way that it’s “I really hope that’s true. Every time I startups world. world’ part. Now we need to do the ‘value strategically important to understand, say, used to come up with new ideas for my Barry hopes that the music industry will flowing in the other direction’ part.” the 5

ISSUE 407 “You’re separating the licences – the 26.07.17 COVER FEATURE content – from the platform that is displaying it. That is an incredibly powerful TOKENLY: “NEW MUSIC thing,” he says. IS BEAUTIFUL. IT’S SO “Now projects that don’t necessarily EASY TO WORK WITH” have any music licences can let somebody else use their own licences within the Tokenly first came to music:)ally’s attention same application. That’s what tokens do: in April when it announced plans for a they separate the ownership layer from direct-to-fan blockchain-based music whatever the platform is.” service called Token.fm. Levine is mulling a possible future It would see artists “tokenise” releases where one blockchain startup – he cites into digital packages, setting the terms for Alexandria and Dot Blockchain as two their release while offering fans “perks” like possibles – figures out how to get the wider private chats and discounts on merchandise, back catalogue of digital music onto the while keeping 80% of the revenues. blockchain, legally. “Tokens have very broad applicability “If one company can do that, it will to all kinds of verticals,” says CEO. Adam B solve the problem for the entire space. Levine. “Ultimately, that’s what tokens are Everybody will then just hook up to that good for: they’re transferable between two back end, although they’ll still be able to users without any intermediary, and they use other back ends too,” he says. make a good ownership layer.” If you try to use the blockchain “We just need to have one team Tokenly did not spring up overnight: to solve all of the problems, succeed, and that team will effectively the company has spent the last two years you’ll have a pre"y bad become the new basis platform on which building the infrastructure for its platform: everybody can build.” “Which should give you an idea of how user experience” Levine also feels positive about the burst much was missing!” says Levine. of activity going on around blockchain He adds that the key problem Tokenly importance of the fact that it was a brand music projects in 2017. is trying to solve is how people with new song. “A lot of projects are trying things with no experience of cryptocurrencies or “New music is beautiful. Wonderful! It’s different twists, and that’s a very good blockchain systems can interact with a so easy to work with. It was a new song, thing, because most of them are probably musical project that uses this technology. and a single song, because otherwise they going to fail. And those failures will be very “If you try to use the blockchain to solve would have had to deal with all the license informative going forward,” he says. all of the problems, you’ll have a pretty bad holders in her library,” he says. “The lessons to learn from those things user experience – because users will have “It’s easy to do projects with new stuff, will be where do they succeed? Where are to learn all of the stuff that they don’t care but once you start trying to capture the they able to catch traction? Where are they about,” he says. old catalogue, it gets very difficult. The and the direct interactions that are possible. even interesting?” “You may have an elegant system where licences are expensive and very tightly Levine also talks about Tokenly’s “We’re in this floating period where, if everything’s on the blockchain, but if controlled; and, even if you succeed, the approach of “tokenising the music licence” you have a strong opinion, you place your nobody uses it, you can’t get the network margins for music are very low.” – which means that when a fan has bought bet, you make your leap and you try to effect: and without that, these things aren’t Token.fm is geared towards new music, a song – and thus owns a licence to play it change the world. But ultimately that’s

report very valuable at all.” although Levine says the appeal for fans – even if they didn’t buy it directly from the still a leap: you don’t know whether it’ll Levine praises Imogen Heap’s and artists alike will be as much about the artist, that licence will enable them to play succeed until you’re on the other side. It’s a ‘Tiny Humans’ project, but notes the community that builds up around that music it in various blockchain-based applications. hardcore Darwinian environment we’re in.” the 6

ISSUE 407 26.07.17 COVER FEATURE

JAAK: “REMEMBER, THIS IS ALL ONE BIG EXPERIMENT…”

British startup Jaak has been winning This is so early in the curve, we plenty of friends and admirers within the still don’t have really good ways music industry since coming out of stealth of explaining what blockchain is” mode early this year. In February, the company outlined its ambition to create MΞTA – a decentralised, rightsholders to tackle real problems as open network for media and entertainment partners. organisations to “capture, store, verify and “There are some industries you can communicate commercial metadata”, to completely disrupt: you can isolate one be tested in a series of pilots with partners part of an industry and sail into it with a from those industries. less-refined product at a lower cost, or The same month, Jaak was announced maybe a higher cost but a much more as one of the first cohort of Techstars refined product, and capture that market. Music startups and recently completed the And the lock-in that incumbents have music/tech accelerator’s program. is what prevents them from competing “Since Techstars we’ve been in the pilot and definitions.” effectively,” says McKenzie. phase. Our first is with Viacom and MTV, so McKenzie has done “I’m yet to see that with blockchain that sits at the cross-section of music and his part to answer that specifically in music, although in some media,” says CEO Vaughn McKenzie. question on conference markets it has a different flavour. But if it “We are gearing up to do a bigger series panels, suggesting that is a supply chain-enabling technology, it of pilots as part of the MΞTA initiative later people simply think of requires either engaging with the existing in the year with the larger music rights blockchain as a network supply chain, or completely re-engineering organisations and DSPs, as well as with like the internet: “a it. And if it’s that, you have to look at startups and individual creators.” network with a bunch of the customers for that supply chain and McKenzie says that attitudes towards configurable, self-enforcing whether they would switch.” blockchain technology are maturing within properties, which is why, Jaak’s emphasis on pilots is part of the the music industry, although he accepts the space is so diverse in its company’s belief that the music industry that there is still some “misinformation” opinions and approaches,” can only benefit from getting involved around what it’s capable of. as he puts it now. in blockchain experiments, rather than “Most people anchor on a few things. If there’s a spectrum of cautiously standing. For some it’s cryptocurrency. For some blockchain philosophies “Remember, this is all one big it’s immutability. And for some it’s from purists to pragmatists, experiment, and we’re going to have a load the potential to build a decentralised Jaak sits towards the latter of failures. But the upside is great: if we database,” he says. end: enthusiastic about the can bend loads of supply chains to be more “People are selling different flavours theoretical future potential efficient and find new applications for the

report of what these things mean. The reality is of blockchain, but also keen technology, that’s better for everybody,” that this is so early in the curve, we still to get down to work with says McKenzie. don’t have agreement around use cases collecting societies and “When people are trying to do new the 7

ISSUE 407 companies. He suggests 26.07.17 COVER FEATURE that the term will soon be “deprecated” because it can be misleading. things, they may go down avenues that “It does raise questions may not be fruitful. It can be like jumping around what someone’s off a cliff and figuring out how to put actually doing, and around a parachute out on your way down. Or tokens and the need for building a bridge and not knowing if there’s tokens within a system. Some enough planks to reach the other side! of these systems do need That’s blockchain at the moment. There are a token, because they’re loads of ideas, but let’s see which pan out.” creating some decentralised One misreading of the blockchain world platform or network that that the music industry can fall into – needs to be powered by the music:)ally included – is suggesting that people running it,” he says. blockchain may fuel ‘the next Spotify’. “Other businesses don’t Which is to say trying to comprehend necessarily need a token, but its potential in terms of businesses that it provides a simple way to already exist. raise funds for development McKenzie points out that the next – and as the market picks Spotify shouldn’t be the limit of our up, you have access to even ambitions. “From the consumer’s point of more capital, which is good view, you already have Spotify. You don’t if it’s hard to quantify at the need another streaming service,” he says. start how much you’ll need to “I don’t think blockchain will generate raise.” loads of Spotifys, but I do think it model that’s completely untested. They McKenzie says that the concern around will enable lots of different content probably don’t have the resource to token launches revolves around the experiences: ones we can’t do now.” squander. But you never know, they might question of whether blockchain startups Don’t just take these models you “We can already build non-interactive be really bullish and land on something shouldn’t be assessed by the same and interactive streaming services like already have and try to build that works,” he says. principles as traditionally funded startups. Is Pandora and Spotify. But there are loads of them in this decentralised world” “It would take a lot of internal expertise there a business there? Does it have a solid things we can’t do, or which are difficult to – and that expertise is super-expensive roadmap? Will it use the money wisely? do, or which don’t scale well. That’s where in the market right now. There are so “The risk is that you form an opinion of a innovation will happen.” McKenzie is similarly honest about the few blockchain experts and blockchain startup based on how much they’re raising. McKenzie compares it to the early days potential for the big, existing streaming developers, that people are able to charge But that’s probably not the best indicator of the internet, when “no one would have services to do something innovative with huge amounts. Those skills are so scarce.” of what these projects are and what they’ll predicted Facebook”. This, in turn, is an blockchain technology. “Also, I don’t know if blockchain will be do,” he says. incentive for music rightsholders to get He doesn’t rule it out, but notes that this layer where ‘you just add blockchain “But because we don’t have a regulatory involved in experiments that may take a Spotify (or, as a number of people to it and it works’. It has to be properly framework, people don’t have to be them out of their comfort zone. suggested in the research for this issue, a embedded.” transparent about what they do or how “Don’t just take these models you SoundCloud) wanting to do something with Like other blockchain founders, they’re doing it. We’re early in the cycle of

report already have and try to build them in this blockchain faces several challenges. McKenzie has been following the token launches, though: we’ll see them get decentralised world. Not everything will “SoundCloud is probably not in a emergence of the initial coin offering more sophisticated over time, and there’ll cross over,” he says. position right now to try a brand new (ICO) as a funding mechanism for these be a need for more rules and regulation.” the 8

ISSUE 407 rights-management system. We are going 26.07.17 COVER FEATURE to want organisations to help creatives verify and check that the legacy and MYCELIA: “WE’VE BEEN FO- existing works are indeed registered true CUSING ON HOW, BUT WE NEED and correct.” TO FOCUS ON WHY” “It’s been put on hold until now because there’s one major issue with smart contracts, which is that they are not legally binding, so if anything goes wrong, you cannot go to court. It’s not a proper contract: it’s a programmable transaction.” However, De Ninni is enthusiastic about an initiative called Mattereum, which has just published a white paper outlining its ambition to create “smart contracts with the legal force of natural language contracts”. It’s not just for music: it could be used for various kinds of intellectual property, physical property and perhaps even real estate transactions. while not directly blockchain-related, “They are offering a way thanks to The first time music:)ally heard about ties in to some of the key themes around something called a Ricardian contract, Mycelia was in July 2015, when musician this technology – metadata sharing and A lot of artists are really success- which links normal contracts with smart Imogen Heap talked to Forbes about her transparency. contracts, and an arbitration system. So hopes for “a fair, true, bright and shining Called The Life Of A Song, the project ful entrepreneurs. You can’t treat if anything happens, you can go to an home for music” supported by blockchain will dissect Heap’s song ‘Hide & Seek’: the them like they’re dumb!” arbitrator and eventually to court. It’s a real technology and cryptocurrencies. biography of how it has been released and game changer,” says De Ninni. That year, Heap put her ideas into interacted with over its 12-year life out of the revenue breakdown. This would allow This illustrates one of the valuable practice with the release of ‘Tiny Human’, her studio; the breakdown of its rights and [individuals] to highlight both what is actually things about Mycelia: by exploring working with startup Ujo Music to make the split percentages; and Heap’s income from working very well and also the grey areas in what artists could do with blockchain track and its stems available to buy with the track. the system,” says De Ninni. technology, it’s uncovering some of the the ether cryptocurrency, while using a The latter will include areas like sales, Another Mycelia project that has been current barriers and problems, as well as smart contract to automate the division of streams, syncs and radio spins through to put on hold for now is an attempt to rewrite seeking out potential answers. its revenues with her collaborators. how it has been used in other works, from some of Heap’s existing contracts to be De Ninni says that it’s an exciting time Two years on, Mycelia has evolved Jason Derulo’s ‘Watcha Say’ to YouTube blockchain-friendly smart contracts. for artists to be wrestling with these issues into a “think and do tank” which conducts meme Dear Sister and the theatrical “Essentially it would just keep the splits and exploring what blockchain technology research and also runs hack days and production Harry Potter & The Cursed Child. the way they are, but then reproduce the (and its startups) can offer them. campaigns to put artists at the centre of “The ultimate goal is to explore and contract and the splits on a smart contract, “A lot of artists are really successful new technological developments, rather visualise how the current global music for various use cases as a little experiment,” entrepreneurs. You can’t treat them like than on their fringes. industry works through the lens of a song, says De Ninni. they’re dumb! Artists have got frustrated

report Carlotta De Ninni, head of research, creating a web application that is going to “We hope it will show people the huge over the years when they go to talk with says that Mycelia is working hard on its essentially show these three major segments benefits of cost savings at the very least some labels and feel like they’re being kept research projects, including one that, – the biography, the song’s breakdown, and to sharing, essentially, an accounting and in the dark, or even like the crazy artist who the 9

ISSUE 407 favourite songs were written – or go into 26.07.17 COVER FEATURE discovery mode for music you haven’t heard yet, related to where you are and the places around,” she says. just cares about sex, drugs and rock ‘n’ “But to get that information on the roll. That’s really not the artists of today, localisation of the songs and the history however, as the ones I’ve met are savvy around them, as a service I would have and very interested in participating in the to pay, and so a split of that money future of their industry generally,” she says. from the music-accompanied guide De Ninni stresses that not all would go straight to the songwriters and rightsholders try to shut their artists out musicians for adding that data and also of business and technology discussions, for their songs: an income stream that we but notes that there are a growing number haven’t even thought about before. Why? of artists who are intrigued by blockchain Because we don’t have a database for the technology in particular. songwriter to put that information.” “They want to understand. I receive Such a system wouldn’t have to use emails every day saying, ‘I want to put my blockchain technology, De Ninni adds, but music on the blockchain, what shall I do?’ I it’s an example of how such a database have to explain that it’s not that easy yet,” could fuel new ideas for music applications. she says. She’s positive about the potential as well “You can’t just put your music on as pragmatic about the way blockchain blockchain; you need a service that does startups can work with the music industry, that for you. And there are some services rather than just disrupt it. that do it, but the problem is that the “Two years ago when everything started, technology is often not ready yet.” At the Midem conference in June, De there were a lot of people saying, ‘Fuck the “A lot of services have amazing white Ninni talked about blockchain technology’s system! We don’t need anyone any more: papers saying, ‘We want to do this and that’ potential to fuel “a lot of new applications that labels, publishers, collecting societies. We – but they haven’t done anything yet. They “You can’t just put your music on could bring new income streams” for artists. just need the blockchain, artists and fans, just pitch great ideas. It can be tricky to blockchain, you need a service “It’s good to think about what’s going to with no middlemen whatsoever,’” she says. understand who’s actually doing stuff and that does that for you” be next. Even if you just think about all the “A lot of startups said that, but the who has amazing ideas but has yet to start. data around songs and people, you’ll have problem was they were tech people, and Not that ideas are a bad thing, but you a lot of services that at the moment are not they had no idea how the music industry have to understand what stage different how: how you could do stuff. But we need possible,” says De Ninni. worked. But when they investigated, they startups are at.” to focus on the why. Why do we need One example she’d love to see involves often changed their opinion: they realised De Ninni often finds herself explaining to blockchain? Then it’s less important to get “localisation of the songs” using data that many artists still need a label, a artists that blockchain technology isn’t “the caught up in how it works. I have no idea on where those songs were written, as publisher and a collecting society still.” ultimate thing”, but is rather the potential how the internet works, but I just know you provided by the songwriters themselves. She concludes, “It’s more that those backbone for a range of services and can do stuff with that,” she says. “Take a city like London: there are companies need to provide value. If you applications that could help them. “People are breaking their brains to thousands of corners or coffee shops provide value, it’s good that you take your She hopes that, in 2017, the industry understand how blockchain works. And it where hits were written. If we had a cut: you are providing an efficient service discussion around blockchain is shifting does make sense: it’s fine if you want to database with this kind of information, for your clients. If you are there just

report away from the technology itself and more learn that. But now we’re starting to focus I could download an application for £1 because you used to be there, but you’re towards what can be done with it. on why we need it, and what we can do, that offers people going to a city some not providing value, then that is what the “We’ve been focusing on the rather than just the hows.” smart itineraries according to where their issue with middlemen is.” the 10

ISSUE 407 26.07.17 COVER FEATURE

UJO MUSIC: “IT’S SUCH AN UPHILL BATTLE WITH EXISTING COMPANIES”

Earlier this month, dance artist RAC – aka André Anjos – released his new album EGO through the usual channels. But he also launched his own webstore selling the album using the Ether cryptocurrency. This was billed as the first full-length album to be distributed using the Ethereum blockchain platform. RAC worked with startup Ujo Music, which previously helped Imogen Heap release her ‘Tiny Human’ track in a similar manner in 2015. “I don’t think this is going to replace to buy EGO, then they started reading what we can do,” says product lead Jack Spotify or iTunes, but being able to support about this and went down the crypto rabbit Spallone. “There’s a long-term vision here the artist directly is pretty important,” hole – and forgot all about the album! But of a more fair trade music ecosystem.” said Anjos ahead of the launch. It quickly that’s what André wanted to enable: he Ujo has previously described this as became apparent that he was right. wanted people to start thinking and talking “a global, open, decentralised, machine- “On the first day of the RAC release, about this more.” readable licensing system: owned by he made more money from tips than he EGO is a glimpse at Ujo Music’s bigger no-one in particular, but simultaneously did from sales. People were excited about plans to build a platform for many artists to owned by everyone” where artists set the On the first day of the RAC this, and about him supporting Ethereum,” launch their own blockchain-based stores distribution policies for their music, and release, he made more money Ujo Music co-founder Jesse Grushack tells – including taking credit card payments, a then apps or startups that match those from tips than he did from sales” music:)ally. Fans could choose to tip RAC feature which wasn’t quite ready for RAC – policies can use the songs. on top of the price – equivalent to $10 – of but also using ‘smart contracts’ to control “We hope to see things like a young duo the album. the licensing and distribution options for build an innovative radio service over a owns all his rights and has opted out of It’s fair to say this isn’t a barrier-free their music. weekend without having to go knock on the collecting societies experimenting with the transaction. It relies on fans having Chrome More than 1,400 artists have already doors of the record labels,” blogged Ujo’s blockchain. RAC is signed to independent plugin MetaMask installed, as well as registered their interest with the company. smart contract lead Simon De La Rouviere label Ninja Tune, with publishers and having some Ether currency to hand – the Those who wholly own their rights will be recently. collecting societies also involved for him getting of which involves a Google search able to release their music; fill in metadata “We hope to see stems automatically and his collaborators. at least. fields including songwriters, performers uploaded and available for remixing “André has a publisher, all the artists he “This is more for the Ethereum and producers; and set the splits so that from your favourite DAW [Digital Audio collaborated with have publishers […] We community right now. When you have royalties can be paid out automatically. Workstation]. We hope to see the first AI did it in a way where we have a licence with MetaMask it’s seamless: two clicks to buy “You’ll have an Ujo portal, where you artist license their samples, and then be the label: a deal to distribute this, and the the album. If you don’t have that, it’s a little can manage your catalogue, but you’ll used in the latest vlog of a YouTube star money will go to the traditional measures

report more arduous: you have to figure all this also be able to push that over to your own that is yet to arrive.” for the payments,” says product lead Jack stuff out,” says Grushack. Ujo store and sell your stuff in Ether. It will EGO is interesting for another reason: Spallone. “A few people have said they were going demonstrate the entire supply chain of this isn’t an example of an artist who One key aspect is the fact that anyone the 11

ISSUE 407 26.07.17 COVER FEATURE

buying the album gets an EGO token – an official blockchain record of their purchase. “We have no idea what we’re going to do with this, and nor does RAC. But he’s excited: there are so many cool things he could do, like invite people to come and hang out 30 minutes before a show, to using it as a presale list for his next tour,” says Grushack. This isn’t unknown. Spotify, for example, is working with some artists to offer presales and merchandise discounts to their keenest streamers, while services like Bandcamp and Patreon work on the basis structures: collecting societies, publishers age. And the companies trusted to enact that a purchaser becomes a member of a and labels, and the company has firm views these legal processes will not let go of their core community for an artist. about the challenges involved for anyone control,” he says. We tried to work with a lot of dif- “It’s a reputational component to the taking a different path. “Let’s call the problem for what it is: we consumption of music. In a way, it sort-of “The adoption – and the desire for don’t have an interoperable database of ferent publishers and PROs and self-regulates piracy: if it takes off, you can adoption – from those established music rights. I could Google a song and it was like pulling teeth” have the bragging rights: ‘I purchased this companies is minimal. A lot of them make find out who composed it, but not how to album on Ethereum,’” says Spallone. money from being opaque. They don’t pay them […] But let’s assume that a lot of disruption to the music industry in the “And if you combine the social make money from being transparent,” says the businesses in the middle can be wholly late 1990s onwards. But with one crucial reputational system or mechanism with a Grushack. automated, especially the ones born out of difference. music streaming platform, and you solve a “We tried to work with a lot of different that 19th-century model of tracking what’s “It’s exciting that we’re now applying the lot of the technical problems underneath, publishers and PROs – and it was like consumed and paying out on that.” same sort of disintermediating technology you can start to implement all of the cool pulling teeth. We don’t need that right Grushack says that Ujo Music’s focus that disrupted this industry and basically things that people have talked about.” at this point. We don’t need to be pulling now is on “the middle-class of artists” who ripped all this value out of it, but that we’re When Ujo talks about fans’ ownership teeth and trying to force change! Let’s just want to make a living from their music: trying to apply legitimate business models of/licences for music in a blockchain world, work with people who are excited about $50k-$80k a year, maybe. on top of it, in a way that puts money back its views are similar to those of Tokenly doing new and interesting things instead.” “It’s really hard to do that: the stigma into creators’ hands,” he says. earlier this issue in terms of people buying He adds, “If companies want to work is that you’re either a starving artist or a “It’s a noble task, sure, but if this doesn’t music from one service and having the with us, we’re happy to help them navigate rock star. But how do you just become take off, man, the world really is fucked! licence to use it in another. these waters. But it’s such an uphill battle a musician, without having to go on tour How indicative would it be if, with all these “It would be really cool if your music and with these existing companies. They need 300 days a year, or living on ramen in an broken systems in our world economically all the data was persistent and attached to to be shown that by being more open and apartment with three other people?” he and politically, and here we are trying you, rather than locked to an application, more transparent, they can actually make says. to do something truly egalitarian to so it could move across different music more money. But unless they’re shown Spallone says that there are parallels reshape some business models, increase

report applications,” says Spallone. that, it’s a fight.” between the blockchain space today transparency and whatnot […] How Most of what Ujo Music is doing sits Spallone agrees. “These are old, archaic and the philosophy of the filesharing indicative would that be if this can’t work? outside the traditional music-industry systems that are not effective in the digital community that brought such But it should work!” the 12

ISSUE 407 Brook is positive about the willingness 26.07.17 COVER FEATURE of publishers and collecting societies to at least take meetings with blockchain BECKY BROOK: “IT CAN’T startups, listen to their ideas and consider SOLVE EVERYTHING. taking part in pilots. IT ISN’T MAGIC!” “The evangelists were being blindly positive. Now people are coming back Becky Brook is one of the bridges between round to it, and that’s partly because the blockchain-startups world and the the [blockchain] entities talking to the music industry: the former EMI Music and rightsholders are more and more realistic. Omnifone executive now works to connect They’re not saying this is a silver bullet.” startups – including Jaak, interviewed As a veteran licensor, Brook also has earlier this issue – with rightsholders and a clear eye on the question – raised collecting societies. elsewhere this issue – of blockchain as a Her first-ever job in the industry, spawning ground for a new generation of royalty processing for Warner Music Group music startups. (“Trawling through crap data coming back “The earliest opportunity would be from DSPs and trying to make sense of something approaching an industry-wide it so we could pay people!”) is one of the sandbox: probably not for commercial reasons she sees blockchain’s potential for launches, but to get small services up and these challenges now. running, and testing, and maybe even Not that she counts herself as an launching on a smaller scale. You could evangelist. “I was a sceptic actually, do that quite quickly using blockchain because most of the blockchain startups I technology,” she says. saw for a while were saying ‘We can solve Some labels – including EMI when everything!’” she says. Blind optimism isn’t what Brook worked there – have tried this kind “Anyone who says that undermines this industry needs. We of idea for a narrow selection of content/ everything they say going forward. It can’t need realism!” rights. She accepts that any industry-wide solve everything. It isn’t magic! But it is one blockchain sandbox would also involve of the best pieces of technology we have appeal being its ability to help the music some opt-outs. to solve the challenges that our industry industry “communicate more effectively Humans’ project, for example, while noting “But this idea of small, experimental faces. Even if it’s not perfect, it’s a lot and efficiently with itself”, particularly that it relied upon being a new track from services? There’s probably something we better than what we currently have.” between entities like publishers who an artist who controlled her rights. could do as an industry to let them try When Brook met Jaak, she says are simultaneously collaborators (or “Artists like Imogen who have that things out. I think rightsholders would the company’s ability to say “blockchain’s at least co-rightsholders in songs) and control can do some really exciting be relatively supportive of something like great at these things and not so great competitors. projects, and I’m very supportive of those,” this at the closed-beta innovation stage,” at these things, and here’s what it The projects that come out of this she says. she says. can offer the industry” countered her may, by their nature, be more down- “But I’m also realistic: if the world has “I think that could be something that natural scepticism. to-earth: making the music industry’s 55m or 60m tracks, and probably… 20m happens in the short term. How that then “So many people you talk to about payment flows more efficient rather compositions? A large number. And those expands from being a development-only blockchain are blindly optimistic – and blind than forging an entirely new distribution don’t magically unattach themselves from sandbox to commercialisation at a certain

report optimism isn’t what this industry needs. We channel for creators. their historical relationships. This ‘perfect scale is another question. But it’s an idea need realism!” she says. This isn’t an either/or scenario though. world’ scenario just isn’t where we are, and that can definitely go a lot further in the Brook sees a key part of blockchain’s Brook praises Imogen Heap’s ‘Tiny I don’t know how we migrate to that world.” medium-to-long term.” the 13

ISSUE 407 26.07.17 COVER FEATURE

DOT BLOCKCHAIN: “WE CAN’T RUSH THIS. IT’S WORTH GET- TING RIGHT”

“We need any young, scrappy girl or boy to be able to code the best music app ever – and they need to get it out there; and if it goes well, they need to be able to license it at 100 miles-per-hour. Because if it’s going well, it’s paying people. And that’s what we need, right?” Benji Rogers is explaining to music:) If your asset is subject to the whim of everybody else on the planet ally one of the long-term benefits he except you, that should keep you up at night!” believes blockchain technology will bring to musicians and the music industry. Not to rightsholders, as well as its licensing terms, is a completely unknown entity that you industry with a solution, they will impose mention those scrappy developers. into the song asset itself. hope is correct. Which one’s better? And if one upon us. We create one of the most “I was at the SXSW hackathon this year SOCAN, CD Baby, FUGA, MediaNet you’ve just paid out your seventy or eighty valuable, viral, exciting things on earth – and I was watching these young girls and and Downtown Publishing’s SongTrust millionth dollars’ worth of publishing fines, music! Yet we don’t know how to control boys who, if you give them the raw tools are among its first partners, while Rogers one of them is better!” he says. or contain it, and we subjugate it to the to play with, within 24 hours will build and his colleagues have been getting “Knowing is better than not knowing. technology companies.” applications that you could see out there,” a minimum viable product (MVP) up What we need to get to is a situation where Rogers wants music rightsholders to he says. and running, plus a roadmap for future we say [to DSPs], ‘This file contains all the feel the responsibility here: the sense that “But I was just looking at them going, additions. data you need and that one doesn’t. How if they don’t have a way to control the use ‘That one’s illegal; that one won’t work; that “The music industry doesn’t have a data does it disadvantage your business to take of their music, that’s their job to solve, one will cost you $10m in licensing on day problem. It doesn’t have a distribution that one over this one? And if the answer is rather than simply to lobby technology one’. And we shouldn’t think that way. ‘Let’s problem. It doesn’t have a consumer ‘Well, we don’t wanna know’… Well, that’s a companies to do the right thing (or to lobby back these people!’ is what we should be problem. It has an asset problem,” is how very interesting answer.” politicians to force them to do it). thinking.” he describes the wider pitch. “It doesn’t To music rightsholders, Rogers is “If your asset is subject to the whim of PledgeMusic founder Rogers was one have a way to place within the asset pitching Dot Blockchain (“or something everybody else on the planet except you, of the earliest and keenest proponents of permission and obligation. It can’t control like it”) as a way for the industry to exert a that should keep you up at night! It’s a blockchain technology within the music its own asset!” new degree of control over how its music is house built on sand,” he says. industry – and his new company Dot Rogers has been pitching the idea of used and monetised. “I want artists to have permission/ Blockchain is one of the startups trying to dot.bc files to artists, rightsholders and “The music industry needs to own this obligation built into their works. I want take the idea forward. digital services alike, with the argument thing, and enforce it. The music industry that work to be persistent. I want it to be Its aim is to create a new file format for the latter based on a vision of solving needs to go to YouTube and SoundCloud forensically auditable. And then I want to – dot.bc – and the supporting technical the kind of metadata black holes that have and everybody else and tell them this go and allow companies to scale and build architecture, for music as well as other left Spotify facing a series of lawsuits from is how we present our works and, as of on top.” forms of media. You could think of it as a songwriters. June 2018, we don’t want them to accept Rogers is sometimes seen as one of the

report DRM wrapper – Rogers prefers the term “We’re proposing to these digital service anything else that is not our official most prominent evangelists for blockchain ‘DRE’ for Digital Rights Expression – that providers, ‘Hey, this file has everything you version,” he says. technology in a music context. However, he encodes the data on a song’s creators and need on who to pay in it, and that other file “Because if we don’t go to the tech also makes it clear that he has reservations the 14

ISSUE 407 that wants their money with. 26.07.17 COVER FEATURE “In that world, you have to be able to answer those brutal, hard questions. Because, ultimately if you can’t prove to someone that your idea is worth a lot of money, it might not be,” he says. “My concern about the ICOs is we’re What problem are they solving? basically going to have a whole bunch That’s always the question of companies show up that aren’t [good] to ask” businesses. And we’re then going to have to go back and explain to the labels, ‘Look, that’s not what we’re doing’. Because it’s about some of the practicalities of the easy for people to say ‘I looked at that purer blockchain ideas, even while admiring blockchain thing and it’s no good’.” their spirit. For example, Imogen Heap’s The conversation ends up back where ‘Tiny Humans’ release with Ujo Music. it started: the notion that if solving the “When Imogen dropped the song and music industry’s ‘asset problem’ could be took that bold step that no artist had the base layer for a new wave of startups done yet, splitting out the payments and and music services. His ideas on the latter everything, it was amazing. Until I take that mirror those echoed elsewhere in this issue song into my computer, alter the metadata by Becky Brook: a sandbox-style system and upload it somewhere else,” he says. for new music applications. “If the metadata’s not persistent and the “If every song was a dot.bc, you could blockchain’s not tracking changes to the create a developer’s licence. Stripe it across track itself, then what are you solving? If every single one, which says, ‘If you’re you build a front-end system that doesn’t developing an application, you can have address the back end, what’s the step up to 10,000 uses for free,’ and once you forward there? If you said to Spotify, ‘There get to 10,000, the obligation is $100 or are 27 parties to pay within this song at whatever it is. And you’ll be able to watch these splits’ they have a machine that will the startup world flourish,” says Rogers. do that. But no one can get them that “The blockchain will sit there and say, information as far as I can tell.” ‘I can tell every single play you’ve done, “If you look at what people want and you just hit the threshold so now it’s blockchains to do, they want smart contracts time to license.’ What a beautiful world that and rapid payments. Those are good things! buzzphrases – an initial coin offering (ICO). currency-backed blockchain at all. What is would be.” But only if you don’t know what it is that “If any startup is going to raise a bunch the advantage to the music industry of the Even so, his pitch is for a blend of you’re paying out on. All this stuff is amazing, of money in an ICO, you have to ask: is it price of Ether going up or down?” boldness and caution from the industry, but you have to begin it with who people are building a business that just supports itself Rogers suggests applying some rather than just the former. and how they relate to each other.” and the currency it is heavily invested in, constructive scepticism based on a world “If you’re in the music industry and Rogers is also keen for the music or is it solving a problem that has not been that the music industry knows more about: you’re not looking at how this is going to industry to “ask the hard questions” solved?” he says. traditional VC funding for startups, and affect your business, you’re going to be in

report whenever it meets a blockchain startup “What problem are they solving? That’s the kind of questions those people – he trouble. But we can’t rush this. It’s worth promising grand visions. Especially if always the question to ask. And often with cites New York-based VC Fred Wilson as getting right rather than just blundering they involve one of 2017’s blockchain an ICO, you’ve got to ask why you need a an example – will be peppering any startup into it.” the 15

ISSUE 407 to build music apps and services on top of. 26.07.17 COVER FEATURE He is also blunt about the obstacles that face blockchain technology catching on in MUSICOIN: “WE DON’T a bigger way. WANT TO HORRIFY MUSIC- “It’s the fault of developers and the INDUSTRY PEOPLE!” crypto world. They made the thing too complex! They have ignored the layman, Musicoin flew onto music:)ally’s radar in and how they can use the technology February this year when it launched a without a big learning curve. The most music-focused cryptocurrency, supported important thing is for us to create some by a peer-to-peer filesharing network. more usable tools,” he says. It used smart contracts for musicians “That’s why the product design and the to release their work, and be paid per play usability of the tools is so important from by listeners, who could also tip them using our point of view: to cover those things so the coins. that people can really understand how the “We are standing in two industries: first system can help them, and benefit their is crypto, the second is music. And the daily lives. A musician should be able to crypto industry has been quite a closed upload their song, manage their releases system: it’s not much understood by the and see the money – and then pay their bill external world,” Musicoin’s creator Isaac the next day.” Mao tells music:)ally. I look around at all the ICOs Mao is hopeful that this is possible. He “We want to use crypto technology to cites the example of strong encryption solve the problems of the music industry. with big investments and technology, which has been available to But at the same time, we don’t want to wonder: are they really doing the general public since the early 1990s, horrify music industry people! So we something valuable?” but which was complicated enough to set want to eventually give people a very up to prevent it getting mainstream usage. usable thing.” speculative tool,” he says. In 2017, though, messaging apps like “In the past several months, we have “I look around at all the ICOs with big WhatsApp, iMessage and Telegram use collected roughly 800 musicians into the investments and wonder: are they really strong encryption in the background, system. They all heard about this project doing something valuable? I personally reaching billions of users. through word of mouth,” continues Mao. doubt it. There are a lot of bubbles. “People know that these apps can “These are musicians who love to share We want Musicoin to be a long-term, encrypt their conversations so that nobody their creations, their musical works, and sustainable project to serve the industry, can see it, and they understand that. They they want to connect with each other and and to serve musicians especially.” don’t need to know what PGP or a private with the fans.” He adds, “We want them to be paid! And key is,” says Mao. Musicoin’s next step will be to introduce cryptocurrency, rather than as simply the remuneration should be a sustainable “Of course concepts like a “universal basic income” which Mao something for speculators to enrich thing as well. Also with an ICO, people can decentralisation and encryption are explains as essentially “giving users themselves. chase the short-term goals and lose their important from an ideological perspective free money to listen to the music”, fully “These things have to be more than just long-term vision. After two weeks they for blockchain. But in our world, I think the supported by the miners of Musicoin, who a useless commodity beyond investment totally change their original promise an majority of musicians won’t need to know hope it will ultimately increase the value of tools. How can these cryptocurrencies so-called vision. This is something we don’t what’s a public key, a private key and so on.

report the cryptocurrency. become in daily use? That’s why we want to do.” They’ll just deal with traditional money and Mao says that Musicoin is partly his didn’t use an ICO [Initial Coin Offering] In the long term, Mao sees Musicoin bank accounts. We need to think about the attempt to find a constructive use for a – we didn’t want the coin to become a serving as a platform for other developers end users.” :) the 16

ISSUE 407 26.07.17 BEYOND MUSIC TV’s desperate hunt for its audience Netfix’s growth to 100m+ subscribers is making ripples in the TV industry

ny time Netflix signs up major talent and Zack Van Amburg, whose CV includes or issues subscriber numbers, think Breaking Bad, Better Call Saul and The pieces flood the music industry Crown. They will report to Eddy Cue. It focusing on “what we can learn has already tentatively moved in here with Afrom Netflix”, as if TV and music are directly Planet Of The Apps (although reviews have comparable (in brief: they’re not). been “mixed”) and, at some point, Carpool Its most recent figures for Q2 show Karaoke – but the launch date for that Netflix is at 103.6m paying subscribers, keeps being shifted, possibly suggesting and its non-US userbase (52.3m) has now an internal crisis of faith. Erlicht and Van eclipsed its US audience (51.3m), plus it Amburg may be coming in to really shake reported a quarterly profit of $66m after things up/whip things along. seeing year-on-year revenue grow 29.6% Apple has already produced bespoke to $2.7bn. Inevitably this triggered debates long-form content around music – notably about how Netflix is now truly global and the live streaming of its annual Apple Music why the subscription music business needs Festival (formerly the iTunes Festival) in to learn from a company that began in 1997 London and the bankrolling of Taylor Swift’s selling and renting DVDs, but quickly pivoted 1989 tour film – and short-form content like from “old media” to become the bright star Drake’s ‘Hotline Bling’ video. of access-based subscriptions. Apple’s long-term strategy for charging Of course, Netflix’s great draw is original for its TV-like shows will be fascinating to programming (see also: Amazon), but this follow. For now, these shows are part of an comes at a time when the music industry is Apple Music subscription. In the future, it’s realising that exclusives are bad for business possible they’ll be spun off as a separate and, apart from Tidal, appears to be quietly video-focused offering. scrapping them. But we also have to factor At the same time as all these new moving in that Netflix charges a fraction per month parts are being added to the streaming of what Apple Music or Spotify do and has video market, the old guard is trying to claw nailed the family sub this way. TV, for the back relevance among younger viewers who most part, is about single viewing (often do not genuflect in front of the TV in the accelerated to binge-watching) whereas corner of the living room like their parents music’s long-term game in streaming is all and grandparents did (and arguably still do). about repeat listens. The BBC is pumping £34m into its

report Apple has – as Apple often does – been children’s services over the next three taking notes, however. It has poached Sony years to draw back/hold onto young Pictures Television executives Jamie Erlicht viewers who are being lured away by the 17

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Snapchat taking the other 50%. Snapchat may have posted enormous losses in 2015 and 2016 ($372.9m and $514.6m respectively) but it still holds a magnetic appeal for the TV world. There are a lot of different dynamics happening here but also a tacit acceptance that the TV audience is not just a moving target – it’s multiple targets all swirling YouTube and tablets. What this means businesses expand their content ambitions. interim CEO Joey Levin last November. around in 3D. is “all-year-round support of multimedia But there is also, as the space gets crowded, Vimeo has now unilaterally backed away A single net will not catch them all and a content, including video, live online a dynamic of retreat and one of migration from this and said it will pour its efforts scattergun approach will have more misses programme extensions and clips, pics, happening outside of the centre. instead into the creator community. than hits. It’s not TV’s existential crisis just blogs, vlogs, podcasts, quizzes, guides, Vimeo has just announced it is scrapping Finally, Time Warner has announced it will yet, but proof that all bets – or one bet to games and apps” according to the its plans to move into subscription-based be launching a range of original shows (five- win them all – are off. broadcaster. It will also “join up and expand video streaming, perhaps feeling a few big minute vertical-video programmes around Yes, maybe the music industry could the set of interactive digital content, players (Netflix, Amazon, possibly YouTube drama, news, documentaries and comedy) slavishly copy Netflix, but the churning and capabilities and experiences available to Red) are just going to sponge up all the for Snapchat, as well as upping its spending mounting chaos around it is TV’s butterfly our audience”. audiences here. “Vimeo has the once-in- on ads. effect. And having/encouraging just one We have a dynamic of doubling-down a-generation opportunity to, following TechCrunch claims the company will winner – as the music industry found in the

report on digital from traditional broadcasters like in Netflix’s footsteps, deliver compelling be spending around $100m over the next days of MTV and then again with iTunes the BBC, while tech giants with established subscription viewing experiences for two years, keeping 50% of any advertising and once more with YouTube – is never a hardware, e-commerce and/or advertising consumers in the market for pay TV,” said revenues around the shows, with dream solution. :) the 18

ISSUE 407 DIGEST 26.07.17 Need to know THE PICK OF MUSIC ALLY’S CONTENT THIS MONTH Sacem trials user- 01 centric streaming 02 payouts When music:)ally spoke with Sacem CEO Jean-Noël Tronc, he covered a lot of ground – including (of course) the value gap as well as blockchain. His most interesting point, however, was revealing that it is running tests on a user-centric model for streaming payouts – where a subscriber’s monthly 01 04 payment is divided among the rightsholders for the music they listen to, rather than poured into a service-wide pool to be divided by overall listening share. This is something Deezer has been pushing for so to have a major rights society step forward is a significant development. It is still, however, early days so the Speakers from PRS for Music, how risky it is organsiation is testing it with real Chrysalis BASCA, UK Music and the MPA all for the industry MelodyVR bags all data behind the scenes. co-founder laid into YouTube (for the record, 03 to put all its three majors and “It may be a very important Chris Wright 04 YouTube was invited to attend eggs in one plans launch next year change for our artists, songwriters on streaming 03 but was unable to). UK Music (unproven) By signing a deal with Sony Music, and publishers,” says Tronc. “We sustainability chair Andy Heath troweled on basket. “From UK startup MelodyVR now has all cannot just tell them we have gut and “the death the dystopia. “We could be in for a commercial the majors on board and suggests feelings. We need to tell them that of the album” an era of cultural barbarism, the standpoint, that a full launch (it’s been in closed these are what the results show. Chris Wright, co-founder of like of which we have never seen,” the reliance – or beta since the end of 2016) is likely Then we look at what we change or the Chrysalis Music Group, wrote he warned if governments fail to over-reliance – on streaming to happen next year – but is not not when it comes to the industry.” a column for us in which he opined protect the value of music. that streaming is strangling the represents a risk,” he argued. ruling out a late-2017 public debut. BASCA chairman Crispin Hunt album as a creative body of work “Spotify is making greater losses Live music, its original focus, picked up on YouTube’s claim as it is making the single the new than ever despite its increasing is now only 50% of its output, Music industry that 80% of the music on there centre of gravity. “If a conscious popularity, and artists and record with videos and other interactive 02 ploughs into the is recommended and turned effort by the record labels and the companies still feel that they are experiences growing in demand. “cultural barbarism” and it against them. “People think artist isn’t made to make albums being underpaid for the music “A lot of streaming services “complete tomfoolery” it is from search, but 80% is for their own sake, regardless of that is being listened to. If the are lossmaking, so with VR we of YouTube recommended,” he said. “So there whether many people will listen Spotify ‘model’ is found not to are trying to see how we can is a massive contradiction in the be sustainable, then the music inject a bit more value into the There was plenty of heated to that album all the way through, messages they are giving out […] industry might suddenly end up in premium content, while making

report debate – and an equal number this element of music is at risk of It is complete tomfoolery.” a very sorry state indeed.” sure our deals ensure we’re not of zingers – at a PRS for Music being lost,” he said. lossmaking,” says CEO Anthony mini-conference on the value gap. Beyond this, he questioned

the Matchett.

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ISSUE 407 26.07.17 DIGEST Need to know continued... “We are thinking about other interesting models that play on the way people interact. Not all- 05 you-can-eat [subscription] but maybe they will be able to pay for an hour of any content they want. It’s still early days.” 07

Muru Music aims 05 to be a “billion- dollar company” You certainly can’t accuse it of lacking in ambition. Muru Music describes itself as “the first AI DJ brain” and is focusing on improving metadata and discovery issues for everyone in the digital music chain. So far it has raised Aus $500,000 (a new funding round is imminent) and has just two full-time staff members – but founder Nicc Johnson sees acres of opportunity stretching out 08 in front of them. “I think we can of digital Emmy Lovell spoke to music startup” according to Lovell. alone. It’s a diverse bunch – has a strong pedigree. Where disrupt various verticals – such as us about what the label hopes it “We’re trying to have stimulus that ranging from blockchain and AI Amazon has Alexa, it has Alice – music licensing and sync, AI voice will achieve – both in-house and leads to ideas that are creatively to VR and online/social video. The an AI entity that plays piano with control and recommendations as an entry point for startups. different,” is her argument. “How report is free to all subscribers humans. Beyond the inevitable, at scale. The other verticals “The entire company can see original can you be if you’re all and is – even if we say so “But what about the ART?” are where I see the big that artists are breaking talking to the same technology ourselves – essential reading with bellyaching, this is a fascinating opportunities for us technology, and companies?” an exhaustive overview of the use of technology where Alice […] I think we have technology is new kids of the block that you listens to and understands what the opportunity to breaking artists need to be aware of and (possibly) a human plays, then replies with be a billion-dollar now,” she says. It working with. what she thinks may come next. company if we is also sniffing out Music/tech startups “My kids and the generation attack all verticals.” “non-traditional 07of 1H17 – download coming through, they’ve been revenue our free report brought up on iPads and Roblox streams through If you’ve not already downloaded Top of the and Minecraft and generative Warner technology”, it, music:)ally has compiled an 08 Popgun: meet music,” argues Phillips. “It’s in gathers whether built or overview of the music and tech Alice the AI composer the games they love, being 06 06 developed in-house, startup scene in 2017 – outlining Founded by former We Are pumped into their heads, and

report round the Firepit Firepit Tech is Warner Music or as partnerships with the 100 most interesting new Hunted and Twitter Music they just get it.” UK’s new “innovation lab” and VP external startups – particularly services to ping on our radar in executive Stephen Phillips, those who “aren’t traditionally a the first six months of this year Australian startup Popgun already the

Most of this content is for Music Ally subscribers only, so you’ll need your login to access it. If you need a new password, follow this link... 20 SoundCloud went from the toast of the music industry after its launch in 2008 – effectively delivering on all the promises made by ISSUE 407 26.07.17 STATS MySpace around UGC and providing a launch platform for new acts Data dive – to a whipping boy (alongside YouTube) in early 2015 for proffering what labels saw as an unsustainable free model. $70m 10 KEY FACTS ABOUT SOUNDCLOUD The pressure on the service to monetise grew and by early 2016 Investment in the company by Twitter in it had deals in place with all three majors and the indies (via Merlin). June 2016. Back in early 2014, Twitter was By the end of that year, SoundCloud Go – its premium subscription said to be looking to buy the platform but offering – was starting to be rolled out outside of the US, swinging walked away from an acquisition in May of it into the white heat of competition with the likes of Spotify, Apple that year. Source: SoundCloud/Re/code Music and Deezer. For a service whose opening gambit was offering creators a way to get their music out there for free (with a pro subscription giving them better analytics) and for users to listen to music for free, wrapping a payment model around this was never going to be easy. This month, unfortunately, the wheels started to come off. The €2.5m company insists it is going to survive, but the shock laying off of 40% Its Series A funding which came from Doughty of its staff to cut overheads have just seen the rubberneckers lurch €21.1m Hanson Technology Ventures in April SoundCloud’s revenues in 2015, but its losses were €51.2m (an forward and the vultures overhead circle all the faster. Here, then, 2009. By January 2011, it had raised $10m in a increase of 30.9% from the year before when they were are the key numbers in the SoundCloud story (to date). Series B funding round from Union Square Ventures €39.1m). In 2015, the company spent more on salaries (€26.8m) and Index Ventures. Source: SoundCloud than it earned in revenues. Source: SoundCloud/Companies House 1m Its total users by May 2010. This quickly accelerated to 10m users £9.99 by January 2012 and leapt again to 15m by May 2012. By 2014, Monthly cost of a SoundCloud Go+ subscription, giving users access to it was up to 175m registered users but has not provided an 150m+ tracks without ads and for ofine play. SoundCloud Go, ofering update on that fgure since. Source: SoundCloud access to 120m tracks, costs £4.99 a month. The company has never published any subscriber numbers. Source: SoundCloud $700m The company’s valuation as of January 2014. This came after Series D 100m–500m funding of $60m – led by Institutional Venture Partners along with the Downloads of the SoundCloud app for the Android OS Chernin Group – had been secured. Source: TechCrunch by the end of 2016. Source: Google

12 $70m Number of hours of audio content being uploaded to the The company’s debt-funding round that arrived in March 2017, coming platform every minute as of early 2014. To put that in context, from Ares Capital, Kreos Capital and Davidson Technology. YouTube at the time was reporting 100 hours of content being SoundCloud was reported to have been seeking to close a new round uploaded every minute. Source: SoundCloud/YouTube of funding (of $100m) around the time. Source: SoundCloud report

Workforce layofs globally in July 2017. From a total employee base of 420, this meant 173 staf the 40% members are out of work as the company slims down to keep going. Source: Bloomberg 21

ISSUE 407 26.07.17 MARKET PROFILE Norway

NORWAY

STATS f Population 5.3m d Adult contemporary artists used GDP per capita (US$) $69,300 to sell a lot of CDs. Now that has ø Total music revenue totally gone. People still listen to per capita (US$) $21.68 them on streaming services, but h they won’t listen to their songs Internet users 5m over and over again, as young c people o#en do...” Friendly rivalry amongst Nordic countries is par for the course – now Broadband connections 2.1m – Jørn Dalchow, daWorks Norway’s music industry could be ready to ramp up its muscle in the i region against traditional music powerhouse and neighbour Sweden Mobile subscriptions 5.8m playlists in America. It spreads really rapidly.” IFPI Norway MD Marte Thorsby says ne of the most surprising things for driven by a growth in streaming, with revenue Active smartphones 5m that these have been “golden years for visitors to the Nordics to discover here – up from $60.49m in 2015 to $71.78m Active tablets 1.3m Norwegian recorded music, both nationally in 2016, according to IFPI figures. This, he is the (mainly good-natured) rivalry Sources: IFPI/CIA World Factbook and internationally”, citing the success of that exists between Denmark, adds, has shifted the focus of the Norwegian Astrid S, Sigrid and Aurora among many OFinland, Norway, Iceland and Sweden, all market from older acts, many of whom sing in others. “Streaming has literally opened the of which spills over into local jokes and ice Norwegian, to younger musicians with a more Swedish and further international markets for hockey matches. global appeal. These younger producers clearly have Norwegian artists,” she explains. “There are no Now, however, it looks like the Nordics “Adult contemporary artists used to sell more international appeal than Norwegian borders and gatekeepers.” might have something new to fight over a lot of CDs,” Dalchow says. “Now that has adult contemporary acts; but Norway’s We should, of course, introduce a couple – local music. Sweden, as the world’s third- totally gone. People still listen to them on strength in streaming also helps in their global of caveats here: Thorsby told the by:Larm largest exporter of music and home of streaming services, but they won’t listen to rise, as Dalchow explains. “When these artists conference in March 2017 that local market Spotify, has long been the regional A&R their songs over and over again, as young are streamed in Norway, it’s very rapidly repertoire share is currently around 25% in powerhouse. But Norway has been making people often do.” picked up by the Spotify people in Stockholm, Norway, higher than the 10% seen in the early inroads in this area of late, thanks to the As a result, labels in Norway have then they get on Swedish playlists, then it streaming days but still far lower than the global success of artists like Kygo, Cashmere started to invest in younger artists who spreads to Denmark, Finland, Germany and pre-streaming days when Norwegian music

report Cat and Alan Walker. work well with the streaming market, often the UK,” he explains. “And then they talk accounted for 50% of the domestic market. This success is, according to Jørn Dalchow, signing them up for single deals rather to the New York office and suddenly you What’s more, Dalchow says that this MD of Norwegian indie label daWorks, being than as album acts. have your song on two or three important may be a limited “window of opportunity” the ISSUE 358

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ISSUE 407 26.07.17 MARKET PROFILE Norway continued...

has done a lot to promote its own TV and RECORDED MUSIC SALES DIGITAL MUSIC REVENUE BY FORMAT, radioDIGITAL streaming MUSIC app – and REVENUE this has helped BY FORMAT; (Volume, million units) IFPI FIGURES olderMUSIC Norwegians ALLY to DATAMAPfeel comfortable FIGURES with (Source: IFPI) (In US$ millions / Source: IFPI) the(In idea US$ of millions streaming. / Source: Dalchow IFPI, says Music that Ally) Norwegian youth have also played a role in 8 80 helping60 the older generation to understand streaming technology. “‘This is Spotify, 7 70 grandma,’”50 as he puts it. 6 60 One potential dark spot on the horizon, however, is the impact of Norway turning 50 40 5 off the FM signal for national radio stations, 40 which30 is happening in 2017. The impact so far 4 has been fairly low key, but the switch has 30 yet to be made in big cities like Oslo. The fear 3 20 20 is that the huge availability of specialised stations on DAB may cause people to cancel 2 10 10 their streaming subscriptions on the not- 1 0 unreasonable0 grounds that DAB provides for 2012 2013 2014 2015 2016 2012 2013 2014 2015 2016 all their musical 2011 needs. 2012 2013 2014 2015 Thorsby, however, argues that the Single downloads Single track downloads Paid/freemium transitionDownloads to DAB could beAd-supported an opportunity Subscriptions CD and other physical Full album downloads subscriptions for the Norwegian music industry. “It is too early to conclude on the effect of DAB in the music market,” she says. “But in addition to the possible threat, we see opportunities – like for Norway, coming at a time when its seems to have plenty of room to expand, growth continues, especially in the youngest with streaming/playlists – to seed tracks in levels of streaming consumption enable taking with it the overall recorded music and older segments.” different segments.” it to punch above its weight in the global market, which grew 12.3% last year. Some There are several possible reasons for this. She continues, “Radio will probably market. “When we have 20m subscribers estimates put the number of music streaming Norway is not just a rich country – GDP per develop from push [big channels] to pull in Germany for Spotify and the UK – and subscribers in Norway at between 1.5m capita is $69,300 – but this wealth is fairly well [niche channels that are comparable to American markets grow – then I think it will and 1.8m – pretty impressive for a country spread out, with Dalchow calling Norway “a narrower, more targeted playlists]. So DAB be much more difficult for the Scandinavian of 5.3m people. But this subscriber base is middle-class market”. That means streaming might challenge, but can also be a possibility artists to be discovered that way,” he says. still growing and Dalchow believes there subscriptions are hugely affordable at a for the music industry.” “Because then the same opportunities will is room for an additional 0.5m+ paid music standard rate of 99 Norwegian krone (around Indeed, for her the biggest challenge happen with German artists and others. subscriptions in Norway, coming largely from $12) a month, lower still when bundled with that the Norwegian music industry faces I think this is a golden opportunity right the older (40+) market. telco packages. Unemployment is generally is a rather more familiar one: YouTube and now, but I am not sure it will last. The IFPI Norway has yet to release its figures low in Norway, despite the fall in oil prices a the value gap. “That said,” she concludes,

report competition will get tougher.” for the first half of 2017, but Thorsby says few years ago, and the country has a very “we are approaching the future with It is perhaps fortunate, then, that the the market is showing “a growing trend in strong digital infrastructure. positivity. We have not seen the end of the domestic streaming market in Norway still streaming”. She adds, “The potential for It also helps that state broadcaster NRK Norwegian era.” :) the 23 Music Ally is a music business information and strategy company. We focus on the change taking place in the Music Ally is an ISSUE 407 industry and provide information and insight into every aspect of the business, consumer research analysing 26.07.17 example of perceptive the changing behaviour and trends in the industry, consultancy services to companies ranging from blue journalism at its chip retailers and telecoms companies to start-ups; and training around methods to digitally market your best, with unrivalled artists and maximise the effectiveness of digital campaigns. We also work with a number of high profile music Andrew Fisher, events around the world, from Bogota to Berlin and Brighton, bringing the industry together to have a good CEO, Shazam coverage of the commonsense debate and get some consensus on how to move forward. Entertainment digital music sector”

ANTHONY CHURCHMAN PAUL BRINDLEY Contact: music:)ally Business development CEO & founder Studio 11, Holborn Studios, 49-50 Eagle Wharf Rd, [email protected] [email protected] London N1 7ED Tel: +44 (0)20 7250 3637 EAMONN FORDE STUART DREDGE b www.MusicAlly.com e [email protected] Reports editor Editor at large [email protected] [email protected] Registered company number: 04525243 VAT number: 858212321 STEVE MAYALL WESLEY T. A’HARRAH © Music Ally Ltd. For the purposes of personal, private use the subscriber may print this publication or Director & founder Head of training & development move it to a storage medium; however, this publication is intended for subscribers only and as such may [email protected] [email protected] not be redistributed without permission. Subscribers agree to terms and conditions set up on the Music Ally website, except where a separate contract takes precedence. Music Ally has taken all reasonable endeavours to ensure the validity of all items reported within this document. We do not assume, and hereby disclaim, any liability for loss or damage caused by errors or omissions. In particular the content is not intended to be relied upon in making (or refraining from making) investments or other decisions. We cannot be held responsible for the contents of any linked sites.

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