Transparency

Believe it or not, it is a complex and costly process to record ownership of a song, digital art, or other digital intellectual property. Your ownership must be reviewed with a government intellectual property office.

Blockchain is a natural fit for recording ownership of digital work. A hash can be generated from the work and stored with date information in the immutable ledger. As such, it would be virtually impossible for anyone to contest that they created that work before you did.

There are companies offering this service today using blockchain. Ujo is a blockchain rights database and payment infrastructure. Ujo uses smart contracts to determine the ownership of a creative work.

Even if someone changes a single musical note in a song, it will be treated as a separate song because it will have a different hash, and therefore reduce dubbing and copying.

There is a risk though, that somebody can take someone else’s song and change a note or two and record it as their own work, and it would receive a distinct hash code. Someone would need to prove that the newer song was copied from the original. Catching the culprit would be difficult too as all we would know would be their public key.

Streamlining

I manage the publishing company Technics Publications. We have published over 100 books, most in the field of data management.

Every six months we pay royalties to our authors. Royalties are payments made to authors which are a percentage of the net sales received. We pay royalties to our authors in July for sales from January through June, and in January for sales from July through December.

We run our royalty reports based on both direct and indirect sources. Direct sales are books that our publishing company sells directly to the public, either through our website or at conference bookstores. Indirect sales are book sales made by other companies to the public, including books sold through Amazon, Apple, and Google. We receive indirect sales reports on a weekly, monthly, or quarterly basis.

In our company, two employees enter all of the sales (both direct and indirect) into our order processing system. Royalty reports are then generated from this system, based on the royalty percentage agreed between author and publisher in the author’s book contract. Payment is then made to each author, along with a royalty report. The current royalty process is a very manually-intensive process, taking on average five days per year.

We can introduce blockchain into this process. A blockchain application can free up both employees to spend their time on more productive initiatives. Instead of waiting every week (or longer) for indirect sales reports, as soon as a sale is made on a site like Amazon, a smart contract would notify us of the sale and the author would be paid.

The sale would be recorded in the blockchain ledger and smart contracts would apply the rules of the author agreement to the sale. This would generate a royalty payment to the author in a digital currency such as Bitcoin, or initiate a payment to a traditional bank account or PayPal account.

The author advantages to using blockchain are complete visibility into the entire payment process, and royalty payments almost instantaneously (instead of waiting for up to six months). The publisher saves time and money, too. For example, we would save two employees working five days each to process royalties.

One big hurdle to making all of this work is that the indirect companies have to agree to send us sales data when a sale is made. We can set up payments to our authors using smart contracts, but unless Amazon and others are willing to adopt a similar blockchain process to pay us, we could end up paying authors for sales that we have not yet been paid. The entire process would work well if our indirect sellers used smart contracts to instantly pay us when a book sells, and then we could use smart contracts to pay the author moments later.

Privacy

Let’s view the same royalties just discussed, but with a different angle. Authors frequently use pen names instead of their actual names. A pen name is used to obscure the public identity of an author; it could be used, for instance, if the author doesn’t want readers to know whether they’re a man or woman. However, no one but the publisher knows the author’s real identity.

If the royalties process is performed using blockchain, it’s possible for the author to use their pen name even with the publisher, providing more complete anonymity.

For example, if a famous author writes a book outside of their typical genre, and is unsure whether it will be popular, a pen name can protect their identity.

Permanence

The process of reporting someone for copyright or trademark infringement can take a lot of time and be very expensive.

As we just discussed, a blockchain application can be used to verify proof of ownership—whether it is a song, book, or work of art in question. Once a hash has been created from someone’s digital product, and stored in the blockchain ledger, proving ownership becomes easier and less costly.

For example, there is a company called Monegraph that allows artists to record their work in the Monegraph blockchain ledger, and also sell it. Monegraph verifies art ownership.

One obvious challenge, however, is that someone could conceivably record someone else’s product in the blockchain ledger before the actual author does, thereby assuming ownership; it would be very difficult to prove otherwise.

Distribution

Artists, musicians, and authors can sell their works directly using a blockchain application, circumventing publishers (like our publishing company) completely in the process.

Since you can create new currencies using blockchain, it could theoretically be possible to create a new currency for each musical artist. Fans could buy that artist’s “coins,” and if the artist becomes more popular, the coins will go up in value.

This is actually happening today with a company called PeerTracks. PeerTracks lets each artist create their own token and choose the quantity of tokens available. Then these can be sold to fans. The value of the tokens is driven by supply and demand.28

Singer Imogen Heap and violinist Zoe Keating are currently using blockchain to sell their music, skipping popular intermediaries such as iTunes or Spotify. Imogen explains the concept of a smart contract: “Basically a tiny little program that has fixed instructions about how to move money…you store it permanently on a blockchain, and when payments come in, it says ‘we’ve received some money: this much goes to the taxman, this much goes to our contributor, this much goes to our studio…”29