“Despite knowing that Bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly.”
Recognized Bitcoin developer and expert Mike Hearn.
Hang out at any music industry conference these days, and everyone’s talking about Bitcoin, blockchain, and the powerful possibilities for a crypto-currency to transform the entire music industry. Imogen Heap, one of its biggest proponents, is now releasing her music via Blockchain technology, and indies, DIY artists, and music entrepreneurs view the cypto-currency as a solution endless transparency problems plaguing major label contracts, streaming payouts, and even live music.
Finally, a music industry that won’t screw you anymore, because it can’t screw you anymore.
Benji Rogers, CEO and founder of Pledge Music, a fan-funded artist platform, is one of several entrepreneurs modeling a future based on the new currency. “No new technology encapsulates the potential for positive change for this suffering music industry more than the Blockchain,” Rogers recently declared, before outlining a detailed idea that even includes a Bitcoin-based audio codec.
But what if Bitcoin itself has already failed?
Centralized banks, big corporations and governments have always despised Bitcoin, for obvious reasons. But so have many investors, big and small, partly because its extreme volatility makes it a horrible store of value (just ask Warren Buffett). Others like the idea of solving the problems posed by powerful banks and nationalized currency manipulation, but trust the value of a dollar bill a lot more.
Now, there’s even more concern over the direction of this decentralized, utopian crypto-currency with the defection of one of its biggest developers. Mike Hearn, arguably one of Bitcoin’s most important figures and a recognized expert in the cryto-currency, has now declared Bitcoin a total failure, while selling off all of his holdings and abandoning the idea. “Despite knowing that Bitcoin could fail all along, the now inescapable conclusion that it has failed still saddens me greatly,” Hearn blogged. “The fundamentals are broken and whatever happens to the price in the short term, the long term trend should probably be downwards.
“I will no longer be taking part in Bitcoin development and have sold all my coins.”
The value of Bitcoin started tanking immediately following the announcement (something that would the world into a panic if it happened to a major currency like the US dollar). But even bigger is the problem that Bitcoin and Blockchain recently became totally unreliable. “The issue is that it’s now officially impossible to depend upon the bitcoin network anymore to know when or if your payment will be transacted, because the congestion is so bad that even minor spikes in volume create dramatic changes in network conditions,” explained ProHashing, a Bitcoin-based business.
“To whom is it acceptable that one could wait either 60 minutes or 14 hours, chosen at random?”
In his scathing Medium post (full text here), Hearn outlined a number of show-stopping problems with both Bitcoin and the system it rides upon. “Think about it,” Hearn posted.
“If you had never heard about Bitcoin before, would you care about a payments network that:
Couldn’t move your existing money
Had wildly unpredictable fees that were high and rising fast
Allowed buyers to take back payments they’d made after walking out of shops, by simply pressing a button (if you aren’t aware of this “feature” that’s because Bitcoin was only just changed to allow it)
Is suffering large backlogs and flaky payments
… which is controlled by China
… and in which the companies and people building it were in open civil war?
I’m going to hazard a guess that the answer is no.”
Another sad fairytale for the music industry?
Members of the Bitcoin community, described by Hearn as fighting a ‘civil war,’ have blasted back. Perhaps that biggest counter-argument is that every technology (much less revolutionary technology) faces setbacks and challenges, and jumping ship isn’t what changes the world. Others have pointed to self-interested gaming of Bitcoin currency valuations, a worthwhile game given the extreme volatility.
But in a very practical sense, Bitcoin and blockchain delivery is broken — right now — which means it’s practical uses for the doing business on Bitcoin and blockchain are low. Which introduces the question of whether Bitcoin was just another sad fairytale for the music industry, and a fantastical solution to chronic problems of dishonesty and non-transparency. Sadly, mega-players like major labels, Spotify, and SoundExchange have always had every incentive not to embrace something like Bitcoin, simply because it opens ledger balances, transaction histories, and money flows, and while offering instant payments without the possibility of accruing time-delayed interest.
Indeed, Bitcoin and blockchain posed a serious threat to businesses based on opaque financials, party because those business depend upon opaque financials and outright theft. Now, the biggest threat to that way of business could be dying a natural death.
Images: Bitcoin, Dmitry Dzhus (CC by 2.0).
Bitcoin “died” 88 times before Hearn opened his mouth. Why should this time be any different?
‘Twasn’t bitcoin killed the Blockchain.
But DRM, being held up and carted around town like the dead body in “Weekend at Bernie’s”.
No…. take a look at blockchain and https://alpha.ujomusic.com/#/imogen_heap/tiny_human/tiny_human – it’s the future.
Ghost
CEO/RECOVR
No…. take a look at blockchain and https://alpha.ujomusic.com/#/imogen_heap/tiny_human/tiny_human – it’s the future.
Ghost
CEO/RECOVR
A CEO named “Ghost”?
That inspires confidence.
Time will tell. But, I have always felt that the discussions around applying block chains to record consumption on streaming media platforms have demonstrated a form of niavity. It’s the same type of niavity that I experienced when discussing how “information wants to be free” during the dot Com boom of the mid 90’s. Sure, it’s possible that these technologies can be used to produce that outcome, but any number of other outcomes are also possible and perhaps more likely.
When ANY technology is represented as miraculous cure for everything and everything without qualification or nuance, I just stop listening. These topics are complex. The outcomes impact real people in real ways. There is no silver bullet.
3 month ago someone already asked the right questions regarding bitcoin-technology : http://www.rebeat.com/de/music/digipinion/page.aspx
A few questions there are good and some are downright incorrect…here’s two:
“In Bitcoin, every user that wishes to join the network needs to download the Blockchain and its history of transactions. Already, this consists of Gigabytes of data. Will users in a Blockchain-driven music business be willing to handle such massive amounts of data, just to listen to their favourite acts?”
This is completely inaccurate and wrong.
“Ultimately, where is the benefit for the end user? Will they adapt to a system that provides total transparency to their content use (even if Blockchain promises to make the username anonymous)?”
There are no usernames.
There are no usernames.
A distinction without a difference. There’s still going to have to be unique information – a key, if you will (although that word is somewhat inappropriate) which facilitates access to withdraw micropayments from some credit card/pay pal/bitcoin/prepaid app store (or their descendents) which I have set up.
The last time my (dumb) cell phone was stolen, the thieves helped themselves to my SD card before I had it returned. Fortunately, there was nothing but easily replaced DRM-free Vladimir Horowitz on there. Now imagine if the SD card was filled with songs tagged with the identifying information which passes for my virtual handshake to pay 25 cents to hear a song. (Who could object to paying 25 cents to hear a song?)
User-unique watermarks are already here on the music downloads I purchase. But should they escape into the wild, they don’t help themselves to my e-money over and over again.
How can any of this possibly help?
What does it do against piracy? What does it do against the underpricing and undervaluing of music?
Try not to jizz in your pants, but envision a future where
* every time a schmuck spins a tune, she’s also electronically transferring funds out of some account/store: her phone/desktop/hifi becomes a coin-op jukebox. No pay, no play. Or better yet, your playback is seamless (no friction!) but logged, so you get billed when you hook back up to the web.
* thanks to the DMCA, editing out blockchain tags or using playback software that ignores the tagging is a crime, because it’s the same as using a device to block or disable DRM measures.
I wonder if Imogen outsources her tech support helpdesk overseas?
I’ll give you the best insight into blockchain/BTC and the music industry you’ll read anywhere. We use blockchain with our own technology, and I’ve written about it many times.
http://www.hypebot.com/hypebot/2015/08/understanding-music-and-blockchain-minus-the-hype.html
The idea proposed by many is that somehow using blockchain as a method of registering works, creating a global unified and decentralized database, giving more control to artists, and improving transparency etc., is the solution to the problems plaguing the music industry, yet that argument is fundamentally flawed. I can’t go into all the reasons here, but one of them is obvious, yet I hear a lot of smart people talking about blockchain as if it were a panacea for the music business.
Here’s why:
Adjusted for inflation, there is a hole in the recorded music industry of nearly $40B, which doesn’t take any growth into consideration, meaning that’s just to get back to where we were. That’s money that’s missing and hasn’t been replaced. It is now easier to buy music than ever before, and yet sales are still going down and subscriptions are lagging. Right now that business is around $15B in revenue. Improved transparency, increased efficiencies, better transactional systems are incremental improvements on ensuring you maximize that $15B. It doesn’t make more money. There’s no growth.
Several years ago a study showed that the average American worker (18-34) spent over $1,200 per year ($100pm) on coffee. Yet today, studies and polls show the average person thinks $10 per month is too much for a music subscription. That’s the problem…societally people have decided that music has little value, and would rather spend $4 on a cup of coffee than $4 towards buying/paying for music. In fact, Starbucks yearly revenue exceeded the entire recorded music industry by over $1B.
Blockchain as a transactional system is not really any better in many respects (as far as consumers are concerned) than what we have now. I can purchase a song in seconds and have it appear on all my devices. Incremental improvements to transparency and other efficiencies (while good) only ensure more of that $15B gets where it should, and generally won’t make the difference between making a living and not. It doesn’t make new money. People are trying to solve the problem by working from the wrong assumptions.
I’ve been down this road before. In the early 90’s I was VP of two very early e-commerce companies who helped user in the age we live in today. We thought we had solved the biggest problem of getting average people online to sell their goods, the transactional problems. What we learned is the transactional aspects were the easy part, we failed to recognize that the complicated part was getting someone to actually part with their money.
If you can’t change the societal aspects, no amount of blockchain transparency/control is going to work. And I’m not even going to get into the technical challenges behind what I see people attempting to do with blockchain that is just…dumb. And I use it every day.
http://n2one.us
Hey Alan, I see you’ve already commented here!
Great post today.
Hey Alan, I see you’ve already commented here. Great post today.
Bitcoin uses blockchain technology. Bitcoin in itself is irrelevant for the music industry (unless you want to pay your streaming subscription with your Bitcoins). It’s the blockchain technology that potentially could bring a valuable solution to many problems in the eco system. If Bitcoin doesn’t work, it doesn’t mean the blockchain will fail. Just imagine a decentralised way of storing rights holder information (Instead of trying to create a global repertoire database) and usage rights. Making it visible for a rights holder what happens with their rights, where. This is what is so excited about this tech. The only thing we need is a company that a applies it in a workable way. Imogen Heap embarked on the journey of figuring this out and see if a used case can be created that creates a good fan experience and at the same time solves the problem music people have with the industry. Control and accountability. To be continued and nothing to do with fairy tales.
It’s the blockchain technology that potentially could bring a valuable solution to many problems in the eco system.
I’m conflating ‘Bitcoin’ and ‘blockchain’ a bit in this article, granted, and yes, another currency can ‘ride’ on blockchain along with ledger balance data, rights information, etc. But read Hearn’s piece, it’s largely about the underlying delivery infrastructure, which he deems as broken and in disrepair, subject to quarrels and ‘civil war’ of its developers.
I’m conflating ‘Bitcoin’ and ‘blockchain’ a bit in this article, granted,
(!)
“Sadly, mega-players like major labels, Spotify, and SoundExchange have always had every incentive not to embrace something like Bitcoin,”
This seems to be the key that nobody seems to understand. The blockchain can be disruptive, so the is no incentive for incumbents who profits from the status quo. The problems with the music industry are systemic.
The blockchain does not provide a better TECHNICAL solution that a private database. It can actually be worse in certain aspects.
ClearTracks actually has a working solution today that delivers on all the promises of the blockchain: transparency, accountability, automated transactions, and the ability to pass up to 100% of sales and royalties back to the artist/rightsholder. No public ledger necessary.
There are a number of articles in Forbes featuring interviews with key players. One of the things that’s going to have to happen (and is not mentioned here) is that entrenched interests (publishers, labels, artists) are suddenly going to have to “open-source” the terms of their deals: “labels” with artists; authors their split with publishers; producers, their cut for working on album A vs. Album B; etc.
Everyone will know what everyone else is getting paid.
Now, how well do you think that kind of thing will go over in corporate America?
Hey Paul.
Interesting thread developing here. The .blockchain codec idea does not require the Bitcoin Blockchain as it hinges on the idea of unifying the data set into a form that can be expressed into multiple databases, distributed or otherwise. The point behind the Bitcoin Blockchain is that it’s matured enough, has a market cap of (depending on the day) $5b and is supported by enough people to make it work. This expression of data into the existing Blockchain would also make it a valuable destination thereby improving its long term viability.
Lastly and this is for a follow up but I could envision all of the key industry players (PRO,s Labels, Trade Bodies etc) running a full node and creating their own backups to support its health. Similarly if the codecs were to be held in say IPFS, then this would solve the issue of database size and scale.
There are problems with the existing Bitcoin system but the dotblockchain project is not Bitcoin dependent.
Lastly what I proposed is not a new form of DRM. It’s more Digital Rights Expression as it is about creating, not limiting usages. Since posting about this and launching
http://www.dotblockchain.info I have seen interest from every level of player. Labels, Publishers, Lawyers, Artists, Fans, PRO’s, Government, developers, VR AR & 360 video companies, Blockchain companies, VC’s as well as social networks. If we create the data standard and all get behind that then we stand a better chance of creating more uses to benefit all.
If not. Then we just multiply the problems and help no one.
Cheers
B
It’s more Digital Rights Expression as it is about creating, not limiting usages.
Anything that can “create usages” can disable them.
(Ooh! That big horse is so pretty! Can we bring it in?)
I’m having difficulty understanding the vision, given the very practical implementation issues raised by Hearn.
The point behind the Bitcoin Blockchain is that it’s matured enough, has a market cap of (depending on the day) $5b and is supported by enough people to make it work.
Has it matured enough? Hearn argues that it’s matured into a gnarled oak, unable to scale, limited by giant factors like China, and hampered by a ‘civil war’ between developers. I guess everyone’s got problems, but how do you envision those very practical, real world problems being solved?
The .blockchain codec idea does not require the Bitcoin Blockchain as it hinges on the idea of unifying the data set into a form that can be expressed into multiple databases, distributed or otherwise.
But, it does require something to work, so if it’s not the currently-constructed blockchain infrastructure, what is it?
You should disregard Mike Hearn’s POV entirely. He is a paid shill
And today, Alan Graham:
http://thetrichordist.com/2016/01/20/beyond-the-blockchain-its-all-about-the-beans/
“Blockchain, for all of what it could do, will not solve the underlying issue that all kinds of creators are facing. That issue is societal. It is at the very heart of everything, and no amount of talk about blockchain, improved transparency, or fair trade is going to change what is ultimately broken.
It’s us…we’re broken.”
I could not agree more with this. As I’ve been saying for years, technology is not the problem, streaming is not the problem. The problem is societal, it’s behavioral, it’s the attitudes and the business models.
Several days ago, someone pointed out the problem of subscription fatigue. Anything anyone’s paying on a monthly basis is going to be looked at and scrutinized for its necessity. Eight dollars here, 10 dollars there, it adds up. Music nerds are gonna hang onto the streaming subs and cut those loose last. The rest of the world? You know, real people? They have to worry about peace in the home if they ditch Netflix, HBO GO, Hulu, cable sports packages, etc. because husband and children.
It’s not “broken” to look at one’s monthly hole and decide that the music sub just doesn’t bring the bang like other services.
Many people are content using YouTube for music at no cost to them. They aren’t really bothered or even aware of insider concerns. This isn’t to say that they should be, and we’ve seen “consumer education” efforts fall flat, even worse resulting in backlash. One could bring ISP bandwidth and time taken with ads into the discussion as costs as well, though this is weighed differently on a personal level.
On the industry side of things, you have all the good stuff: monopoly, price manipulation, conflict of interest, black-box, lobbying, the works, with its own “consumer education” agenda. This sets the tone for the marketplace, and the marketplace informs consumer expectation over time.
So the oil cartel goes into full glut mode to destroy domestic US production, and the Canadian oil industry and consequently dollar gets dragged down with it. Is the market “broken”? That depends on your views on what a market is or should be. What I see is that most don’t really discuss this. They’re either happy to see the evil oil companies go down, or wondering why gas isn’t cheaper, sometimes both simultaneously. Are they “broken”? On one hand, no, they’re just looking out for their hurting wallets, exacerbated by the above situation. On the other, maybe we should give intelligent buyers a bit more credit. Depends on your level of societal cynicism I suppose.
Sure, Netflix is 9 bucks, but some titles aren’t there. The ones in the theater, well you’ll have to wait. Still not on Netflix? Then they’ll get it somewhere else, legally, otherwise.. maybe even pay 9 bucks for a single title, if they really want it. It’s a one time buy, not monthly, for something you want… If for no other reason than psychological, this falls into a different spending category, which partially explains why physical and downloads are still around after ten years (or less) of subscription, depending on the country.
Perhaps we move to more differentiated business models online, where people pay for what they use. See a plate, buy it, eat it as opposed to a buffet. Might work out cheaper for them, and better reward the artists they are actually listening to, rather than carrying a huge library. Maybe after today’s CEOs retire.
Perhaps we move to more differentiated business models online, where people pay for what they use. See a plate, buy it, eat it as opposed to a buffet. Might work out cheaper for them, and better reward the artists they are actually listening to, rather than carrying a huge library. Maybe after today’s CEOs retire.
Awesome. You go put your short-shorts on, work it for some of that sweet sweet VC, and pour your life and reputation into it.
Let us know how it works out for ya.
Good grief, you’re impossible.
Every attempt at discussion turns into an insult fest.
Think I’ll extricate. Bye.
I know, I know. Suggesting that the music industry (and its pontificating wannabes) actually take some risk themselves is just an excuse for pearl-clutching.
In the Natural Order of Things, everyone from customers to tech giants to startups Should Just Do as You Say. And if it doesn’t work out? Roadkill. That’s the kind of attitude the industry is supposed to reserve for musicians. The world at large, however, will probably tell you to shove it.
I waited 32 days to get 1.34 btc from coinbase last month, because I have not logged in since 2013. This how a btc wallet works, you have to catch up with all the transactions.
How would this work with music? Would we have to catch up with all the transactions made since the last login before we could listen to it?
If so, I just don’t see how its possible to use this technology in the music industry. Possibly not until we get into quantum computing and quantum networks. Were talking 20-50 years from now, if blockchain technology can survive quantum computing which will make hashing much easier. Also at that point AI will be making better songs than any human possibly could so whats the point.
The author attempts to make the argument that since Bitcoin failed, cryptography cannot improve the lot of artists and labels. This is, of course, completely silly and demonstrably false. Such luddite perceptions of technology and its application are what put the record industry in the position it finds itself today. Given the music industry’s track record for predicting technological trends, as a recognized blockchain expert I would give the technology a little bit longer before I pronounce it unfit for purpose with a wave of hand over a keyboard.
Well firstly it is too early to declare btc a failure. And you are right, this is less about btc and more about cryptography. The author conflating btc and blockchain muddles the argument. That said using blockchain could improve efficiencies a large magnitude, but again the core issue is that these are incremental improvements that won’t make the difference between an artist who eats and one who does not. If the money isn’t there because people aren’t spending it, then better records and data mean very little. That has to be solved.
Blockchain and Bitcoin will not be adopted for music. It raises transaction costs and complexity for the consumer and delivers no commensurate value. Show me the market that’s going,”Hmm, I COULD be paying every single time I listen to a track. And in exchange, my music listening experience is otherwise no different. Sign me up!” Listeners are not listening to music in order to pay artists. They’re doing it because they love listening to music. We gave them radio (free) and then CD-ripping, Napster, and now free streaming, and YouTube. The fantasy is that consumers WANT to put the genie back into the bottle.
You had me up until “We gave them [] CD-ripping […]“.
$18 and climbing – the price back when you could get away with it – is a pretty funny definition of a “gift”.
But back to current topic: people seem to think finding a way to charge for music by the pound solves the problem of subscription sticker shock for infrequent users. And it seems like that problem does have to be solved.
Phone companies have figured it out. Ten cents a minute for voice service sounds like a crazy price, but when you do the math, that’s what the effective price is on many of these “Just $3 a month!” or pay-as-you-go plans from the likes of Virgin Mobile and T-Mobile. But if the talker is an honest-to-goodness, actual infrequent user who will not otherwise hit a certain threshold of usage, it beats paying $35/month and up.
This guy has simply thrown his toys out of the pram through bad bitcoin investments on his part.
All this means is more Bitcoins for everyone else.
He sold at the highest price it’s been at for a while, then said it’s dead. Very greedy and irresponsible indeed. This article is very biased.