Music creators around the globe are missing out on millions, potentially even billions, in unpaid royalties. This isn’t simply due to occasional errors; it’s a systemic problem in an industry that often resists innovation to protect its revenue.
Sound extreme? The recent lawsuit by the popular band Limp Bizkit against Universal Music Group (UMG) highlights the seriousness of the issue. The band claims UMG’s royalty software is “intentionally designed” to conceal payments. If an established band faces this challenge, it’s likely much harder for emerging artists.
Yet, a potential solution could finally make royalty calculations transparent and accurate. Here’s a deeper look at how it could reshape the music industry for the better.
Metadata Inaccuracies: An Industry-Wide Issue
At the core of these royalty issues lies metadata—the vital information attached to each song, including titles, songwriters, producers, and record labels. While metadata appears on streaming services like Spotify, it also spans multiple databases, ensuring that everyone receives proper credit and payment each time a song is played.
Unfortunately, this alignment often fails, leaving many creators without fair compensation. Despite metadata being essential, the industry still lacks standardized processes for data entry and verification. Metadata isn’t stored in a central location; instead, it’s scattered across numerous global databases.
SoundExchange, a U.S. performance rights organization, recently sued AccuRadio, an internet radio service, alleging unpaid royalties. Designated by the Library of Congress, SoundExchange’s case illustrates the widespread issues in royalty distribution, impacting both high-profile artists and emerging talents.
Overcoming “Errors” and Resistance to Change
The current royalty systems aren’t just delayed or inconsistent—they’re outdated, prone to both human and technical errors, and susceptible to manipulation. Many artists remain unaware of where their payments originate or if they’re being fully compensated.
A promising solution is blockchain technology, which provides a transparent, decentralized network for securely storing data. Each time a song plays, a blockchain record logs it permanently, ensuring accuracy.
Blockchain faces challenges like slower processing speeds and significant setup costs, but these pale in comparison to artists’ lost earnings. Music industry leaders could benefit from this solution, as each lawsuit tarnishes their reputations, which are worth protecting.
The Need for Industry Evolution: Innovation as a Path Forward
Implementing blockchain for royalty payments offers clear advantages to artists and investors alike. With secure and accurate tracking, trust grows, making the music industry more attractive for investments. When stakeholders feel confident in the data, they’re more likely to support the industry’s growth.
Ripe Capital, for example, leverages blockchain to tokenize music royalties, enabling fractional ownership of royalties and providing artists with transparent income insights. Similarly, Audius allows musicians to share tracks directly with fans, bypassing intermediaries, while Myco offers artists an independent, fair income model.
Projects like these highlight the potential for positive industry-wide change. Collaboration, rather than competition, can lead to effective solutions for addressing royalty miscalculations.
Final Thoughts
The royalty payment issue has revealed a significant flaw within the music industry. Limp Bizkit and SoundExchange’s lawsuits expose millions in lost royalties and underscore the pressing need for reform, despite resistance from established players.
Blockchain offers a promising alternative, one that could eliminate many of the errors embedded in outdated systems. While initial costs and adoption hurdles remain, the potential to ensure fair compensation for all makes this innovation worth pursuing.
The post Unpaid royalties are killing artists’ earnings – could blockchain be the ultimate fix? appeared first on CryptoSlate.
