How many slices in this cake?

Behind the monetization of music there is a convoluted web of attribution credits, copyright control, and financial benefactors. This is because Music is the only type of art form that functions with fractionalization at every layer. One can fracture provenance credit, control of use and even revenue collection. This complicated breakdown can sometimes lead to revenue loss, misattribution and the worst of it all, lost business opportunities for musicians.

One, not so fun example that happens often is: one of the rights owners on a song does not get back to a third party interested in sync licensing a track, the deal falls apart and the revenue goes to another track. This undoubtedly results in many frustrations from the other rights holders who were perhaps looking for revenue and exposure from that particular placement. We are all also familiar with the length of time it takes for songwriters, producers and sometimes artists to get paid due to bad metadata.

There are many ways in which web3 can address each of these layers, let’s take a look at the ways in which I consider each one should be handled:

This should be immutable and permanent (albeit with a few exceptions) and should allow collectors or anyone looking at the blockchain to look at who are the original creators of a song. It’s also a great place to give recognition to participants of a work that have perhaps participated in a work-for-hire model. These attribution credits also hold additional value, separate from holding licensing control and financial gain. They can be used to gain access to separate professional organizations that require a minimum number of credits. They can also be used to be considered and win awards.

These should not be part of any NFT package in my view, awards and accreditations that are meant for artist creators, should remain with them. However, how creators are attributed can be complicated. Artist names sometimes change, and using wallets as identifiers can be problematic if these wallets are ever compromised. Solutions for this should be made in consideration of these potential problems.

It is understood in the music industry that if you hold a copyright credit you have the right to perform the track as you wish, however this is not always the case. Owning a control of use of a copyright composition means that you can control how/when a song is performed, how copies are made, and derivative works made from that track. For recordings, owning the copyright’s control of use means controlling how copies are made and derivative works, which includes syncs to video or video games. Here is where artists are usually getting caught chasing down their fellow copyright holders in order to secure a licensing deal. This is because the music is the only art form that allows fractionalized licensing. If one songwriter has decided to go on a one month retreat at sweat lodge with no access to the outside world, and has not assigned a third party to authorize licensing the track, the deal is lost.

In web3 control can be attributed to one of the parties that owns the copyright via tokenization. Especially placing certain criteria on the control token holder so that all parties are happily involved. This control can also be granted in equal pieces with the incentives given to token holders bringing in deals.

Another use for web3 is to generate licensing NFTs, allowing holders of the NFT to use the track for the use allowed by the token. In this manner, copyright control holders can agree to predetermined terms and pricing for the use of the track. This also allows music supervisors or potential users of the track to buy into predetermined deals.

It’s easy to say that control of use and financial splits are the same, but this is not always the case. Particularly if artists want to start giving collectors access to their royalty income. This financial layer is also the most complicated, because each lane can also be fragmented: sync, derivative, streaming, sales. It is often the case that artists donate their income from songs to charity, this is not always all of the income from the track but instead just streaming/sales income. In these cases sync or derivative works income is sometimes still given back to the artist.

What most excites me about this final layer, is just bringing all of royalty collection on-chain. Because music often has additional parties to just musician & songwriters, there are also PROs/MROs, Labels, Publishers, Managers, even Lawyers at times. Depending on who is collecting the royalties on behalf of the artists, there are little and very limited tools for creators to audit this royalty collections. When royalty collection is brought on-chain, collection parties will have to trim the fat and there will be no need for audits.

Lastly, NFTs that include royalty income, which is not always going to be the case, should have this layer bundled in via liquid splits. Artists can also sell fractions of each different lanes of monetization or all of them bundled together for a premium price. These seem like fun innovations, but I’d like to give the caveat that selling royalty income could be considered a security. Artists, proceed with caution when experimenting using these models.

My hope is that in the future that all three of these layers can be tied to a creation and allowed to operate separately in web3. The chaos that is music copyright will probably continue but I hope that the future will allow for artists to control how their music is consumed and be remunerated in a timely fashion. The most exciting part is that musicians and artists will be able to play with different models that can even allow fans to take part in different layers at different times.