Unpaid royalties are killing artists’ earnings — could blockchain be the ultimate fix?

Globally, music professionals are missing millions, if not billions, of dollars in royalties. This isn’t just an occasional oversight or technical flaw; it’s a fundamental problem within an industry that wants to prevent its evolution to preserve profits.

Does that sound extreme? Well, the recent lawsuit initiated by Limp Bizkit against Universal Music Group (UMG) shows just how serious the problem is. The world-renowned band claims that UMG uses royalty software that is ‘intentionally designed’ to hide payments. And if it’s that bad for Limp Bizkit, imagine how much worse it is for upcoming artists.

However, a solution could finally bring clarity to royalty calculations and payments. Let’s dive into the details and explore how it could make the music industry a better place for everyone involved.

Metadata Isn’t Always Accurate, No Matter What They Say

At the heart of the royalty payments issues is metadata. The music industry usually represents it by the credits shown on streaming platforms like Spotify or Apple Music. However, it also includes all critical details associated with a song, such as titles, songwriters, producers, publishers, and record labels.

And to make sure everyone gets credited and paid each time a song is played, this data needs to be aligned across multiple databases. Sadly, that doesn’t always happen. That’s why many talented people miss out on their fair share.

You may wonder, what’s so hard about entering the correct information for a song? However, the music industry has faced ongoing challenges with metadata for years. There are no definitive standards for how music metadata is collected or displayed, and there is no requirement to check the accuracy of this information before it is published. To make things even trickier, this data isn’t housed in a single, centralized location; instead, it is dispersed across countless databases worldwide.

What’s even more alarming is that Limp Bizkit isn’t the only one calling out the issue. SoundExchange, a US organization responsible for managing performance rights, also filed a similar lawsuit against AccuRadio. AccuRadio is an internet radio platform that permits digital broadcasters to use sound recordings as long as royalties are paid.

Designated by the Library of Congress to collect and distribute these payments, SoundExchange claims that AccuRadio has failed to fulfill its financial obligations. This legal action is just another example of how deeply embedded these royalty issues are within the music business and how they affect everyone, from major stars to up-and-coming singers.

Eliminating ‘Errors’ and Excuses Is Possible, but Many Industry Titans Don’t Want It

The sad reality is that the problems with today’s royalty systems go beyond late payments or missed checks. These systems depend on old technology that is prone to mistakes—both human and software errors. Furthermore, there’s always the possibility of intentional manipulation. As a result, artists frequently don’t know where their payments come from or if they’re actually getting what they should.

One technology you are likely familiar with may be a more reliable solution: blockchain. It offers a transparent, decentralized network for storing data. The mechanism isn’t too complex to understand—every time a song is played, that action is logged on the blockchain, creating a permanent record that can’t be modified.

Like any emerging technology, blockchain has its drawbacks. Some of them are slower transaction times, limited adoption, and high initial investments. However, I believe they are minor compared to artists’ losses because of the ongoing ‘technical flaws’ in existing systems. Music business titans should actually be interested in such a solution because, with every lawsuit, they lose their reputation, which is worth a fortune.

Slowing Innovation is a Mistake—The Music Industry Must Evolve for Its Own Future

Moreover, I’m certain that upgrading royalty payments through blockchain offers advantages for artists and music investors. As an open and secure tracking system guarantees accurate royalty calculations, it will also enhance their trust in the market. When stakeholders are confident in the data supporting their investments, the music industry becomes more appealing and promising for them.

That’s precisely what Ripe Capital is trying to achieve by leveraging blockchain to tokenize music royalties and allowing fractional ownership of these assets. This approach opens opportunities for smaller investors and provides artists with more transparent information about their income.

Similarly, Audius is changing the rules of the music business by eliminating the need for intermediaries between singers and their audience—the project allows musicians to share their tracks directly with fans. Finally, initiatives like Myco offer artists a platform to earn from their music independently, transparently, and fairly.

It’s exciting to see so many projects with a shared mission. History shows that we can find the best solutions more quickly when we collaborate. So, instead of competing, we should focus on offering diverse solutions to the issue of miscalculation of royalties. By joining forces, we can make a real difference.

Final Thoughts

The situation with royalty payments highlights a flawed aspect of the music industry. Limp Bizkit and SoundExchange’s lawsuits have uncovered millions of dollars lost and stressed the urgent need for reform that most music titans would prefer to ignore.

Blockchain offers a more transparent alternative in this tangled web of outdated systems and hidden royalties. Establishing a transparent, decentralized framework can eradicate many errors that have long poisoned the royalty payments system. Though obstacles like initial expenses and widespread adoption exist, the potential for fair compensation makes the effort worthwhile.

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