Attack of the 50 Foot Blockchain

by David Gerard

  The problems it outlines are well-known and widely acknowledged:

  Who owns what is frequently not traceable at all. “20-50 percent of music payments don’t make it to their rightful owners.” Music collection societies tried to create a Global Repertoire Database in the early 2010s, but scrapped the idea in 2014, as nobody wanted to create a new central octopus.405.

  Existing industry money flows are an unbelievably complicated mess that’s barely understood by most participants.

  Middlemen take money without any reasonable present-day justification.

  Record and publishing companies deliberately obscure what they owe and who they owe it to,406 and pay very slowly.

  Streaming doesn’t pay nearly as well as CDs used to. (That last problem is not like the others, but keeps being spoken of like it is.)

  The report proposes: (a) gather data about as many of these deals as possible, to make the problems clear, (b) revise the contractual arrangements of literally the entire recording industry worldwide, and – in half a page tacked on the end – (c) keep the entire details of every deal the recording industry has ever done and continues to do on a blockchain and (d) administer the deals using smart contracts.

  Specifically, it suggests:

  Rights ownership and royalty splits that are recorded on the blockchain, money being automatically redirected accordingly, e.g., directly upon an iTunes purchase;

  Transactions that occur “nearly instantaneously” (“in less than one second”) and directly, from consumer to artist without intermediaries.

  Of course, the word “blockchain” caught all press attention, and not any of the real problems the rest of the paper described.

  Imogen Heap: “Tiny Human”. Total sales: $133.20.

  Others had already been thinking along blockchain lines. Imogen Heap has been recording through major labels for a couple of decades now, first with the duo Frou Frou and then as a solo singer, songwriter and producer. In the course of a string of chart hits and Grammy nominations, she’s suffered quite her share of duplicitous incompetence at the hands of the music industry, and wants something better.

  In late 2015, Heap found herself free of previous deals, and so released her new song “Tiny Human” as the test case for Mycelia,407 running on the Ethereum blockchain. Her motivation was to cut through the tangle of bad deals and obscure rights the record industry offered. “Its success will come from the adoption of millions of music lovers.”408 Mycelia worked with Ujo Music, an attempt to automate the back-room disbursement side put together by Ethereum development company ConsenSys, whose Vinay Gupta had first told Heap about smart contracts.

  Heap’s explicit goal is to have all music you’ve “bought” (not just hers) behave as marketing spyware that collects data on the user, in the manner of advertising trackers on web pages:409

  We know less about what our songs get up to once they’ve left ‘home’. What would I like to read on these postcards from our songs? Well, how many times it was played, by who and where would be a great start.

  The last Imogen Heap release with spyware was the 2005 Speak For Yourself CD with Sony’s rootkit malware – an initiative that didn’t go down so well then either.

  The press coverage of Heap’s new initiative was vast, and her name is still routinely brought up whenever blockchaining the music industry is mentioned. What I’ve yet to see anyone mention is how well it did in practice. Total sales of “Tiny Human” through Ujo Music on the Ethereum blockchain were … $133.20. Not $133,200 – but one hundred and thirty-three dollars and twenty cents: 222 sales at 60 cents each.410 It literally got more press articles than sales. It was taken off sale some time in 2016.411

  It didn’t help that buying it was almost impossible even for a blockchain advocate,412 let alone an ordinary human music fan. You went to the page, clicked “Download”, followed the instructions to create an Ethereum wallet, and went off to a Bitcoin exchange to buy bitcoins then exchange those for ether, as ETH wasn’t widely traded directly to dollars at the time. Getting hold of the bitcoins required you either to send your money and a pile of government identification to an unregulated exchange – the recommended exchange, ShapeShift, had literally left New York state to avoid anti-money-laundering regulations413 – deal with crooks or both. Once you’d done all this, you got a download key. The process was ridiculously glitchy and buggy. “The exact ether amount is a bit of a gamble.”414

  Ujo Music later posted a rambling nonexcuse for the “Tiny Human” disaster, in which they admitted that they’d only researched what the hell they were doing after they’d done it. “We are but a few bright-eyed technologists with a special hammer, looking for the right nail.”415

  You’d think that at that point Heap would be wishing she’d just put it up on Bandcamp, but she’s still pursuing the blockchain dream and selling others on it, particularly the Featured Artists Coalition, i.e., the stars who did quite well out of the old major label system and would like to keep something that works like that did. Never give up!

  A record shop must not be harder to use than BitTorrent. The legal options, iTunes, Netflix and Spotify, made it big by being more convenient than piracy, and there is nothing convenient about dealing with blockchains. For buying music online, Bandcamp has all comers beat for a record shop experience that delights both buyers and sellers,416 pays 85% to the artist and doesn’t have any use for a blockchain.

  Why blockchains are a bad fit for music

  It’s immediately obvious that blockchains proper – even if euphemised to Distributed Ledger Technology – can’t possibly be the panacea the record industry desperately desires.

  No single blockchain can possibly scale to the whole music industry. There were an estimated 35 million songs in iTunes in 2013417; Spotify played a billion streams a day by mid-2015.418 If you use multiple blockchains, they will need reconciliation.

  Apart from the metadata itself being huge, there’s the encoded details of all the hundred-page contracts. Who are the participants in the blockchain who will each be keeping their own copy of all of this data? And who will pay for the computing resources to execute all the smart contracts for each song played?

  (Posited solutions include storing contract details off-chain on the BitTorrent-like InterPlanetary File System, so you’d better hope there’s still a node that can seed a full copy of your publishing deal thirty years later! Also, the IPFS doesn’t work yet.)

  “Where there’s a hit, there’s a writ.” Data will change – erroneous or fraudulent claims, copyright lawsuits changing ownership information, you litigate your way free of your awful first contract, a musician dies. How is your “immutable” blockchain corrected?

  What’s your security threat model? This one never seems to be mentioned, and we’re talking about real-world money here. How is your blockchain kept secure against hostile attackers, e.g., someone who has the money to bring 51% of mining resources to bear against a Proof of Work secured chain? How will you clean up the mess after an attacker uses bugs in your smart contract platform that they knew existed and you didn’t?

  Attempts to make sense of the hype

  As blockchain proposals proliferate, so do industry white papers frantically trying to make sense of all of this.

  The basic claims advanced by Blockchain for Creative Industries’ extensively publicised “Music On The Blockchain”419 (foreword by Nick Mason of Pink Floyd) are highly questionable:

  BCI regard the prospect of a networked database of music copyright information, near-instant micropayments, transparency through the value chain and access to alternative sources of capital as the four key potential benefits of blockchain technology for the record industry, though even these are not without their challenges.

  That’s an understatement. (They also think Proof of Work is a great idea and not a naturally-centralising ecological disaster.) BCI acknowledge as problems:

  A cryptographic hash won’t preve
nt copying.

  Who enters the data? How is the data verified? (The oracle problem.)

  Credit and splits are often negotiated well after the writing or recording.

  Promises of a “fair trade music ecosystem” founder on the obvious problem that “it is not clear that all parties understand fairness or fair trade in the same way.”

  Which blockchain does all this run on, what cryptocurrency is our medium of exchange? Are any technically up to the task? (spoiler: no.)

  MusicTechFest’s “#MTFLabs: Blockchain” meeting420 broke down on the problem that the various players have always had contradictory interests, viciously fought, and moving the perpetual industry civil war to the blockchain probably won’t help much:

  In large part due to the inherent fault lines within the topic itself, the lab turned away from seeking “solutions” to discussing concepts such as “copyright”, “ownership” and “security”, as such words can take on very different meanings based on one’s professional background and personal frames. Differences in perception revealed seemingly intractable disagreements that were unlikely to be resolved in a weeklong discussion about an incredibly complex technology.

  … As tensions grew over fundamental differences in perception and the complexity of the issue expanded the more its core limitations were revealed, the effort to arrive at even the most basic conclusions nearly collapsed.

  Their paper notes the things the blockchain can’t do for you:

  DRM, which still can’t work.

  Storing large amounts of data, e.g., song files.

  Doing all this for free. You’ll need some way to pay for all the computing resources this will need, and there will probably need to be fees for all of the hypothesised transactions.

  They propose:

  a modular approach, where specific problems are solved incrementally, building up an open and transparent meta-system ensuring the individual systems that address the sub-problems use open standards and globally acceptable and accessible data, for example residing in one or more blockchain-based systems.

  This is likely the only workable approach to the global metadata problem – come up with a usable open standard that’s sufficiently self-evidently correct that others adopt it – except there’s no reason to use a blockchain for this.

  “Blockchain or the Chaingang?” by Jeremy Silver421 is the best and clearest survey I’ve found of blockchain dreams and how they relate to music industry psychology. It’s not perfect on technical detail, but you don’t need to be a techie to know what snake-oil salesmen sound like.

  Silver outlines many of the obvious problems with musical blockchains:

  The really obvious scaling problems.

  Music industry blockchain maximalists are sincere but misguided, and want technically infeasible things.

  Blockchain dreams require DRM: “adding the transactional security is key to what blockchain does. That has to be one of its key selling points.”

  Heap’s idea of full metadata on everything about a song, and deals not being secret, is fundamentally good. (Even if listening to a record being turned into an opportunity for spyware has a few issues.) But blockchains won’t somehow clean up the metadata that the Global Repertoire Database hoped to gather, and that data’s still hugely in flux (when there’s a hit, there’s a writ).

  As in every other industry that’s tried reconciling all the data, Global Repertoire Database-type proposals fail when everyone realises they’re about to give the metadata maintainer a natural monopoly.

  Incumbents will treat technological change as a threat and resist it as bitterly as they have every other technology. Silver notes major labels refusing to look at BitTorrent data his firm Semetric was offering them, even though it was an excellent predictor of sales, for fear of appearing to validate BitTorrent in any manner.

  The one point I think Silver slips on is near the conclusion:

  From a purely pragmatic perspective, if you asked a technologist today what would be the most efficient system to build, using current technologies, to create a royalties tracking, gathering and distribution system, they would probably tell you it was blockchain.

  Let me just differ on that one. That said, Silver is confident enough in his conclusion that he’s now CEO of Digital Catapult, a consultancy who enthusiastically offer business blockchain services, even if some of their promotional material is disconcertingly aspirational.422

  Other musical blockchain initiatives

  All of these have as their business plan to become the new central octopus, or at least one of several.

  In the wake of its report, Berklee has started its own Open Music Initiative, to do what the Global Repertoire Database tried to, with blockchains thrown in to no obvious utility.423

  PeerTracks is one of several companies attempting to set up a system where every artist would sell their own separate cryptocurrency tokens as shares in their future earnings, and streaming royalties would be allocated to the owners of the tokens via smart contracts.424 Apparently the buyers would be the artist’s fans rather than music industry companies. Founder Cédric Cobban subscribes to Austrian economics, which led him to Bitcoin and then this idea.425

  Benji Rogers of the dot.blockchain initiative pushes a holistic vision to which the entire industry would need to subscribe, revolving around his “.bc” file format, which he swears up and down is not at all Digital Rights Management, which customers despise – it’s Digital Rights Expression, which plays only on compliant platforms that only let you do permitted things with it and formats that don’t do this shouldn’t be allowed to exist.426 This is literally the approach that crashed and burned hard enough in the early 2000s to make “DRM” a curse to this day. Also, everything should involve Virtual Reality, for some reason. And the InterPlanetary File System, which if it worked would still be a new form of BitTorrent.

  Revelator promises a generic buzzword soup of rights management, instant transactions, micropayments and “disruptive technologies”, to demonstrate the actual point of much of this: getting funding from venture capitalists. You’ll be pleased to know they say it’s all about the art.427

  The TAO is a smart contracts-based rights administrator selling unregistered securities shares to raise development funds. They explicitly invoke The DAO as their model, which is a bold tack to take after July 2016.428

  All these competing systems speak of the artist as their only and eternal concern. But the TAO promoted its share offering with news of a label putting all their artists on the TAO just like that, suggesting that artists in the new world will play a role much like their present one, i.e., a sort of industrially-processed cheese slice.

  Are you supposed to sign up with some of these systems? All of them? Why? How are disputes with your blockchain-based rights management organisation handled? Perhaps your contract with them could go on a blockchain.

  (So sorry, our smart contract got hacked! All your money is gone. Yes, yours in particular. No, we can’t get it back, smart contract says no. Well, you could sue, I suppose. How much money have you got? Oh, none? What a pity. Never mind.)

  SingularDTV

  The SingularDTV initiative is sufficiently remarkable to cover in depth. SingularDTV takes this tottering heap of bad ideas and uses it to implement another tottering heap of bad ideas.

  SingularDTV is a platform for filmmakers and TV producers to fund their content and then distribute it. This involves a native ICO-style cryptocurrency token called SNGLS (running on the Ethereum blockchain), with funding and revenues administered by a smart contract called CODE.429

  This is the poison pill: it runs on their token, and they control the software that reads it. If they get greedy — and really, when has anyone with power in the entertainment industry ever gotten greedy? — your “immutable” and “decentralised” ledger may turn out to be neither, as happened with The DAO. There will be heartfelt excuses.

  SNGLS were sold in an
ICO and are traded on the cryptocurrency exchanges. The offer document for their unregistered security430 went out the door a bit early:

  User has carefully reviewed the code of the Smart Contract System located on the Ethereum blockchain at the addresses set forth under [correct cite] and fully understands and accepts the functions implemented therein;

  The closest they have to a technologist on the SingularDTV executive is Joseph Lubin of the Ethereum Foundation and ConsenSys, the company developing their smart contract. Everyone else appears to be a media industry person, which leaves SingularDTV looking very like the standard marketing of DRM snake oil to desperate old media.

  SingularDTV’s stated goal in their white paper431 is two million paid viewings per episode, at $2.60 a go — in ether, not actual dollars — of a planned TV show over the next two to three years. They give no basis for this number, nor where millions of new Ethereum users will come from, nor why millions of ordinary suburban consumers won’t find hitting the Pirate Bay vastly more convenient than dealing in ether and having “sorry for your loss” events. (Though they have a seven-minute SingularDTV Lightwallet Instructional Video.) Perhaps they can gross even more than $133.20.

  Why would someone think such a ridiculously flimsy scheme was a good and workable idea? Their totally boss sci-fi TV series Singularity, no less! A worldwide economic collapse, as predicted by Austrian economics, leads to a fictional Caribbean island becoming the richest place in the world because it was first to adopt Ethereum as its currency. Then an artificial intelligence takes over the world, rendering the preceding plot meaningless. To be produced and distributed worldwide through the S-DTV portal!