Spotify acquires blockchain startup Mediachain to solve music’s attribution problem – TechCrunch
Spotify has acquired the Brooklyn-based blockchain startupÂ Mediachain Labs, whose teamÂ will join the companyâs office in New York where they will work on developing better technology for connecting artists and other rights holders with the tracks hosted on Spotifyâs service. Prior to its acquisition, the startup had developed several technologies that could aid in these efforts, including aÂ decentralized, peer-to-peer database toÂ connect applications withÂ media and the information about it, as well asÂ an attribution engine for creators, andÂ a cryptocurrency thatÂ rewards creators for their work.
In short, the startup was working to leverage blockchain technology in order to help solve problems with attribution.
This is an area where Spotify can use some help, as it turns out. Last year, Spotify settled a licensing dispute withÂ the National Music Publishers Association (NMPA) in the U.S. over unpaid royalties.
According to the NMPA, Spotify had failed to obtain mechanical licenses â which refer to a copyright holderâs control over the ability to reproduce a musical work â for a large number of songs on its service, The New York Times had reported. The issue could impact other streaming services as well, the NMPA said, estimating that as much of 25 percent of the activity on streaming platforms is today unlicensed.
Spotify at the time agreed to pay over $20 million to music publishers as a result of this settlement, in addition to aÂ $5 million penalty. While the company likely avoided several class action lawsuits as a result of the settlement, it spoke to a larger problem in the industry.
SpotifyÂ had claimed that it didnât pay out theÂ royalties because it simply didnât have the necessary data toÂ help it figure out whose claims were legitimate, or even how to locate the parties. ItÂ said it lacked an authoritative database that covered all existing music rights. This opens it up to litigation, which is obviously not the ideal way of managing these payments.
With Mediachain, Spotify potentially has a solution on its hands â but instead of building out a centralized database with music rights information, it looks like it will build a decentralized one.
As Mediachain explains in a blog post, its vision for the problem with attribution isÂ a shared data layer, which is saysÂ âis key to solving attribution, empowering creators and rights owners, and enabling a more efficient and sustainable model for creativity online.â
It also helps that the team at Mediachain has music industry experience. The company noted in the post that its CTO Arkadiy Kukarkin was the first engineering hire at the music curation aggregatorÂ Hype Machine, and before starting Mediachain Labs, co-founder Jesse Walden had co-founded and runÂ an artist management firmÂ that worked with artists includingÂ Solange Knowles, Blood Orange and Majical Cloudz.
Mediachain says it will turn over theÂ technology it had already built to the open source community as it moves to Spotify.