Earlier this year the Finnish collective management organization Teosto, which represents the interests of thousands of Finnish composers and music writers, engaged Chainfrog to implement a proof-of-concept blockchain-backed collective rights management system for Teosto Futures Labs in Q1 2017. An announcement was made by Teosto on 29 May, and the system is named “Pigeon”.
The system will allow different copyright organizations to report to each other performances of musical works, determine royalty payments, and acknowledge and settle said payments. It relies on Multichain as a blockchain to remove the need for a trusted intermediary to handle report verification and clearing, and permits reports to be generated in industry standard CRD format and JSON format.
Collective management organizations present an ideal use case for blockchain, in our opinion. Each society has the same overall aim, namely the collection and distribution of royalties to the creators of musical compositions, but ultimately they exist to care for their membership. As such, they form a consortium with no clear leader to elect as an “overseer” of the transaction processes in dealing with the transfer and settlement of payments. In any case, it would not be beneficial to the final recipients of the royalties to have to pay a cut to a “middleman” handling the whole process.
Teosto is a remarkably forward-looking organization, and has put forward a number of ground-breaking developments in the area of collective rights management through their Futures Lab division. It was a privilege to work with them on the project, and we look forward to seeing the blockchain-backed settlement system improving the transparency and speed at which collection societies all over the world can go about their core business – ensuring artists and composers receive their dues.