Alongside a backdrop of late payments to at least one distributor, music download store eMusic has just released a white paper spelling out an ambitious blockchain ICO. But, writes David Gerard, their plan leaves some significant questions unanswered.
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Op-ed by David Gerard of Rocknerd
After the light paper a few months ago, venerable music download store eMusic has released the full white paper (PDF) for their ICO token offering!
It’s a bit underwhelming. The plan is:
- Collect a great big pile of money by selling magic beans.
- Spend the money writing an all-new platform, to sell downloads and serve the streaming outlets.
- Pay people in more of the magic beans.
The details of Stage 2 are a proper Underpants Gnomes-style “???”
The Plan
eMusic’s present platform is a web-based download store. Customers subscribe and get a certain number of download credits each month, which they have to use or lose.
They plan to start with the present download store, but using the new token instead of monthly download credits — with the incentive that the tokens won’t expire.
The new platform would sell downloads as before. The new bit is that unsigned artists could publish there — at present, you have to go through a distributor — and your content would also go to the streaming services.
A fully transparent music publishing system that can be used by any producer, A creator or provider of music — from unencumbered/DIY individual artists right up to major labels with 1,000s of artists on their roster.
eMusic isn’t presently on speaking terms with any of the majors, and is haemorrhaging indie catalogues. But the labels will surely come back for this plan!
eMusic continues to be a profitable business in a world where very few players see meaningful revenue from music sales.
This is a slight surprise, given how eMusic has gone bust and been bought out repeatedly over the past twenty years. Also, nobody can get a straight answer on just how they’re losing all those indie catalogues lately.
Note that these plans are all in the future tense — none of this exists yet.
The artist and label plan
The new platform will start with unsigned indie artists. “A small platform fee will apply for storage/hosting of files.”
The split is 50/50 between you and eMusic. They acknowledge that you could get more from unnamed other outlets — i.e., Bandcamp — but it’s totally worth it, because eMusic will be so good.
As we expand, we expect to attract independent, major-affiliated and eventually major labels to the platform by offering larger-scale batch ingestion tools. For thousands of existing eMusic label partners, this process would be rather seamless as we already have their catalogs ingested into our systems.
To tackle the legal challenge of delivering entire label catalogs through our platform, we will be working closely with music rights lawyers and other industry specialists to establish a clearing house service that would enable us to incorporate any back-catalog content, and we will work with associated rights agreements to ensure the flow of royalties remains uninterrupted.
That is: the legalities — which you might think were rather important — exist only as a vague notion. They have no idea right now how to make all of this work legally.
Your eMusic uploads will be available on lots of other platforms too! … once eMusic make any arrangements with them. “We are under no illusion that convincing established service providers, such as Pandora or Spotify, to incorporate our blockchain platform will be easy.”
Blockchains! and Smart Contracts!
Blockchain evangelists will tell you that supply chains and other economic structures complicated by intermediary processes can be simplified and their efficiency increased by digitizing the transactions involved, distributing them on a public ledger and allowing the parties involved to interact with each other directly rather than having to go through a central node.
They can tell you this, but that doesn’t mean they’re not talking out of their hats. I wrote a chapter of a book on how this wouldn’t work in music, and so far I’ve been correct.
The white paper says a few times that blockchain systems will be more efficient, therefore cheaper — but there are no real-world examples of it working out this way.
Smart Contract 1 will be “Content” — for artists to publish on the platform. Smart Contract 2 will be “Sales”:
When a sale or stream is made on a retail outlet, the data is recorded off-chain to a database containing music asset ids. On a regular schedule (daily in the case of eMusic retail store) the service provider will update a Sales Smart Contract, sending the funds generated by the sale/stream of each music asset along with the IDs, as well as the fiat value per asset and number of sales/streams per asset for that period.
That is — the Smart Contracts are just the programs you would need to make a store work. The blockchain is just used as a transaction log — its “blockchain” nature is not used in any meaningful way.
“Smart contract” is a cool-sounding jargon term for “computer program” — writing this system will be just as much work as any other new computer system, and it’ll have just the same problems with bugs and user acceptance testing.
And, as I spent all of chapter 10 of Attack of the 50 Foot Blockchain attempting to bludgeon home — smart contracts are almost impossible for humans to program safely. Smart contract coding is harderthan ordinary coding — it’s hard-to-impossible to fix bugs, the programmers and the languages they’re using are frequently terrible, and security is a nightmare.
Yes, but where’s my money?
eMusic will introduce a proprietary Ethereum-based ERC-20 token — a digital asset that can only be used in our new music ecosystem.
You get paid in eMusic magic beans. Not many landlords, supermarkets or music stores will be accepting these as yet. I asked about this on /r/eMusicofficial on Reddit, and they answered:
It will be the artist choice to decide whether to be paid in cash or tokens — part of our $70M USD raise will be to provide the option for artists to be paid as they would like. Being paid in EMU will have benefits that normal fiat won’t have including participating in fan based incentives for referrals, access to crowdfunding for future music projects, and even third parties that allow for payment for goods and services through the platform (like studio rentals, etc).
Page 35 of the white paper says:
10. Liquidity
eMusic Tokens are not a currency issued by any individual, entity, central bank or national, supra-national or quasi-national organization, nor is it backed by any hard assets or other credit. The circulation and trading of eMusic Tokens on the market depends on the consensus on its value between relevant market participants. Neither the Company nor any other person is obliged to purchase any eMusic Tokens from a purchaser or any other eMusic Token holder. The Company does not guarantee the liquidity or market price of eMusic Tokens to any extent. Purchasers of eMusic Tokens who wish to sell their eMusic Tokens must locate one (1) or more willing buyers to purchase at a mutually agreed price, which process could be costly and time-consuming. At any given time, no crypto-currency exchange or other public market may have eMusic Tokens listed thereon for trading. The Company does not intend to take any steps to cause eMusic Tokens to be listed on any crypto-currency or other exchange.
So the tokens are non-exchangeable customer loyalty points, and you’re stuck with them. But at least you can opt to get actual money instead.
Not answered — why they’re doing this on a public blockchain at all. They’re trying to claim these tokens aren’t tradeable and shouldn’t be tradeable. There’s a whole page of disclaimers about these ICO tokens not being any sort of investment.
We are conscious of the fact we share company in our pursuit of a decentralized solution with many projects of varying degrees of repute. Putting any questionable and unfortunate get-rich-quick schemes aside …
No aspect of this scheme is decentralised. Everything about it runs from their website and their company.
There’s no functional reason why the tokens shouldn’t just be entries in an eMusic database. Why are you doing all of this?
The customers respond!
eMusic has existing, paying subscribers, many of whom have been with them for years. The closest you’ll see to an official forum is Reddit /r/eMusicofficial.
The existing customers are mostly confused by this ridiculous blockchain garbage —and consider it a distraction from the loss of label catalogues:
To read the eMusic light paper and Medium posts, you are openly claiming (almost boasting) you will take artists and labels from companies like the Orchard, while paying labels less than virtually any other major platform in the industry. How is that going to magically bring content back once transactions take place by tokens instead of cash? It feels like — and this may not be accurate — eMusic is paying so much attention to blockchain and some yet-to-be-proven claim to focus on unsigned artists (which won’t address any of the content problems, by the way — it’s signed artists that are wanted but disappearing from the site) that no one is minding the fort with respect to existing content partners.
Their main concern is eMusic losing labels:
After 12 years, and around £2000 spent, I’m finally done. It’s been downhill since the relaunch, but today I had £10 left to spend before my credit renewed, and almost everything I had in my wishlist was unavailable. I just feel like i’m wasting my money. Couple that with so many site glitches and errors, it’s just become a frustrating experience all round.
Feel kind of sad about it, because I was on an immensely good package, but it’s just not worth it anymore. Subscription cancelled.
Hope you all have better luck than I did going forwards. This forum has made for sad and sober reading over the last 6 months, but i’m just done with it now. I have no idea how much longer they can possibly survive.
But blockchain will save them, right?
The token sale is lined up for Q4 2019.
Update: Orchard Pulls Labels, Artists Off eMusic For Non-Payment. “The Orchard has been in communication with eMusic on outstanding money owed, and despite threats of takedown, we have failed to receive payments. Therefore, all content through The Orchard has been taken down from eMusic’s platform as of July 2018.”