New blockchain-based music streaming service Audius is a copyright nightmare

New startup Audius says its blockchain-based music streaming service is the solution that finally pays attention to the needs of indie artists. It is also full of piracy.


The Audius website says, "Music platforms were at their best when they listened to what artists and fans wanted – no companies or big labels" and that uploaded songs "can never be censored or deleted." TechCrunch named Audius & # 39; blockchain, have been moved & # 39;secret sauce, "While Yahoo Finance said it was"respond adequately to the most urgent needs within the industry. But copyright is one of the most pressing issues in music right now. Audius contains infringing material – such as an unlicensed version of Ariana Grande and the & # 39; problem & # 39; from Iggy Azalea – which the company cannot remove if the promotional material is correct.

Audius competes directly in front of the SoundCloud audience, which may explain the problems. SoundCloud was once a refuge for emerging artists, where at that time unknown people such as The Chainsmokers and Lorde were hosted, but much infringing material was also hosted: remixes, mashups and often entire songs. Although SoundCloud had a content ID system since 2011, it started to get tougher with enforcing copyright complaints after signing deals with labels, often with haphazard results, so hardcore users started searching somewhere else. In an attempt to address these users, Audius encounters the same problems.

"They say "We don't have the ability to deform you or censor you." What I hear when I read is: "It becomes very difficult for us to remove everything you impose," says Kevin Casini, a professor of entertainment law at the Quinnipiac School of Law in Connecticut. "They try to talk as if they are talking to people who are afraid of this bogey broker. And they also say: & # 39; Hey, this is a new place where you can upload something, at least for a short time, and we don't look at it and see what it is. & # 39; that they know this is something that is going to happen soon for them, and they signal and advertise to people that really know what they say, namely: "You can come here and do it."

Audius says it focuses on the newcomers who would have ever used SoundCloud. "We now really see ourselves in the same niche as SoundCloud," says Audius CEO Roneil Rumburg The edge. Audius can even shoot at it. The hackles of indie artists were raised by a SoundCloud income-generating contract that made it possible to change payment terms without notice and sue blocking artists against the company.

But the problem is that all the things Audius says can be solved with the blockchain – a more direct line between fans and artists, discovery, generating their own income – can be done without the blockchain. In fact this is is is done without the blockchain at Bandcamp and Patreon, among others.

There to be real problems in the music industry: poor and non-standardized metadata, missing contributor credits, unidentified recordings to be matched, copyright infringement in any form and lack of advanced audio fingerprint tools. Human errors with metadata mean that musicians, for example, miss out on routine payments. Recently a scammer was able to put an unreleased Kanye West album on Apple Music as ringtones. Artist is cheating can take advantage of the work of others on streaming services by simply tagging songs incorrectly or adjusting the audio, such as moving a song up or down slightly.


Blockchain does not solve all this and in some cases makes it worse.

"At first glance, many people think," Blockchain is perfect for this, "says Jack Spallone, senior product manager at ConsenSys." Not entirely. If (the music industry) could really use Excel, it might not be a problem. & # 39;

Blockchains make piracy more headache.

Audius tries to prevent SoundCloud's copyright issues by not hosting the content uploaded by the user. The open source protocol, built on blockchain, means that the responsibility for hosting and making uploaded content available is distributed to people who register as node operators. They say that this method should protect them of liability and the claws of large labels. This is actually an open question. Has copying and distribution initiated by the user but performed by a system some companies isolated in the pastbut it has not been a sufficient argument for others.

There are other red flags with the way Audius is set up: confirmed by the company The edge that there is no content ID system to cope with potential infringement. Although individual uploaders can be held liable for infringement, there is no way for Audius to remove infringing material and there is also no way to make a breach claim on the website. "A formal process is in the making," said a representative of the company.

Whether or not this business model persists in court, lawsuits from major publishers or labels can easily nullify Audius' capital. And if you are buried with lawsuits, you have no money for anything else. It remains to be seen how labels and other rights holders will respond to Audius, which is quickly saturated with infringing material.

Original Ed Sheeran songs are now available to play on Audius, along with songs registered with labels such as Dim Mak and Spinnin & # 39; and scores of non-sanctioned remixes with material from Kanye West and Eric Prydz. None of these artists are paid for this use. In fact, says Audius, nobody is paid at all. The implementation of payments is planned "TBD as somewhere next year," says Rumburg.


Even if Audius is not directly liable for infringement, it can still be held secondary liability if a court finds that it "promotes its use to infringe copyright, as evidenced by clear expression or other confirmatory measures taken to promote infringement."

Experts are skeptical as to whether being present on the blockchain is sufficient to protect Audius from washing their hands of bad actors. Historically, services such as Grokster similar arguments used. After all, Grokster has not hosted any material; it only allowed the resources for people to share files with each other. But it lost that fight in the Supreme Court and stopped in 2005. "That's what all early peer-to-peer services said and it didn't work great for them," said John Bergmayer, legal director at Public Knowledge.

Audius essentially sees its role as an open-source software producer, says Rumburg. “We actually provide artists and listeners with the tools they need to communicate directly with each other. We help manage that community, but we do not actively post content or manage the code. "

I ask Bergmayer if that is enough to protect the company. "I'm all for a looser copyright system, but I don't want people to put forward those legal arguments that have been lost," he says. "If there is an underlying direct infringer and you do something, nothing at all, now or in the past that makes it possible in some way, there is probably a claim against you."

Of all the different types of art that can be protected by copyright, music is one of the most messy to deal with. To start with, each number two copyright: one for the composition and one for the recording. Most songs have many people and entities that have to be paid on both sides every time a song is played – from the record label to the songwriters to the people who perform the song.


Here is an example originally used by Annie Lin, senior business advisor at Twitch: Katy Perry & # 39; s "Firework". Capitol Records owns the "Firework" recording, but five different songwriters with five different music publishers have percentages of composition rights. Most existing music works in this way; Imagine the logistical difficulties of convincing everyone from hundreds of regions around the world, all of whom have different copyrights, to switch to Blockchain.

But can Audius attract an audience?

This is probably the reason why Audius takes the SoundCloud route. The easiest way to use blockchain with music streaming services is to focus on controlled compositions – that is, songs that are written, owned, and managed by one entity (i.e., many emerging artists). That market is still a piece of music as a whole.

Moreover, focusing on such a niche market means that we are confronted with the economic reality of competing with people like Spotify, Apple Music, Amazon and, yes, SoundCloud, all of which have licensing agreements with the majors to deliver huge catalogs. People already get music for these services for $ 10 a month, so it's hard to convince them to sign up for another service without one of their favorite popular artists.

"Okay, well, we're not going into the majors," says George Howard, associate professor of music company / management at Berklee College of Music and Brown University, who describes this overall strategy. "We just get up with some music with a group of artists that nobody has ever heard of and wonder why nobody comes here because they don't understand the network effect."


There are other problems that every blockchain-based music streaming service faces. How can a copyright holder identify the location of the infringing work other than by issuing a summons? How can the service comply with a DMCA notification when content is invariably embedded in a blockchain? What liability does a node operator have for hosting infringing material that the operator may not have uploaded? Or users for uploading?

Blockchain technology can be useful in music in some cases. For example, it could cause scarcity with limited edition digital editions or be used to reward and share income with fans such as Imogen Heap did during her last tour. But using it for a music streaming service is not necessary, and claiming it is a solution to one of the biggest problems facing musicians is simply not true. "They don't understand copyright," Howard says about Audius. "They have a barrier to take on evil from the major stakeholders, and that is just going to crash and burn. The problem is that it is sending another signal that blockchain and music are not working."