Streaming Giant Spotify Acquires Blockchain Startup Mediachain Labs

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by Polina Chernykh · 3 min read
Streaming Giant Spotify Acquires Blockchain Startup Mediachain Labs
Unlike physical or download sales, which pay artists a fixed price per song or album sold, Spotify pays royalties based on the number of artists' streams as a proportion of total songs streamed on the service. They distribute approximately 70% of total revenue to rights holders, who then pay artists based on their individual agreements. Photo: Blixt/Flickr

Music streaming service has announced a new acquisition that will help the company to monitor music ownership information and prevent problems of attribution.

Spotify has bought the New York-based blockchain company Mediachain for the undisclosed sum.

As Mediachain wrote in a blog post, they have been “acquired by Spotify to further the streaming leader’s journey towards a more fair, transparent and rewarding music industry for creators and rights owners”.

The Mediachain team will move to Spotify’s offices in New York City where they will jointly develop the technology for connecting right owners with the songs hosted on Spotify’s platform.

The startup was launched in 2016 and has attracted $1.5 million from a range of prominent investors, including Union Square Ventures and Andreesen-Horowitz.

“Over the last three years, we’ve developed open, decentralized data infrastructure, built open-first applications to surface attribution for creators, and even prototyped our own cryptocurrency to reward creators and curators for their contributions to culture,” the company said.

Mediachain has been investigating how the blockchain capabilities can be used to create a more connected world for music creators and help them reach their audiences and earn a living.

“All of these efforts have been driven by the passionate community of creators, developers, blockchain enthusiasts, media organizations and investors who have shared our vision for a more open and programmable world for media metadata.”

Mediachain also said in a blog post that its team has experience in the music industry. Before co-founding Mediachain, Jesse Walden ran an artist management company that worked with artists like Solange Knowles, Majical Cloudz, and Blood Orange. The startup’s CTO, Arkadiy Kukarkin, was the first engineering hire at music blog aggregator HypeMachine.

“This experience, as well as the rest of the team’s personal pursuits as creatives, has driven our conviction about the future of media metadata: a shared data layer is key to solving attribution, empowering creators and rights owners, and enabling a more efficient and sustainable model for creativity online,” the startup added.

Mediachain is expected to help Spotify solve issues with attribution, taking into account that it had problems with this before. In December 2015, the company faced a class action lawsuit from musician David Lowery regarding unpaid royalties.

The National Music Publishers Association (NMPA), a major trade association in the US for songwriters and publishers, claimed that Spotify failed to get mechanical licenses for some of the songs on its service. However, the company settled a dispute by paying a $5 million penalty and more than $20 million to music publishers. The deal between the parties will enable music publishers in the US to receive royalties for music tracks on Spotify.

Earlier this month, a group of major music rights societies cooperated for a new project that aims to use the blockchain technology for protecting rights of songwriters. The societies, according to the announcement, are going to build a new Hyperledger-based platform that will speed up licensing and enhance royalty matching processes.

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