Can cities use blockchain to promote transparency in music?

The LinkNYC wifi hubs in action. Image: Getty.

Back in December 2014, without much fanfare, hundreds of standalone machines appeared on the streets of New York City, offering a number of free services for residents and tourists. These included accessing free WiFi, making a phone call, looking up directions and finding out important numbers, all accessed through a touchscreen that looks like a cross between a light post and a bikeshare-scheme stand.

The objective behind the LinkNYC screens was to provide free information to all New Yorkers and visitors, regardless of where one was or how much money they had. Accessible, available to everyone, transparent and helpful, the machines have assisted with mobility, access to information, communication and, importantly, civic engagement.

Last year, Estonia launched an e-residency business programme, aimed at recruiting entrepreneurs to register their company in the country and subsequently pay Estonian taxes on their profits. The program does not require business owners to move to Estonia: all filing and requisite paperwork is done online. The residency offer does, however, come with a number of tax incentives across R&D and recruitment to entice those lured digitally to explore opening up a bricks and mortar office.

The program has been especially popular with British businesses worried about Brexit and access to the EU. Using new technologies and methods, another often painstaking process – setting up a business – has been simplified for ease of access, much like finding a free and fast WiFi signal in NYC.

Both these examples use what the sector calls ‘smart’ technologies to improve people’s engagement with civic society. A smart city is one that develops an infrastructure of communication technology to give people access to information and resources in a way that’s almost effortless for the user.

In New York, it is the simple pain of getting around or finding WiFi. In Estonia, it is competing in the global market for entrepreneurs, their ideas and money. Across our cities and towns, more of these new technologies are being beta-tested, incubated and refined. This should engender improvements, especially in one of the most challenging issues in civics and cities today: making everything available to everyone in as fair and transparent a way as possible.

Both examples of successful, smart city technologies are built to foster transparency in a continuously moving organism in an even more complex ecosystem. There are other sectors that can benefit from this way of thinking. Take, for example, our sector and obsession: music. If we open up ideas, solutions and data for everyone, then – hopefully – everyone benefits. For music, transparency is in the eye of the beholder. The way that music is bought, sold and transferred could be rethought if we explore its challenges as a smart cities problem.

With music, the problem is not one with which the majority of the public is concerned: it is negotiated and debated behind closed doors. On the streets, the war against piracy in the mid-2000s is now assuaged. Most people have migrated to streaming services, such as Spotify and YouTube. The problem is, there’s no standard rate in which each song is paid per stream. Each service is different, and within each service, the rate depends on how much one’s track is being streamed at one given time, in one given place.

Behind this, there’s a century-old industry of collection societies, publishers and royalty administrators, moving bits and bytes across the globe in an effort to capture each penny, take a small percentage and then pass the remainder on to the creators.

The system is creaking under the requirement, in the streaming era, to keep track not only of each purchase but of every single listen. While listeners access tracks at the swipe of a touchscreen, payments to creators are slow – and in some areas opaque. Licensing information is not always easily accessible. Most problematically of all, there is not one single database of music copyright: there are several, none of them complete, and occasionally they actually disagree.


In NYC, before LinkNYC appeared, WiFi was more difficult to access in public. To those British businesspeople and entrepreneurs concerned with Brexit, access to the single market was more difficult without Estonia’s e-residency program. With music, the snags lie beneath the surface and that is where transparent systems can create change. Customers may not care or know how much each stream or download provides an artist, but artists and their representatives do. While solutions exist, the organism is not yet benefitting as a whole. The music sector, if treated as a city, is not as open as it should be. Smart cities technologies, ones adapted to impact traffic, banking, housing and healthcare, could be part of the solution, helping to provide a pathway to transparency.

Let’s build a roadmap of a song, from earbud to artist’s bank account. Once streamed, there could very well be five middlemen or women in the process. There can even be more if the chain crosses national borders, for instance if your song is played in Indonesia and you live and work in Boston. These intermediaries include publishing companies, rights administrators, royalty companies, collection societies, record labels, management companies and other entities.

Liken this to the process one goes through to open a bar in New York or stage a music festival in Poland. Both require multiple permissions and permits from different departments, each with their own schedules, objectives and requirements. Navigating the process requires as much work as realizing the art that initiated the process.

Lower barriers to entry, sometimes seen as empowering artists, have also resulted in an increasing number of musicians having to do it all – the flipside of being able to ‘do it yourself’. Without a label or manager, business decisions, from the day-to-day to the strategic, jostle for time with writing and recording. This is the city equivalent of having to grow, tend to and harvest all of one’s vegetables just to be able to eat. It’s having to build the bus before you drive yourself to work.

Looked at as a Smart Cities problem, new solutions present themselves. If a music value chain considered itself 100 per cent transparent, the song roadmap would be available for all to see at the start and end of the road. This could be done through blockchain technology, the notion of a distributed ledger, recording ‘blocks’ of transactions in an immutable ‘chain’.

First conceived to support the digital currency bitcoin, the underlying technology is increasingly being seen as having the potential to disrupt not only financial services but a whole range of sectors from healthcare to the diamond trade – part of the so-called Fourth Industrial Revolution. The potential for transforming the music industries is considerable. If income for each track, and for all parties, was to be recorded on a distributed ledger, for instance, then everyone in New York City could stream music from a LinkNYC machine, and rest assured those behind the content were being paid fairly for their work.

The solution here, however, is not only with the music industry. What if a city declared a goal to declare itself 100 per cent music transparent? Let’s unpack this.

Using blockchain technology within a national server, a file could be tagged with a blockchain marker. Once uploaded, this would trigger an instantaneous recognition of the song’s performance and, consequently, a payment into that artist’s wallet, as determined by a predetermined ‘smart contract’ – or programmable transaction, executed automatically, via the blockchain, when certain conditions are met. If the country or city would prohibit the uploading of songs without the relevant file marker, new songs would be tracked and payments would be deposited and allocated in real time, dramatically simplifying what is often a four or five step process.

The music industry is already doing this, albeit slowly. But cities aren’t along for the ride. We need a LinkNYC for music, or an e-residency for copyright. A number of collection societies – the ‘music police’ that license restaurants, cafes, shops and other establishments to play music while monitoring TV and radio – have invested in blockchain technology, working with global players including IBM on developing new architecture. Meanwhile, Spotify recently acquired the blockchain start-up Mediachain.

The LinkNYC program and the Estonian e-business residency removed barriers, created transparency and opened up their product, or service, to everyone. We can do the same with music. Maybe Tallinn and New York City can be the first ever music transparent cities, where every nanosecond of music that makes all our lives better in the places we live was paid for in real time to the rightful owners of each track. It’s just smart.

Dr. Shain Shapiro is founder & CEO of Sound Diplomacy. Marcus O’Dair is a programme Leader at Middlesex University.

 
 
 
 

To fix the housing crisis, we need to decide what success would look like

Building houses in Ilford, 1947. Image: Getty.

Recent years have seen growing public and political recognition that there is a crisis in housing. This has led to a widening debate on the causes and potential solutions.

However, within this debate there has been little in the way of a consensus view of what constitutes the current housing crisis – or what a “crisis-free” housing system might look like. There seems little clear idea of any measurable goal. The nearest we have as a target to aim at has been a series of aspirational numbers for new-build homes, with limited clarity on what to expect if we were to hit those numbers.

Clarity about what success would look like is essential. Without a framework for what we need and want from housing, our ability to understand and fix it appropriately will be compromised. A lack of clarity also increases the risk of unintended consequences from misguided policy interventions.

The current housing debate is, to quote UCL’s Michael Edwards, “bedevilled by rival simplifications”. There are several, quite often competing explanations for why we have a housing crisis. For many it is our failure to build homes at the same rate as projected household formation. This failure might be assigned to the planning system, the greenbelt, housebuilder business models, the land market, or NIMBYs.

For others, the crisis is a result of falling interest rates, rising credit supply, low income growth, wealth and income inequality, tax incentives, or simply our fixation on house price growth. For some, there is no shortage of homes, rather a poor distribution. And for others there isn’t really a housing crisis.

Despite the apparent contradictions in this mix of positions, each of the arguments that support these various views may hold significant elements of truth. Housing is a complex and interconnected system within the economy and society. There is no simple single housing market: there are multiple markets defined by location, property type, tenure, and price. Therefore, there is no simple single housing crisis. Instead we have multiple overlapping issues affecting different parts of the country in different ways and to varying degrees.

There may be factors that influence all housing markets across the UK, indeed across much of the globe. There will be others that impact more locally and within specific housing sectors.

So, for instance, there is growing acceptance by many experts that the cost and availability of credit has been one of the biggest, if not the biggest, drivers of increases in national house prices over the last twenty years.


But it is not the only factor. The growth in buy-to-let has contributed to the financialisation of housing, with homes increasingly thought of as an investment rather than a place for people to live. A lack of supply is predominantly an issue for London and its surrounds, but there are localised shortages elsewhere, particularly of specific types or tenure of homes.

Planning (including a lack of) and the land market limit the responsiveness of supply to rising demand. Housing is unevenly distributed, mostly across generations but also spatially and within generations. Some areas don’t need a net increase in housing but desperately need existing poor-quality homes improved or replaced. In many areas the biggest issue is low (or negative) income growth and employment insecurity.

All these issues and others play a part in defining “the housing crisis”. Having a framework for what we need and want from housing, combined with an understanding of the complexities and interactions that run through the housing market, is essential to resolving the problems they create.

The problem with ‘households’

A misunderstanding of the complexities of housing can be found in one of the most frequently stated explanations for the crisis: a lack of new supply compared with household projections.

Unfortunately, this argument is flawed. Household projections are not a measure of housing demand. The effective demand for new housing is determined by the number of people or companies willing and financially able to buy property. Meanwhile new supply only accounts for around 12 per cent of total transactions and probably less of available homes for sale.

Importantly, even if some analysis may suggest there is no shortage of supply, that does not mean there is no need for new supply. Household projections are a statistical construct based on the past, not a direct measure of future housing demand. But they are still important if used appropriately within a framework for what we need and want from housing.

If we are more explicit about the role of household projections in measuring housing need and the assumptions they contain, then the ‘supply versus household projections’ argument might be recast as a debate on changing household sizes and the consumption of housing (both in terms of space and multiple properties).

This then implies that we should be clearer about the minimum acceptable amount of housing people need, while also accounting for what they want. Should younger people still expect to form households at the same rate and size as their parents? The assumptions and projections around future household sizes should be moved from the background, where they are typically only discussed by planners and researchers, to the centre of the debate.

They should be just one part of a framework for success that explicitly states what we need and want from housing – not just in terms of size but also cost, tenure, quality, security, and location – and better defines the minimum we are prepared to accept. That will provide a clearer understanding of where housing is failing to meet those requirements and help set objectives for how to fix it. These could then be applied appropriately across different markets.

“Rather than trying to return to the relatively short-lived 20th century ideal of mass home-ownership, perhaps we should be focussing our efforts on making renting cheaper”

If measurement against the framework shows that households are not able to form at an appropriate rate and size relative to what they need, then we probably need to increase supply while possibly encouraging older households to move out of larger homes. If rents are too expensive then we may need to reform the rental sectors and increase supply. If housing quality is poor, then we need to work harder at improving and replacing existing stock. If many areas are struggling due to low (or negative) income growth and employment insecurity, then we probably need to look beyond just housing. It might even question whether we need to rebalance the economy and infrastructure investment away from London and its commuter zone.

Having a framework for success may even highlight which issues we can fix and which we can’t. For example, it looks likely that we are stuck with a low interest rate and hence high house price to income market. Under those conditions, prospective first-time buyers will continue to struggle to raise a deposit and access home-ownership irrespective of how much new supply can be realistically delivered.

Rather than trying to return to the relatively short-lived 20th century ideal of mass home-ownership, perhaps we should be focussing our efforts on making renting cheaper, higher quality, and more secure as a long-term home. Increasing new supply would be an important tool in achieving that outcome.

When we have a framework for what success could look like, our ability to understand and fix housing appropriately will be dramatically improved. It would be an important step towards making housing available, affordable, and appropriate for everyone that needs it. It would also be more useful than simply setting a nice round number national target for new homes.

Neal Hudson is an independent housing analyst, who tweets as @resi_analyst. This article originally appeared on his blog.