7 UP: An Interview with… Paul Dilorito

Blockchain, FinTech, News, Regulation | April 20, 2017 By:

Paul Dilorito is the Director of Operations and Data Strategy at PRS for Music, a member-owned music collection and rights society.  PRS recently joined with two other rights societies in a partnership to prototype a new blockchain-based system for managing copyright information.

The goal of the project is to prototype how the music industry could create and adopt a shared, decentralized database of musical work metadata with real-time update and tracking capabilities.

Dilorito talked with Block Tribune about the possibilities of blockchain and the project.

BLOCK TRIBUNE:  The music industry was notoriously slow to react to the Internet. What lessons were learned from that experience?

PAUL DILORITO:  We have certainly learned to be faster at reacting to new digital platforms and service providers. For example, PRS forMusic was the first organization to license YouTube outside of the US back in 2007. We are also pleased to be a leading source of research in related areas, such as anti-piracy; in 2012, we worked with Google and Detica to define the six business models for copyright infringement, and we are also looking forward to releasing our findings on stream-ripping – one of the biggest growing threats to streaming consumption – shortly. And, of course, our blockchain initiative with ASCAP and SACEM is also further evidence that we are very open to exploring new technologies that could benefit the music industry. But the Internet is always changing and being a first mover has not always proven beneficial in hindsight.

BLOCK TRIBUNE: Will blockchain become the standard for music accounting practices?  Or will it exist in tandem with existing methods?

DILORITO:  Blockchain is certainly of great interest and PRS for Music is actively exploring how it may be developed further to unlock its potential via discussions with others in the industry and tech developers, in addition to our joint initiative with ASCAP, SACEM and others such as PPL.  It certainly looks as if blockchain has potential to be part of the solution in enabling greater transparency around music usage and helping to bring value back to music. But it is only part of a potential solution.

Blockchain also invites many questions and we are exploring these carefully.  What is very apparent is that blockchain solutions need to either be linked to a designated authority to guarantee accuracy around metadata and ownership of musical works, or blockchain tools should be governed by agreed protocols on data authority hierarchies – so that the blockchain is checked against a source that is closest to the owner.  Anyone can set up a blockchain, so there needs to be a mechanism to check true rights ownership and enable widespread adoption, and confidence in the data it will hold.

BLOCK TRIBUNE:  How will terrestrial and Internet radio fit into the blockchain world? Similarly, how will retail and live performance? TV?

DILORITO:  These are sectors that could feasibly benefit from blockchain, but it is early days.  Blockchain is certainly an area of interest along with other tools that have already been developed.  Music recognition technologies have a part to play and we have an active interest in these as well.

BLOCK TRIBUNE:  What parallels do you see in the developing blockchain world from the early Internet days?

DILORITO:  Blockchain is an emerging technology that is in an early stage of development. There are currently a number of different (even competing) blockchain initiatives developing across different industry sectors that are incompatible with one another and not all are likely to survive. This is not dissimilar to the evolution of the Internet, when competing browser technology and messaging applications were incompatible due to proprietary standards and protocols. The lack of maturity in distributed ledger platforms makes it difficult to discuss opportunities to achieve interoperability and international standardization, which can often take many years to achieve.

Blockchain is a useful technology. But key to its success in the music sector is the adoption of new workflows, behaviors, and an agreed methodology for applying data authority rules. These are not new issues and exist even without the blockchain technology. They need to be solved before any single blockchain solution will prevail. This is an area PRS forMusic is heavily focusing on in these early stages.

BLOCK TRIBUNE:  What are the most pressing questions of your constituents regarding blockchain?

DILORITO:  A key question that has been raised in the industry is how authority will be established in relationship to metadata and rights ownership?  There are a number of solutions that we are exploring from designated authorities and protocols for hierarchies of data authority.

Another question is whether smart contracts are suitable in the event that Blockchain scales up to serve the industry, rather than simply providing a tool for individual artists who own 100% of the rights to a musical work.  If smart contracts were to be widely adopted, how will they be respected?

Content platforms will need to accommodate smart contracts and there must be a change in the hosting safe harbor legislation to make them liable. Otherwise, there will be no incentive to respect smart contracts embedded in creative content.

Another key question is how will negotiations to override smart contracts be undertaken?  Most creative works have a chain of contractual relationships – subject to change and territory specific. Disputes in this area are common.  PRS forMusic will need to explore this area to ensure that flexibility is maintained.

BLOCK TRIBUNE:  What is your timeframe for developing the app that was recently announced?

DILORITO:  We are moving forward with our proof of concept and engaging with wider conversations within the industry.  Now is a great time to make progress because everyone we speak to wants to see improvements in this area.  Momentum can be built on the growth in this market and the need for quick and effective micro licensing solutions.  So we’re pushing forward as quickly as we can.

BLOCK TRIBUNE:  Are there any apps or companies using blockchain that have caught your eye as a possible model for what you want to accomplish with this technology?

DILORITO:  There are Smart Content platforms for digital media that have most definitely caught our eye.  PRS for Music was very pleased to set a challenge for entrepreneurs that are investigating the potential use of blockchain in the world of digital rights management.  One of the key pain points in the industry is the high number of recordings with incomplete or incorrect data, which the filter created by some platforms could significantly help with.

We maintain discussions with a number of them and provide guidance to help them better understand the music industry challenges.