The music industry is facing several significant challenges with opportunity for disruption, including slow and opaque IP rights management and payment processes for music royalties. With a value of $45 billion, this is a large opportunity to provide artists and rights holders timely payments and the ability to leverage their royalties for financial gain or community building with their fans. Web3 has a lot to offer in solving these problems, and today we introduce the Original Works protocol to address these very issues.
Meet the Original Works protocol
The Original Works Protocol is built in collaboration with the music industry, with the goal of improving transparency and financial freedom for artists and rights holders. It is built on top of a core primitive: the Original Works Royalty Token (‘RT’), a smart contract that governs on chain royalty payments from a media asset in the real world (such as digital streaming royalties). Royalty payments sent to a RT can be used in a variety of ways, from connecting a song's royalties to fan communities through using it as collateral to receive advances on future royalty payments. In essence, a RT represents the commitment of a media distributor to pay future royalties to the RT smart contract that governs those rights. Once that royalty stream is on chain it can then be used in any web3 fashion the rights holder desires.
How it works
Creating a trusted bridge between real world media assets, royalty streams and a web3 smart contract is the core innovation of the Original Works protocol. Once this bridge is trusted, fast and reliable, new innovations can be built on top of the core primitive for the benefit of all the stakeholders in the music industry.
Here’s how it works:
Artists and other music IP rights holders bridge their music royalty payments to the Original Works protocol by creating an Original Works Royalty Token smart contract. The RT represents their agreement, together with their media distributor, to receive future royalty payments sent to that RT. This revenue can be from digital streams (example: Spotify), physical sales of records, merchandise or even web3 native assets such as NFT sales.
Each RT must be validated and signed by an Original Works Protocol Payment Oracle (PO). Payment Oracles bridge data and payment flow from the off chain to the on chain world. POs are music industry participants who have the access, visibility and ability to ensure that royalty payments move on chain to the RT (for example, rights organizations, distributors and record labels). In return for validating a RT, and providing a ‘proof of royalties’, PO’s receive service fees from the protocol.
Once a RT has been created and validated it starts receiving royalty payments in accordance with the real world revenue of that media asset, and can be used to access other apps enabled by the Original Works protocol, such as receiving advances on future royalties, or splitting those royalties with fans.
Building trust
Web3 offers composability, transparency and trust. However, that only exists once things are on chain. The challenge in working with real world assets is creating a trusted bridge between web3 and web2, and this is what the Original Works protocol strives to do by working together with the music industry and aligning incentives amongst the many participants involved in the protocol.
By creating a protocol that serves everyone’s interests, fraud can be prevented and transparency increased: PPOs verify the RT veracity and commit to paying the relevant royalties to the RT, should they fail, their collateral can be used to pay back hurt parties. As financial data on chain is transparent, parties who specialize in fraud can detect such occurrences and submit it to the protocol for arbitration.
Digital streaming platforms can opt in to supply zero knowledge proofs regarding the payments sent to artists, thus enabling artists to verify that the correct amount of royalties reaches them, despite the middle men along the way. This will greatly increase the trust artists have in digital streaming platforms, and can help alleviate the pushback these platforms have historically received from artists.
Who is the Original Works protocol for?
The Original Works protocol serves three main categories: artists and rights holders, music businesses and web3 builders.
Artists & Rightsholders: Artists, the main participants in the network, gain from financial freedom and control over their music royalties.
Music Businesses: The Original Works protocol serves the entire music industry: Digital Streaming Providers by enabling better transparency and artist engagement, music distributors and Collective Rights Organizations by adding value and speed for their artist services, labels by adding new revenue opportunities for the artists they manage.
Builders: Developers can build new applications on top of the open Original Works protocol. For example new ways for fans to engage with artists they love through on chain music assets or financial products that give artists new ways to take control of their music royalties.
Leveraging web3 to build a better music industry
The Original Works protocol is built together with the music industry to create a trusted bridge between real world music assets and the financial freedom and composability that web3 affords. Together with music rights holders, songwriters, publishers, rights societies, distributors, artists, labels and digital streaming platforms this bridge can be trusted, transparent, fast and reliable, enabling new innovations to be built on top of the core primitive for the benefit of all the stakeholders in the music industry.
If you're interested in hearing more, providing feedback or taking part, get in touch: yehoshua@revelator.com
