Spotify acquires Mediachain in effort to uphold artists rights
Spotify has acquired New York start-up Mediachain, aiming to use its open source, blockchain-based peer-to-peer database and protocol to pay artists more fairly. The acquisition may help Spotify resolve its issues concerning unpaid royalties, which led to a recent $30m settlement for the company. Mediachain could create a music blockchain that could track creators’ data in a transparent way. Spotify is working on garnering support from labels and the creative community, making acquisitions to ensure its licensing arrangements better service its customers.
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Spotify has acquired Mediachain, the New York-based startup behind an open source peer-to-peer database and protocol for registering, identifying, and tracking creative works across the internet. Terms of the deal were not disclosed.

Launched in 2016 with seed backing from Andreessen Horowitz and Union Square Ventures, Mediachain has been working toward using blockchain technology to entrench timestamps and data regarding ownership within a specific media asset. It’s all about enabling creators and rightsholders to prove they are the owner of a piece of work — in Spotify’s case, music — and receive payment.

The problem for legitimate companies, such as Spotify, is that they may try to pay artists and publishers but often don’t know who to pay. This is perhaps more of a problem with smaller artists or indie labels. Just last month, Spotify reached a $30 million settlement with a publishing group over unpaid royalties and agreed to establish best practices to make a “reasonable effort” to match all music streams with rightsholders.

Blockchain technology has enabled the bitcoin cryptocurrency to flourish through a decentralized database, where the ownership of specific tokens and their values are recorded, and Mediachain has been working to enable a similar setup in music. “A music blockchain would be a single place to publish all information about who made what song, without having to trust a third-party organization,” Mediachain cofounder Jesse Walden has said previously.

Now Spotify is bringing Brooklyn-based Mediachain to work in its New York office to “help further Spotify’s journey toward a more fair, transparent, and rewarding music industry for creators and rights owners,” according to a press release.

With Spotify recently passing 50 million paid subscribers and expectations that it will aim for an IPO sometime in 2018, the music-streaming giant has been going all out lately to garner the full support of labels and the broader creative community. Earlier this month, Spotify entered into a new licensing arrangement with Universal Music Group (UMG), allowing bands to limit new album releases to Spotify’s premium subscription for up to two weeks. It followed this up weeks later by signing a similar deal with Merlin, effectively adding thousands of indie labels to a flexible release policy.

Much like its refreshed licensing arrangements with labels, bringing Mediachain on board is all about demonstrating that it’s doing its very best to ensure artists are fairly compensated for their work.

Mediachain also represents the latest in a long line of acquisitions by Spotify. Last month, it snapped up content recommendation startup MightyTV, shortly after having bought Sonalytic, a company specializing in music discovery and identification. And back in November, Spotify acquired Preact, a startup that helps companies acquire and retain subscribers.