Spotify, the European streaming music service that took the United States and other parts of the world by storm several years ago, has long been a favorite among listeners for its selection of music and ease of use. Like many other streaming services, though, Spotify has its share of detractors among artists and rights holders, some of whom suggest that the shifting world of royalties is not entirely fair or accurate. Now, in a maneuver aimed at improving and honing relations with rightsholders for the music streaming on its platform, Spotify has acquired the New York-based startup Mediachain, which it hopes will assist in tracking and processing royalty payments. The key to this development will be the use of blockchain technology.

Mediachain History Dates Back to 2016

Mediachain was launched in 2016 with the support of seed funding from Andreessen Horowitz and Union Square Ventures, according to VentureBeat. The startup has been working to develop a peer-to-peer database and platform to be used to register, identify, and track the distribution of creative works online. Important to the process of maintaining this database is the use of blockchain technology for the purposes of timestamping and certifying ownership. Blockchain, originally developed for use in tracking and maintaining records of Bitcoin and other cryptocurrency transactions, has seen increasing numbers of applications outside of the digital currency world in recent months.

The ultimate goal of the Mediachain position within Spotify will be to enable the creators and rights holders of music streaming on Spotify's platform to efficiently prove that they own the work they have created, which will in turn streamline the royalties distribution process.

Who Gets the Payment?

One of the biggest problems facing streaming companies like Spotify is not the matter of being willing to pay royalties, but rather the question of who should receive those payments. Particularly in the case of independent artists and labels, determining who owns the rights to a particular recording can be very difficult. The challenges have resulted in legal turmoil for Spotify. In response, Mediachain's cofounder Jesse Walden indicated that "a music blockchain would be a single place to publish all information about who made what song, without have to trust a third-party organization."

Spotify enjoys subscriptions from 50 million paying customers and may be looking ahead to an IPO in 2018, according to VentureBeat. By helping to shore up its royalties payment process and utilize the latest in blockchain technology, it could successfully create further distance between itself and other competing services. At the same time, the move, if successful, is likely to ingratiate Spotify with artists, publishers, and the broader creative world as well.