Spotify acquires Mediachain to develop blockchain technology that matches royalties with rightsowners

By Paul Sawers for VB

Spotify has acquired Mediachain, a 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 to a specific media asset. It’s all about enabling creators and rightsowners to prove they are the owner of a piece of work — in the case of Spotify this would mean 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 the right people are to pay, which 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 they reached an agreement to establish best practices for Spotify to make a “reasonable effort” to match all music streams with rightsowners to make payments.

While blockchain technology has enabled the bitcoin cryptocurrency to flourish through a decentralized database where the ownership of specific tokens and their values are recorded, Mediachain has been working toward enabling 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 previously said.

Now, Spotify is bringing Brooklyn-based Mediachain in-house to work in its New York office, to “help further Spotify’s journey towards 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, with 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 when it signed a similar deal with Merlin, effectively adding thousands of indie labels to a similar flexible release policy.

Spotify’s latest acquisition can be viewed through a similar lens to that of its refreshed licensing arrangements with labels: bringing Mediachain on board is all about showing that it’s doing its very best to ensure artists are 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, which came shortly after it 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.