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\def\VERSION{0.9.1.4}
\documentclass[12pt]{report}
\ProvidesPackage{musereum}
\usepackage{framed}
\usepackage{float}
\usepackage{eurosym}
\usepackage{graphicx}
\graphicspath{ {images/} }
\usepackage[T1]{fontenc}
\usepackage{titlesec, blindtext, color}
\definecolor{gray75}{gray}{0.75}
\newcommand{\hsp}{\hspace{20pt}}
\titleformat{\chapter}[hang]{\Huge\bfseries}{\thechapter\hsp\textcolor{gray75}{|}\hsp}{0pt}{\Huge\bfseries}
\titlespacing*{\chapter}{0pt}{-35pt}{40pt}
\usepackage{amsmath}
\usepackage{amsfonts}
\usepackage{amssymb}
\usepackage{booktabs}
\usepackage{pgfplots}
\usepgfplotslibrary{fillbetween}
\usepackage{multirow}
\usepackage{tikz}
\usetikzlibrary{calc,trees,positioning,arrows,chains,fit,shapes.geometric,%
decorations.pathreplacing,decorations.pathmorphing,shapes,%
decorations.markings,%
matrix,shapes.symbols}
\usepackage{amsmath}
\usepackage{graphicx}
\usepackage{hyperref}
%\hypersetup{
% colorlinks=true,
% linkcolor=blue,
% filecolor=magenta,
% urlcolor=cyan,
%}
%Russian-specific packages
%--------------------------------------
\usepackage[T2A]{fontenc}
\usepackage[utf8]{inputenc}
%\usepackage[russian]{babel}
%--------------------------------------
%Hyphenation rules
%--------------------------------------
\usepackage{hyphenat}
%\hyphenation{ма-те-ма-ти-ка вос-ста-нав-ли-вать}
%--------------------------------------
\usepackage{multicol}
\setlength{\columnsep}{1.2cm}
\newcommand{\hlc}[1]{\colorbox{white!25}{#1}}
\usepackage[a4paper, total={6.5in, 8.7in}]{geometry}
\tikzstyle{event} = [trapezium, trapezium left angle=70, trapezium right angle=110, minimum width=3cm, minimum height=1cm, text centered, draw=black]
\tikzstyle{inout} = [rectangle, rounded corners, minimum width=3cm, minimum height=1cm,text centered, draw=black]
\tikzstyle{rect} = [rectangle, minimum width=3cm, minimum height=1cm, text centered, draw=black]
\tikzstyle{check} = [diamond, minimum width=3cm, minimum height=1cm, text centered, draw=black]
\tikzstyle{arrow} = [thick,->,>=stealth]
\tikzstyle{line} = [thick]
\tikzstyle{vecArrow} = [thick, decoration={markings,mark=at position
1 with {\arrow[semithick]{open triangle 60}}},
double distance=1.4pt, shorten >= 5.5pt,
preaction = {decorate},
postaction = {draw,line width=1.4pt, white,shorten >= 4.5pt}]
\tikzstyle{innerWhite} = [semithick, white,line width=1.4pt, shorten >= 4.5pt]
\pgfplotsset{
axisPlot/.style={
scaled ticks=false,
ymajorgrids=true,
xmajorgrids=false,
ylabel near ticks,
xlabel near ticks,
width=13cm,
height=7.5cm,
legend cell align={left},
legend style={at={(0,-0.20)}, anchor=north west, draw=none}
}
}
\pgfdeclarelayer{background}
\pgfdeclarelayer{foreground}
\pgfsetlayers{background,main,foreground}
%\usepackage{musereum}
\usepackage{import}
\setlength{\parindent}{0em}
\setlength{\parskip}{0.65em}
\renewcommand{\baselinestretch}{1.1}
\definecolor{light-gray}{gray}{0.95}
\def\code#1{\colorbox{light-gray}{\texttt{#1}}}
\title{Musereum}
\author{Artem Aler Dan}
\date{\today}
\begin{document}
\begin{titlepage}
\centering
\scshape % Use small caps for all text on the title page
\vspace*{\baselineskip} % White space at the top of the page
\rule{\textwidth}{1.6pt}\vspace*{-\baselineskip}\vspace*{2pt} % Thick horizontal rule
\rule{\textwidth}{0.4pt} % Thin horizontal rule
\vspace{0.75\baselineskip} % Whitespace above the title
{\Huge\textbf{MUSEREUM}} % Title
% \vspace{0.2\baselineskip} % Whitespace below the title
\rule{\textwidth}{0.4pt}\vspace*{-\baselineskip}\vspace{3.2pt} % Thin horizontal rule
\rule{\textwidth}{1.6pt} % Thick horizontal rule
\vspace{1.5\baselineskip} % Whitespace after the title block
%------------------------------------------------
% Subtitle
%------------------------------------------------
Official Whitepaper % Subtitle or further description
\small{ver.\VERSION}
\vspace*{3.5\baselineskip} % Whitespace under the subtitle
%------------------------------------------------
% Editor(s)
%------------------------------------------------
Edited By
\vspace{0.5\baselineskip} % Whitespace before the editors
{\scshape\Large Artem Abaev \\ Dan Reitman \\ Aler Denisov \\ Gleb Cohen \\} % Editor list
% \vspace{0.5\baselineskip} % Whitespace below the editor list
% \textit{The University of California \\ Berkeley} % Editor affiliation
\vfill % Whitespace between editor names and publisher logo
%------------------------------------------------
% Publisher
%------------------------------------------------
\vspace{0.3\baselineskip} % Whitespace under the publisher logo
2017 % Publication year
{\large Musereum Team} % Publisher
\end{titlepage}
%\maketitle
\pagebreak
\tableofcontents
\pagebreak
\chapter{Introduction}
\label{overview}
%\begin{multicols}{2}
Musereum is a blockchain-based project created by a consortium of blockchain professionals together with software development experts, lawyers and professional members of music industry. The expertise of the developing members allows for implementation of mentioned industries and technology to cope with realistic business challenges and transform the transactional structure of the global music industry.
The project represents a music platform based on smart contracts. Musereum tokens are key units of the platform employed to build economic relationships between all participants of the network.
Since it is difficult to immediately change the current situation in the industry that has been developing for decades, that is why the innovative mechanisms will be integrated gradually in collaboration with involved parties of the process.
Within the Musereum framework, the parties will be able to create music tokens that represent shares of exclusive rights for a track. The token issuance will be corresponded with track licensing and timestamping in Ethereum or Ethereum Classic public networks. Since music tokens will be traded on authorized exchanges, musicians will be able to attract funds using the crowdfunding model. At the same time professionals will be provided with a transparent tool for rights clearing, listeners will be given a way to legally and directly support their favorite artists and a new investment vehicle will be created for investors.
As a result, the project implementation will lead to radical transformation of relations in music industry, that is:
\begin{itemize}
\item creation of a unified database for management of intellectual property rights;
\item fairness of royalty payments due to decentralized processing;
\item creation of a music platform for promising artists;
\item simplification of licensing procedure.
\end{itemize}
%\end{multicols}
\chapter{Industry Overview}
\label{industry}
%\begin{multicols}{2}
As indicated by the International Confederation of Societies of Authors and Composers (CISAC), music royalties’ collections reached \euro 8b in 2016 with digital from societies totaled \euro 0,95b in 2016, up 51\% to previous year.
Music collections in Europe amounted to \euro 4,2b in 2016 (including \euro 653m in UK). Though digital music collections soared by 40\% to the previous year, its share was only 10\% across the whole EU. Meanwhile there are some countries where digital music constitutes a significant part, especially among the early adopters like Sweden where digital collections increased 118.4\% during the last 5 years to slightly less than one third of total music royalties.
According to the UK Music, the main umbrella organization that unites all the parties involved in production of music across the United Kingdom, total Gross Value Added contribution generated by UK music industry in 2016 was \textsterling 4.4b, more than a half of which (\textsterling 2.5b) is from export. About 45\% of total GVA is the revenue that relates directly to artists - musicians, composers, lyricists and singers. Recorded music and Music Publishing amounted to \textsterling 640m and \textsterling 473m respectively while Music representatives (namely collecting societies, managers and music trade bodies) and Producers \& Studios – \textsterling 96m and \textsterling 121m. The rest \textsterling 1b is generated by live events. Only PRS for music, which is a part of UK Music, collected more than \textsterling 620m of royalties from music copyrights in the UK in 2016. PRS Music indicated the prominent revenue growth with the highest rate of growth related to digital platforms (except for the streaming) from \textsterling 38.1m to \textsterling 80.5m (90\%) and streaming which is alone contributed \textsterling 61,5m. The rest of the amount is consisted from public performance (\textsterling 183,2m) and other categories.
In the Unites States and Canada music collections amounted almost \euro 2b (about \$2,2b) in 2016 which is 12,5\% higher than in 2015 mostly due increase in digital (up 73,3\%). USA music royalties amounted \$1.756b, Canada - \$219m. During the last 5 years (from 2012) in total collections from digital music had grown 400.6\% from \euro 56m to \euro 278m, accounting 14.1\% of total collections of music royalties at the Northern America. There are 3 main performance rights organizations in USA: ASCAP, BMI and SESAC. The leading collection society, ASCAP (The American Society of Composers, Authors and Publishers), reported \$1.059 billion of revenue in 2016 (including \$759m from US and more than \$300m of revenue abroad) . The second one, BMI reached \$1.13b of revenue and distributed \$1.02b in music royalties at the 2015 with digital revenues more than \$150m. And, finally, the third significant performance rights organization in the US is SESAC (Society of European Stage Authors and Composers). It generated about \$250m of revenue in 2016 with up to \$500m collections which flow through it . All the PRO in US pay royalties to artists quarterly. ASCAP and BMI quarterly royalties are subjects to be paid within 6 months, SESAC pays at the end of the next quarter.
In Asia-Pacific region music collections reached \euro 1,257m in 2016 with an 11\% of Y2Y growth with digital music indicating 33,5\% of growth accounting \euro 194m or 15,4\% of total music collections. The leading country in the region is Japan which collected \euro 858m in music royalties or more than 2/3 of the total Asia-Pacific market. In terms of share of digital music collection the world number one country is Korea where total 2016Y collections reached \euro 110m and digital as the largest part of the pie accounting \euro 37m or 33,5\%, indicating 104.6\% of growth during the last 5 years (since 2012). Due a low level respect for existing rights, despite the huge music consumption market and increasing its potential, China music collections amounted only \euro 23m in 2016.
Though music collections in Latin America \& the Caribbean have grown by 28.1\% to \euro 491m during the last 5 years and digital music boost at 1,4K\%, its share is still very low – 7,1\%. Meanwhile in some countries digital music plays a significant role. In Mexico, being driven by streaming services and licensing of Youtube, digital revenues from music royalties have soared from \euro 386k in 2012 to \euro 24m, accounting 36,6\% of total market in 2016. Overall Africa music collections are insignificant and amounted only \euro 67m in 2016 (0,7\% of the world market).
In terms of the market structure the most eloquent case is UK Streaming distribution, representing 58\% from each 1 US dollar to those market participants, which are involved in Recording (Label 46,4\% + Artist 11,6\%), 12\% to Songwriter and Publisher (8,4\% and 3,6\% respectively), and the rest 30\% to Digital Services Providers (streaming services). Since most of the streams relate to free users, while revenues are generated mostly from subscriptions, all streaming services remain unprofitable and carry significant losses.
By the middle 2017 the overall usage of music has increased by 9.9\% compared to the last year.
According to the music market research conducted by the Buzzanglemusic company, overall usage of music albums has increased by 9\%, when for music compositions it has increased by 29,5\%.
%\end{multicols}
\def\Prev{2016}
\def\Current{2017}
\def\Grow{\% increase}
\def\Summary{Overall usage of music compositions}
\def\Sales{Track sales}
\def\Streaming{Streaming}
\def\VideoStreaming{Video streaming}
\def\Albums{Overall usage of albums}
\def\AlbumsSales{Album sales}
\begin{table}[H]
\centering
\caption{Ready models of license limitations}
\begin{tabular}{p{0.4\linewidth}rrr}%p{0.65\linewidth}cc}
\toprule
& \Prev & \Current & \Grow \\
\toprule
%\multicolumn{2}{c}{\code{EnumerateRule}} \\
\midrule
\Summary & \texttt{1,167,384,931} & \texttt{1,512,049,118} & \texttt{29.50\%} \\
\Sales & \texttt{410,920,611} & \texttt{313,305,154} & \texttt{-23.80\%} \\
\Streaming & \texttt{113,469,648,006} & \texttt{179,811,594,535} & \texttt{58.50\%} \\
\VideoStreaming & \texttt{95,696,158,924} & \texttt{101,531,507,971} & \texttt{6.10\%} \\
\Albums & \texttt{266,565,904} & \texttt{292,986,056} & \texttt{9.90\%} \\
\AlbumsSales & \texttt{86,029,972} & \texttt{74,093,472} & \texttt{-13.90\%} \\
\bottomrule
\end{tabular}
\end{table}
%\vfill\null\pagebreak
\section{Distribution of royalties from the use of music work}
\label{industry-distribution}
\newcommand{\slice}[4]{
\pgfmathparse{0.5*#1+0.5*#2}
\let\midangle\pgfmathresult
% slice
\draw[thick,fill=black!10] (0,0) -- (#1:1) arc (#1:#2:1) -- cycle;
% outer label
\node[label=\midangle:#4] at (\midangle:1) {};
% inner label
\pgfmathparse{min((#2-#1-10)/110*(-0.3),0)}
\let\temp\pgfmathresult
\pgfmathparse{max(\temp,-0.5) + 0.8}
\let\innerpos\pgfmathresult
\node at (\midangle:\innerpos) {#3};
}
\def\Royalty{Copyright}
\def\Digital{Digital formats}
\def\Physical{Physical media}
\def\Sync{Synchronization}
\begin{figure}[H]
\centering
\caption{Track distribution income}
\begin{tikzpicture}[scale=3]
\newcounter{a}
\newcounter{b}
\foreach \p/\t in {
14/\Royalty,
50/\Digital,
34/\Physical,
2/\Sync}
{
\setcounter{a}{\value{b}}
\addtocounter{b}{\p}
\slice{\thea/100*360}
{\theb/100*360}
{\p\%}{\t}
}
\end{tikzpicture}
\end{figure}
Such popularity is determined by related income growth. It is worth mentioning that the most profitable are the tracks distributed in digital formats that make half of all consumed music as opposed, in particular, to tracks distributed by physical sales – 34\%.
\begin{figure}[H]
\centering
\caption{Streaming income}
\vspace{20pt}
\pgfplotstableread[row sep=\\,col sep=&]{
interval & carT \\
2011 & 10 \\
2012 & 15 \\
2013 & 21 \\
2014 & 25 \\
2015 & 32 \\
2016 & 50 \\
}\streamingPartion
\begin{tikzpicture}
\begin{axis}[
width=13cm,
height=6cm,
bar width=1cm,
ylabel near ticks,
xlabel near ticks,
nodes near coords,
major grid style={line width=.2pt,draw=gray!50},
ymajorgrids=true,
domain=0:2*pi,
ybar,
symbolic x coords={2011,2012,2013,2014,2015,2016},
xtick=data,
ymin=0,ymax=65,
bar width=1.5cm,
ylabel={Income share, \%},
]
\addplot [black, fill=black!20] table[x=interval,y=carT]{\streamingPartion};
\end{axis}
\end{tikzpicture}
\end{figure}
In 2017, audio streaming reached all-time high records and increased by 58,5\%. In specific markets the income growth amounted to more than 300\% (South Africa). In terms of profitability, audio streaming is the leader in its industry. For example, although video traffic attracts 900 million users, the income has amounted only to \$553 million, whereas the streaming income makes \$3,904 million with the total 212 million users.
\begin{figure}[H]
\def\streamingSubscription{Streaming subscriptions}
\def\videoStreaming{Video streaming}
\centering
\caption{Audio and video streaming: Users and income correlation}
\vspace{20pt}
\pgfplotstableread[row sep=\\,col sep=&]{
interval & users & revenue \\
\streamingSubscription & 250 & 3950 \\
\videoStreaming & 920 & 550 \\
}\userRevenue
\begin{tikzpicture}
\begin{axis}[
width=13cm,
height=10cm,
bar width=2.2cm,
ylabel near ticks,
xlabel near ticks,
nodes near coords,
major grid style={line width=.2pt,draw=gray!50},
ymajorgrids=true,
domain=0:2*pi,
ybar,
symbolic x coords={\streamingSubscription,\videoStreaming},
xtick=data,
nodes near coords,
ymin=0,ymax=4500,
ylabel={Income share, \%},
enlarge x limits={abs=3cm},
legend cell align={left},
legend style={at={(0,-0.20)}, anchor=north west, draw=none}
]
\addplot [ black, fill=black!40 ] table[x=interval,y=users]{\userRevenue};
\addplot [ black, fill=black!20 ] table[x=interval,y=revenue]{\userRevenue};
\addlegendentry{Users}
\addlegendentry{Royalty, US~\$000,000}
\end{axis}
\end{tikzpicture}
\end{figure}
On average, US \$498,000–US \$2,000,000 is invested in a new track (particularly these numbers are confirmed with data from the USA and the UK). In 2015, \$4.5 billion of global music industry income were invested in A\&R and Marketing.
\def\InvestToRecord{New track promotion investments}
\def\Clients{Customer acquisition}
\def\Record{Track costs}
\def\Video{Video}
\def\Tour{Tour support}
\def\Marketing{Marketing}
\def\Sum{Total}
\begin{table}[H]
\centering
\begin{tabular}{p{0.5\linewidth}rr}
\toprule
\multicolumn{3}{c}{\textbf{\InvestToRecord}, US~\$000} \\
\bottomrule
\midrule
\textbf{Type of investment} & \textbf{min} & \textbf{max} \\
\midrule
\Clients & \texttt{50} & \texttt{350} \\
\Record & \texttt{150} & \texttt{500} \\
\Video & \texttt{25} & \texttt{300} \\
\Tour & \texttt{50} & \texttt{150} \\
\Marketing & \texttt{200} & \texttt{700} \\
\Sum & \texttt{475} & \texttt{2,000} \\
\bottomrule
\end{tabular}
\end{table}
Music track popularity is also affected by the performing artist popularity that is nowadays directly connected to the social networking. 6 out of 10 most liked people on Facebook, followed on Twitter and watched on Youtube are artists.
It is also important to consider the international nature of streaming. 230 digital music services offer the access to 40 million tracks around the EU with approximately 50\% of all popular tracks that are downloaded and played in Europe have been created out of Europe.
The highest share of global music industry market income in 2016 that amounts to 50\% belongs to digital music tracks, the total sum comes to \$15.7 billion.
IFPI claims that 50\% of track income is received by music industry participants thanks to digital formats.
Digital platforms make the following payments:
\def\PayPlay{Royalties paid per play}
\def\PayBuy{Оплата при покупке песни}
\def\Platform{Music platform}
\def\LabelPartion{Paid to labels}
\def\ArtistPartion{Shared with an artist}
\def\YoutubePay{\$0.001 royalty is paid to the uploader of track}
\begin{table}[H]
\centering
\caption{Platform payments}
%\vspace(20pt}
\begin{tabular}{lrr}
\toprule
& \multicolumn{2}{c}{\textbf{\PayPlay}} \\
\textbf{\Platform} &
\textbf{\LabelPartion}, US~\$ &
\textbf{\ArtistPartion}, \% \\
\bottomrule
\midrule
Apple Music / iTunes & \texttt{0.0013} & \texttt{12} \\
Zune & \texttt{0.0280} & \texttt{11} \\
Napster & \texttt{0.0160} & \texttt{11–12} \\
Rhapsody & \texttt{0.0130} & \texttt{11–12} \\
Spotify & \texttt{0.0050} & \texttt{11-12} \\
Youtube & \multicolumn{2}{p{0.55\linewidth}}{\YoutubePay} \\
\bottomrule
\end{tabular}
\end{table}
%\vfill\null\pagebreak
\section{Music Industry Structure}
\label{industry-structure}
%\begin{multicols}{2}
The core value and raison d’etre of the music industry is music. But since music itself is a complex object, instead of a simple “composer + artist > listener” relations, we have an entangled, complicated and rarely efficient structure.
Each music piece comprises two separate objects:
\begin{enumerate}
\item composition (instruction on how to perform music) and
\item sound recording (performed music recorded on a physical medium).
\end{enumerate}
For both the composition and the recording a separate set of exclusive rights (meaning the rights to determine how the object can be used) exists. The exclusive right for a music composition belongs to authors (composer, songwriter), while the right for a sound record is owned by the artists and record producers. It is rather uncommon for one person to hold all of the abovementioned rights.
It means that to use music legally, one must obtain a permission from all the authors, artists and record producers. A further problem, however, is that musicians do not usually manage their rights personally.
An artist usually applies to a sound recording company – a label – and receives a payment in advance, assigning a share of their recording rights to the label, so that the label can withhold a part of future royalties from performance rights that would otherwise be given to an artist.
Labels can be divided into two general types: the majors and the indie labels, or the independents. The formers are major sound recording companies, the latter represent small and medium businesses of the industry. Although independents issue 80\% of all new releases, the biggest of them holds only 1.5\% of the market. Indie labels amount to 37,6\% of the global market with total estimated revenue of about \$5.6 billion. An independent label collaborates with 40 artists on average. For both types of labels, the highest income source comes from the streaming.
Authors on the other hand usually assign a share of their rights, including the rights to future royalties, to music publishers in exchange for advance payments and copyright management, protection and enforcement that publishers provide.
Distribution and delivering music to end customers is carried out by distributors (who distribute music as physical media) and aggregators (who distribute music in digital formats).
As even major rights holders are not able to keep track of all owned music usage, most of states set up collective management organizations (CMOs). CMOs trace cases of track public usage and collect payments for this kind of usage that is further distributed among rights holders; moreover, usually there is a specific CMO for every type of exclusive right. In some countries such organizations are created only for specific types of rights. Apart from that, in some countries (Russia, Nordic countries) CMOs manage the rights on non-contractual basis, i.e. they have the right to collect royalty in favor of rights holders that do not have any relations with the CMO.
As far as the relationship pattern is rather bulky, if the end user wants to obtain a license for a music composition, they have to address one more professional party of the market – copyright clearance agency that either settles relations between all rights holders or simply buys off the right for a music composition.
Thus, a value pattern in music industry can be illustrated as follows:
%\end{multicols}
%\vfill\null\pagebreak
\begin{figure}[H]
\centering
\def\Author{Author}
\def\AuthorDesc{Creates originals music compositions; they can transfer the publishing right for a royalty share not exceeding 50\%}
\def\Publisher{Publisher}
\def\PublisherDesc{Licenses music composition catalogue for playback and mechanical use; collects and distributes royalty between authors and publishers}
\def\Laws{Copyright collectives}
\def\LawsDesc{track and evaluate every use of a composition; it collects
and distributes royalty between authors and publishers}
\def\LawNote{Music composition right belongs to the author or a publisher; the playback usage is traced by a copyright collective}
\def\LicensePlay{Playback license}
\def\LicensePhysical{Mechanical license}
\def\Artist{Recording artist}
\def\ArtistDesc{Front and back artists participating in audio recording in
exchange for sales royalty}
\def\Label{Label}
\def\LabelDesc{Sponsors, records and promotes audio records}
\def\Distributor{Aggregator/Distributor }
\def\DistributorDesc{Distributes digital tracks online or physical media}
\def\LawSecondNote{The composition right belongs to the author or a label; sales are traced by a label, aggregator or distributor}
\def\Records{Audio records}
\def\Around{Associated rights}
\caption{Value creation structure}
\vspace{20pt}
\begin{tikzpicture}[node distance=1.5cm]
\node(Author) [rect, text width=6.4cm]
{\textbf{\Author}\linebreak\AuthorDesc};
\node(Publisher) [rect, text width=6.4cm, below=0.5cm of Author]
{\textbf{\Publisher}\linebreak\PublisherDesc};
\node(Laws) [rect, text width=6.4cm, below=0.5cm of Publisher]
{\textbf{\Laws}\linebreak\LawsDesc};
\node(LawNote) [inout, text width=6.5cm, below=0.5cm of Laws]
{\LawNote};
\node(LicensePlay) [rect, text width=3.1cm, below=0.5cm of LawNote, anchor=north east, xshift=-.25cm]
{\LicensePlay};
\node(LicensePhysical) [rect, text width=3.1cm, below=0.5cm of LawNote, anchor=north west, xshift=.25cm]
{\LicensePhysical};
\node(Artist) [rect, text width=6.4cm, right=3cm of Author.north east, anchor=north west]
{\textbf{\Artist}\linebreak\ArtistDesc};
\node(Label) [rect, text width=6.4cm, below=0.5cm of Artist]
{\textbf{\Label}\linebreak\LabelDesc};
\node(Distributor) [rect, text width=6.4cm, below=0.5cm of Label]
{\textbf{\Distributor}\linebreak\DistributorDesc};
\node(LawSecondNote) [inout, text width=6.5cm, below=0.5cm of Distributor]
{\LawSecondNote};
\node(Records) [rect, text width=3.1cm, below=0.5cm of LawSecondNote.south, anchor=north east, xshift=-.25cm]
{\Records};
\node(Around) [rect, text width=3.1cm, below=0.5cm of LawSecondNote.south, anchor=north west, xshift=.25cm]
{\Around};
\end{tikzpicture}
\end{figure}
%\begin{multicols}{2}
However, the actual relations in music industry are even more complicated. Nowadays sampling is widely used in the process of music creation; considering that, it is close to impossible to create a totally original composition in an oversaturated informational environment without any adoption. The same complicated rights structure underlies every usage of a sample in a composition, that makes music licensing a difficult undertaking.
\begin{itemize}
\item Composers;
\item Songwriters;
\item Performing artists;
\item Labels;
\item Publishers;
\item Clearance agencies;
\item Distributors and aggregators;
\item Collective management organizations.
\end{itemize}
%Each usage of music creates a flow of royalty distributed among all mentioned parties:
However, the actual relations in music industry are even more complicated. Nowadays sampling is widely used in the process of music creation; considering that, it is close to impossible to create a totally original composition in an oversaturated informational environment without any adoption. The same complicated rights structure underlies every usage of a sample in a composition, that makes music licensing a difficult undertaking.
This difficulty can be illustrated by a RIAA statement cited in the US Copyright Office report of 2015: one of RIAA members had released a very successful album and had to obtain for that album 1481 licenses for the release of three physical products, the 92 digital products, the 27 songs across the 51 songwriters with a total of 89 shares. One of those shares represented a 1.5 percent interest in a song, and there were two publishers for that. According to the RIAA, apart from multiple songwriter interests, one of the reasons for this explosion in licensing complexity is the increased complexity of the releases themselves — whereas in the past a record label release consisted of a disk and some liner notes, today it comprises multiple digital formats, different kinds of audiovisual presentations, and different kinds of music services.
Due to the international nature of digital music distribution mentioned above, the process becomes even more difficult as it is necessary to consider the peculiarities of legal regulations in different jurisdictions. For example, rights holders in the USA are not entitled to receive royalty for radio broadcasting of their music, while in some jurisdictions they may be entitled to such royalties.
%\end{multicols}
%\vfill\null\pagebreak
\section{Major Industry Problems}
\label{industry-problems}
Due to excessive complexity of relations in music industry, major problems arise.
\subsection{Lack of available and trustworthy information about copyright ownership}
As RIAA notes,
\begin{framed}
%\begin{multicols}{2}
"it is difficult to identify and keep track of musical work ownership due to changes when musical works and catalogs change hands". The situation is further complicated by existence of separate rights for compositions and records, each distributed among multiple rights holders. The problem in the industry is characterized by the lack of universally accepted data identifiers.
This situation results in a great uncertainty for potential licensees – it is unclear from whom the license can be obtained. Rights clearing agencies mitigate this problem to some extent, but another intermediary is hardly a solution. Instead of tracking and recording the history of transactions in real time, significant resources are spent to make researches on demand. As a result, the cost of music for licensee increases – it is always the end users who pay for market inefficiencies.
In complicated cases this uncertainty can affect the rights holders themselves – clearing the rights may be considered too expensive for the music work to be used at all.
No universal database for IP rights in music exists at the moment. D.A. Wallach explains it in the book "Bitcoin for rock-stars" as follows: "The root of the problem is again the one we’re exploring here: the absence of a single dataset containing credits and rights information. Instead, this information is fragmented among many territorial organizations. Every entity treats its data as proprietary and intrinsically valuable. This is understandable, given that these organizations invest heavily in their datasets".
%\end{multicols}
\end{framed}
In 2011 there was an attempt to create such a dataset. Supported by music publishers, the Global Repertoire Database (GRD) project was announced. It was supposed to comprise all registrations of audio records and relevant metadata. In July 2014 the project was closed due to objections from copyright collectives.
%\vfill\null\pagebreak
%\begin{multicols}{2}
\subsection{Lack of transparency of transactions in the industry}
The first problem is inseparably linked to the second one. Even if the rights for a composition or a record has been correctly recorded, there are no universal solutions to prove that the information is up-to-date. Apart from that, in case of a conflict with a potential infringement in the past, it is often impossible to prove who was the real licensor at a certain date.
Licensors are not the only party aggrieved at non-transparency as it increases the uncertainty in their relations with partners. Inability to trace the transactions leads to inability of music content creators to effectively protect their interests while defining due royalty. US publishers, for example. in the USA don’t have the right to verify the statements of account they receive from licensees.
Even if the information submitted by the end licensee is fair, the value transmission chain is too long to be effectively monitored by the final element – an author or a musician. Non-transparent transactions are incentives for intermediaries to keep as much as possible for themselves. Referencing Spotify, as well as YouTube and Musicmaker, Perry Resnick, who conducts music audits, commented that “[m]any deals are not done unless the major labels receive a share of equity in the licensee, which also lowers the royalty rates paid for specific recordings, sometimes down to zero.”
\subsection{Lack of control over the use of music}
Another problem is determining how the music works are being used. Where and how a music work is used may be of no less importance that the amount of royalties paid for it – the author of a symphonic work may not be happy to hear it in some litter-box ad. In some cases, even the coexistence of certain music works within one medium can be undesirable.
At the same time, due to the increase in number of rights holders for one IP asset, its management is complicated not only from the organizational point of view, but also because the interests of authors and publishers, performing artists and labels can significantly differ. In most cases the control over the use of a music work is fully assigned to the label or the publisher and may contradict the opinion of the creator.
A separate problem is the compulsory licensing of music. US non-interactive streaming services in particular (including Pandora) can obtain compulsory licenses even without the consent of the rights holders, while interactive streaming services only need the consent of the rights holders for the use of sound recording but can inform the rights holders of the composition via issuing a note of intent (NOI). This situation essentially deprives authors of their right to control their music works.
%\vfill\null\pagebreak
\subsection{Black boxes}
As a result of the above mentioned basic problems a significant market distortion is created along with the black boxes – huge lumps of undistributed royalty.
Rights holders' due royalty cannot be paid prior to identification of the rights holder. And since there is no database with the universal information on the rights holders, some royalties end up in black boxes.
And even if the rights holder is known, there is an incentive for every intermediary to delay the payment for as long as possible and receive the interest on the black box royalties. The NOI system in the USA is known to be largely abused, and the authors might never even know that their composition are being used.
The poor state of international cooperation between publishers and collective management organizations can also result in possible withholding of the royalties collected.
\subsection{Piracy}
The complexity and clumsiness of the described pattern makes it cheaper for users to violate the exclusive right than to make clear all the complicated agreements with all rights holders. It is worth mentioning that "ethic piracy" as an outcry against artificially complicated and musician-exploiting system might also be possible. According to a research by American professor Peter DiCola, 1 billion users annually use BitTorrent. This number can help us evaluate the approximate damage caused by music piracy. The associated center of the EU has stated that in 2011 the global damage caused by pirate content amounted to 8\% that is approximately \$5,2 billion. However, according to the organization, there is no need to eradicate internet-piracy.
\subsection{Lack of effective ways to monetize music}
Non-transparent payments, structure complexity and long chains of intermediaries result in time lags between the actual use of music work and the payment made to its creator. As a result, those able to offer the creators advance payments – the majors – gain excessive market power and can impose unfair conditions on both the creators and the users. The market power of the majors make for an oligopolic market, where individual artists are forced to enter into highly restraining deals in order to get paid and be promoted.
\section{Possible Solution}
\label{industry-solution}
Musereum project aims to solve the above-mentioned problems by tokenizing IP rights for music and therefore enabling the real time tracking their ownership, implementing automated licensing and royalties’ distribution and enabling assigning and re-assigning shares of IP rights by transferring the tokens representing such rights.
\begin{figure}[H]
\centering
\caption{Inflation Rate}
\vspace{20pt}
\pgfplotstableread[row sep=\\,col sep=&]{
year & seconds & inflation & blocks & supply & emission \\
2018 & 31536000 & 10.091 & 6307200 & 275228800 & 25228800 \\
2019 & 31536000 & 9.166 & 12614400 & 300457600 & 25228800 \\
2020 & 31622400 & 8.419 & 18938880 & 325755520 & 25297920 \\
2021 & 31536000 & 7.744 & 25246080 & 350984320 & 25228800 \\
2022 & 31536000 & 7.188 & 31553280 & 376213120 & 25228800 \\
2023 & 31536000 & 6.705 & 37860480 & 401441920 & 25228800 \\
2024 & 31622400 & 6.301 & 44184960 & 426739840 & 25297920 \\
2025 & 31536000 & 5.911 & 50492160 & 451968640 & 25228800 \\
2026 & 31536000 & 5.581 & 56799360 & 477197449 & 25228800 \\
2027 & 31536000 & 5.286 & 63106560 & 502426240 & 25228800 \\
2028 & 31622400 & 5.035 & 69431040 & 527724160 & 25297920 \\
2029 & 31536000 & 4.780 & 75738240 & 552952960 & 25228800 \\
2030 & 31536000 & 4.562 & 82045440 & 578181760 & 25228800 \\
2031 & 31536000 & 4.363 & 88352640 & 603410560 & 25228800 \\
2032 & 31622400 & 4.192 & 94677120 & 628708480 & 25297920 \\
2033 & 31536000 & 4.012 & 100984320 & 653937280 & 25228800 \\
2034 & 31536000 & 3.857 & 107291520 & 679166080 & 25228800 \\
2035 & 31536000 & 3.714 & 113598720 & 704394880 & 25228800 \\
2036 & 31622400 & 3.591 & 119923200 & 729692800 & 25297920 \\
2037 & 31536000 & 3.458 & 126230400 & 754921600 & 25228800 \\
2038 & 31536000 & 3.341 & 132537600 & 780150400 & 25228800 \\
}\salesCount
\begin{tikzpicture}
\begin{axis}[
axisPlot,
width=15cm,
ymin=3, ymax=15,
symbolic x coords={
2018,
2019,
2020,
2021,
2022,
2023,
2024,
2025,
2026,
2027,
2028,
2029,
2030,
2031,
2032,
2033,
2034,
2035,
2036,
2037,
2038
},
x tick label style = {font = \small, text width = 1.7cm, align = center, rotate = 70, anchor = north east},
xtick=data,
ylabel={Number of campaigns, per year}
]
\path[name path=a] (axis cs:2018,0) -- (axis cs:2038,0);
\addplot[
thick, color=black, mark=*, name path=p]
table[
x=year,
y=inflation
]{\salesCount};
\addplot [
thick,
fill=black,
fill opacity=0.2
] fill between[
of=p and a
];
\end{axis}
\end{tikzpicture}
\end{figure}
\begin{figure}[H]
\centering
\caption{Total Supply}
\vspace{20pt}
\pgfplotstableread[row sep=\\,col sep=&]{
year & seconds & inflation & blocks & supply & emission \\
2018 & 31536000 & 10.091 & 6307200 & 275.228800 & 25228800 \\
2019 & 31536000 & 9.166 & 12614400 & 300.457600 & 25228800 \\
2020 & 31622400 & 8.419 & 18938880 & 325.755520 & 25297920 \\
2021 & 31536000 & 7.744 & 25246080 & 350.984320 & 25228800 \\
2022 & 31536000 & 7.188 & 31553280 & 376.213120 & 25228800 \\
2023 & 31536000 & 6.705 & 37860480 & 401.441920 & 25228800 \\
2024 & 31622400 & 6.301 & 44184960 & 426.739840 & 25297920 \\
2025 & 31536000 & 5.911 & 50492160 & 451.968640 & 25228800 \\
2026 & 31536000 & 5.581 & 56799360 & 477.197449 & 25228800 \\
2027 & 31536000 & 5.286 & 63106560 & 502.426240 & 25228800 \\
2028 & 31622400 & 5.035 & 69431040 & 527.724160 & 25297920 \\
2029 & 31536000 & 4.780 & 75738240 & 552.952960 & 25228800 \\
2030 & 31536000 & 4.562 & 82045440 & 578.181760 & 25228800 \\
2031 & 31536000 & 4.363 & 88352640 & 603.410560 & 25228800 \\
2032 & 31622400 & 4.192 & 94677120 & 628.708480 & 25297920 \\
2033 & 31536000 & 4.012 & 100984320 & 653.937280 & 25228800 \\
2034 & 31536000 & 3.857 & 107291520 & 679.166080 & 25228800 \\
2035 & 31536000 & 3.714 & 113598720 & 704.394880 & 25228800 \\
2036 & 31622400 & 3.591 & 119923200 & 729.692800 & 25297920 \\
2037 & 31536000 & 3.458 & 126230400 & 754.921600 & 25228800 \\
2038 & 31536000 & 3.341 & 132537600 & 780.150400 & 25228800 \\
}\salesCount
\begin{tikzpicture}
\begin{axis}[
axisPlot,
width=15cm,
scaled ticks=false,
ymin=200, ymax=1000,
symbolic x coords={
2018,
2019,
2020,
2021,
2022,
2023,
2024,
2025,
2026,
2027,
2028,
2029,
2030,
2031,
2032,
2033,
2034,
2035,
2036,
2037,
2038
},
x tick label style = {font = \small, text width = 1.7cm, align = center, rotate = 70, anchor = north east},
xtick=data,
ylabel={Issues total supply, 000,000~ETM}
]
\path[name path=a] (axis cs:2018,0) -- (axis cs:2038,0);
\addplot[
thick, color=black, mark=*, name path=p]
table[
x=year,
y=supply
]{\salesCount};
\addplot [
thick,
fill=black,
fill opacity=0.2
] fill between[
of=p and a
];
\end{axis}
\end{tikzpicture}
\end{figure}
\begin{table}[H]
\centering
\caption{ETM Emission summary}
%\begin{tabular}{p{0.35\linewidth}p{0.65\linewidth}}
\begin{tabular}{
r
p{0.16\linewidth}
p{0.16\linewidth}
p{0.16\linewidth}
p{0.16\linewidth}
p{0.16\linewidth}
}
\toprule
Year &
\scriptsize{Amount of seconds in a year} &
\scriptsize{Percent of inflation} &
\scriptsize{Amount of blocks} &
\scriptsize{Total number ETM tokens in the end of the year} &
\scriptsize{Total ETM emission in a year} \\
\bottomrule
\midrule
\texttt{2018} & \texttt{31,536,000} & \texttt{10.091\%} & \texttt{6,307,200} & \texttt{275,228,800} & \texttt{<25,228,800} \\
\texttt{2019} & \texttt{31,536,000} & \texttt{9.166\%} & \texttt{12,614,400} & \texttt{300,457,600} & \texttt{<25,228,800} \\
\texttt{2020} & \texttt{31,622,400} & \texttt{8.419\%} & \texttt{18,938,880} & \texttt{325,755,520} & \texttt{<25,297,920} \\
\texttt{2021} & \texttt{31,536,000} & \texttt{7.744\%} & \texttt{25,246,080} & \texttt{350,984,320} & \texttt{<25,228,800} \\
\texttt{2022} & \texttt{31,536,000} & \texttt{7.188\%} & \texttt{31,553,280} & \texttt{376,213,120} & \texttt{<25,228,800} \\
\texttt{2023} & \texttt{31,536,000} & \texttt{6.705\%} & \texttt{37,860,480} & \texttt{401,441,920} & \texttt{<25,228,800} \\
\texttt{2024} & \texttt{31,622,400} & \texttt{6.301\%} & \texttt{44,184,960} & \texttt{426,739,840} & \texttt{<25,297,920} \\
\texttt{2025} & \texttt{31,536,000} & \texttt{5.911\%} & \texttt{50,492,160} & \texttt{451,968,640} & \texttt{<25,228,800} \\
\texttt{2026} & \texttt{31,536,000} & \texttt{5.581\%} & \texttt{56,799,360} & \texttt{477,197,449} & \texttt{<25,228,800} \\
\texttt{2027} & \texttt{31,536,000} & \texttt{5.286\%} & \texttt{63,106,560} & \texttt{502,426,240} & \texttt{<25,228,800} \\
\texttt{2028} & \texttt{31,622,400} & \texttt{5.035\%} & \texttt{69,431,040} & \texttt{527,724,160} & \texttt{<25,297,920} \\
\texttt{2029} & \texttt{31,536,000} & \texttt{4.780\%} & \texttt{75,738,240} & \texttt{552,952,960} & \texttt{<25,228,800} \\
\texttt{2030} & \texttt{31,536,000} & \texttt{4.562\%} & \texttt{82,045,440} & \texttt{578,181,760} & \texttt{<25,228,800} \\
\texttt{2031} & \texttt{31,536,000} & \texttt{4.363\%} & \texttt{88,352,640} & \texttt{603,410,560} & \texttt{<25,228,800} \\
\texttt{2032} & \texttt{31,622,400} & \texttt{4.192\%} & \texttt{94,677,120} & \texttt{628,708,480} & \texttt{<25,297,920} \\
\texttt{2033} & \texttt{31,536,000} & \texttt{4.012\%} & \texttt{100,984,320} & \texttt{653,937,280} & \texttt{<25,228,800} \\
\texttt{2034} & \texttt{31,536,000} & \texttt{3.857\%} & \texttt{107,291,520} & \texttt{679,166,080} & \texttt{<25,228,800} \\
\texttt{2035} & \texttt{31,536,000} & \texttt{3.714\%} & \texttt{113,598,720} & \texttt{704,394,880} & \texttt{<25,228,800} \\
\texttt{2036} & \texttt{31,622,400} & \texttt{3.591\%} & \texttt{119,923,200} & \texttt{729,692,800} & \texttt{<25,297,920} \\
\texttt{2037} & \texttt{31,536,000} & \texttt{3.458\%} & \texttt{126,230,400} & \texttt{754,921,600} & \texttt{<25,228,800} \\
\texttt{2038} & \texttt{31,536,000} & \texttt{3.341\%} & \texttt{132,537,600} & \texttt{780,150,400} & \texttt{<25,228,800} \\
\bottomrule
\end{tabular}
\end{table}
\begin{table}[H]
\centering
\caption{Possible solutions}
\vspace{20pt}
\begin{tabular}{p{0.35\linewidth}p{0.65\linewidth}}
\toprule
Problem & Solution \\
\bottomrule
\midrule
Lack of available and trustworthy information about IP ownership &
Creation of a verified database that comprehensively describes distribution of rights by making records about corresponding rights on the blockchain. \\
\hline
Nontransparent transactions &
Any record in the ledger allows to trace all issued licenses as well as processed payments that automatically calculate the amount and the procedure for royalty payment. \\
\hline
Absence of effective means for control over how music is being used &
Introduction of automated voting mechanism for the rights holders to control licensing of their assets and other matters related to them. \\
\hline
Black boxes &
Transparent transactions, direct distribution of royalties to rights holders and availability of data on rights ownership eradicate the conditions for creation of black boxes. \\
\hline
Piracy &
By reducing the transactional fees for obtaining legal access to music and providing for the transparent royalties’ distribution, the project will undermine both the economic (complexity and inflated prices) and the ethical (unfair distributions of royalties) reasons for piracy. Furthermore, the Soundchain project developed on top of the Musereum project will allow end users to get free access to music, further reducing the economical motivation for the IP violation. \\
\hline
Complicated monetization of music content &
Automated licensing and reduction of costs for rights clearance will boost the growth of rights holders' income from the commercial use of their music by simplify licensing procedures and eliminating most of administrative barriers.
Furthermore, tokenization of IP rights will provide rights holders with the opportunity to crowd fund themselves via the ICO model instead of assigning the right to a label or a publisher for an advanced payment. \\
\bottomrule
\end{tabular}
\end{table}
%Таким образом, проект «Musereum» является мощным правовым механизмом управления различными типами прав в музыкальной индустрии.
%Действующие музыкальные платформы, использующие Blockchain-технологии, также не имеют преимуществ, содержащихся в проекте «Musereum».
\def\y{\textbf{Yes}}
\def\n{No}
\def\o{--}
\begin{table}[H]
\centering
\caption{Platform features compare to competitors}
\vspace{20pt}
\begin{tabular}{p{0.35\linewidth}ccccccc}
\toprule
Features & \scriptsize{Soundchain} & \scriptsize{Ujo Music} & \scriptsize{Musicoin} & \scriptsize{Token FM} & \scriptsize{Jaak} & \scriptsize{PeerTracks} & \scriptsize{Opus} \\
\bottomrule
\midrule
Own blockchain & \y & \y & \y & \n & \n & \y & \n \\
\midrule
Right tokenization of tracks & \y & \n & \n & \n & \n & \n & \n \\
\midrule
Licenses on smart contracts & \y & \n & \n & \n & \n & \n & \n \\
\midrule
Collective management & \y & \n & \n & \n & \n & \n & \n \\
\midrule
Investment in music & \y & \n & \n & \n & \n & \n & \n \\
\midrule
Decentralized data storage & \y & \y & \y & \o & \o & \y & \y \\
\midrule
Decentralized metadata & \y & \y & \y & \o & \o & \y & \y \\
\midrule
Content encryption & \y & \n & \n & \o & \o & \o & \y \\
\midrule
Marketplace of music rights & \y & \n & \n & \n & \n & \n & \n \\
\midrule
Fundraising for musicians & \y & \n & \n & \n & \n & \n & \n \\
\bottomrule
\end{tabular}
\end{table}
\chapter{Crypto–Economy Aspect}
\label{finance}
The basic concept of the Soundchain project is to provide the users of the Soundchain platform with free access to the uploaded music, while paying to the rights holders of that music with ETM tokens for every unique play via the PPP smart-contract. The ETM tokens that are used to pay to the rights holders are generated by the Musereum network and are kept by the Soundchain Foundation.
One of the key concepts of the Musereum project is enabling participants to trade shares in exclusive rights for music works by selling music tokens representing these shares. For each uploaded music work — an asset — a set of music tokens will be generated, with 100\% of them representing the full ownership of IP rights for an asset. Any number of these music tokens can be purchased, and the holders of a certain type of music tokens are the rights holders of a corresponding asset. Unlike conventional platforms, where miners are the main beneficiaries and receive tokens generated by the blocks the verify, PoA consensus algorithm allows Musereum to use generated tokens to remunerate music creators for the value they bring to the system, sending these tokens to the Soundchain Foundation.
The following conservative scenario model is presented as an evidence for the economic sustainability of these concepts. The key economic indicators of the platform are calculated without considering any factors of demand for the ETM token except for demand generated by the demand to by music tokens. Please note that this is a hypothetical model. Any historic data on the demand for any type of assets, including IP rights and royalties, is no indication of future demand and/or price for such assets that are dependent on the future market situation.
To evaluate a potential demand for ETM tokens we have used the market data provided by the RoyaltyExchange.com website – a centralized exchange platform for trading royalties from existing musical works. Since the beginning of the 2017, 132 assets have been sold for the total price amounting to \$8,050,550.
The information on the price distribution for the assets is presented below.
\begin{figure}[H]
\centering
\caption{Price distribution for the assets rights}
\vspace{20pt}
\pgfplotstableread[row sep=\\,col sep=&]{
interval & carT \\
{0–50} & 65.90 \\
{50–100} & 19.70 \\
{100–250} & 12.87 \\
{250–500} & 1.51 \\
{500–1,000} & 1.51 \\
}\streamingPartion
\begin{tikzpicture}
\begin{axis}[
width=13cm,
height=10cm,
bar width=1cm,
ylabel near ticks,
xlabel near ticks,
% nodes near coords,
major grid style={line width=.2pt,draw=gray!50},
xmajorgrids=true,
domain=0:2*pi,
xbar,
symbolic y coords={
{500–1,000},
{250–500},
{100–250},
{50–100},
{0–50}
},
ytick=data,
xmin=0,xmax=100,
xlabel={Part of Total assets, \%},
ylabel={25\% of Asset Rights Price, US \$ 000},
]
\addplot[
fill=black!20
] table[
y=interval,
x=carT]{\streamingPartion};
\end{axis}
\end{tikzpicture}
\vspace{20pt}
\def\PriceRang{Price range for an asset}
\def\Number{Number of assets}
\def\Percent{\% of total count}
\begin{table}[H]
\centering
\begin{tabular}{p{0.5\linewidth}rr}
\toprule
\PriceRang & \Number & \Percent \\
\bottomrule
\midrule
US \$0 – US \$50,000 & \texttt{87} & \texttt{65.90\%} \\
US \$50,000 – US \$100,000 & \texttt{24} & \texttt{19.70\%} \\
US \$100,000 – US \$250,000 & \texttt{17} & \texttt{12.87\%} \\
US \$250,000 – US \$500,000 & \texttt{2} & \texttt{1.51\%} \\
US \$500,000 – US \$1,000,000 & \texttt{2} & \texttt{1.51\%} \\
\bottomrule
\end{tabular}
\end{table}
\end{figure}
%\vfill\null\pagebreak
The average price of an asset at RoyaltyExchange.com is US \$61,000 (US \$8,000,000/132 lots). A limiting factor for the possible price of asset is the auction model of sale, which enables only one buyer to purchase each asset. Although auction model enhances competition between possible buyers, it ultimately limits the maximum possible price for the asset by introducing the minimum price per buyer and enforcing a take-it-or-leave-it decision making. This creates an entry barrier for possible buyers who may be interested in buying the type of asset offered, but on a smaller scale. Connected to this is another limiting factor – even a greater entry barrier exists for those buyers who wish to not only buy out one asset, but build a portfolio of assets enabling to mitigate the risks connected with it.
Assets at the Musereum platform will be sold via the crowd sale model, where the number of buyers is only limited by the total supply of music tokens. We believe that elimination of entry barriers, and increasing the number of possible buyers for an asset and will contribute to more value offered, higher demand and ultimately higher average prices for an asset on our platform. Considering this, we assume that the average total price of each asset on our platform will be not less than US \$80,000. Gramatik has become the first example of the crowd sale model for IP rights - he has attracted 2.5 million dollars in the ETH crypto currency within 24 hours by selling tokens, representing the rights to all his future royalties.
We have dedicated about 2 weeks to contact artists, and of 20 artists reached, 8 have agreed to upload their music works to the demo of our platform and 3 have expressed their interest in selling shares of their IP rights via the platform. In 2018 we are planning to a marketing campaign to promote this new and cost-effective model of music works monetization among independent labels, authors, singers and our potential partners in industry – digital service providers, collection societies, producers, etc. According to our estimates, this will lead to at least 200 successful music token sale campaigns, with average amount of contributions equivalent to US \$80,000 per campaign and a further boost in 2019 due to attraction of new users, that will shift from existing time-consuming and costly ways of monetization. A minimum rate of growth of 30\% is assumed after 2020.
\begin{figure}[H]
\centering
\caption{Number of music token sale campaigns}
\vspace{20pt}
\pgfplotstableread[row sep=\\,col sep=&]{
year & salesCount \\
2018 & 100 \\
2019 & 2000 \\
2020 & 7000 \\
2021 & 13000 \\
2022 & 16500 \\
}\salesCount
\begin{tikzpicture}
\begin{axis}[
axisPlot,
ymin=0, ymax=20000,