NFTs to better manage musicians’ copyrights? Interview with Sacem

For a few years now, NFTs have taken the world of culture by storm and many players in the music industry have seized upon these new technological tools full of promise. This is notably the case of Sacem, the French organization in charge of collecting and distributing music royalties. After studying blockchain technology for several years, it has multiplied projects and other partnerships related to music NFTs… But not only. Julien Lefebvre, director of innovation at Sacem, tells us about these experiments and sheds light on the potential of these new tools for musicians.

What is Sacem and what is its role?

Before entering in the heart of the subject, it is necessary to understand what Sacem is and what are its missions.

The Sacem, or Society of Authors, Composers and Music Publishers, is a nonprofit corporation founded and managed by its members, through a board of directors composed of different actors of the music industry. Its main mission is to collect royalties from all users of music, before distribute them among the various rights holders who are members of the organization.

Sacem must ensure that for all direct and indirect uses of music, the creators of the works used (lyrics, scores, composition, etc.) are compensated. These are the copyrights as a whole, which must be distinguished from the rights on the recordings (or masters). The latter are not managed by Sacem, but by the record companies, which are responsible for collecting the rights of the performers who play and sing the songs.

👉 À lire sur la même thématique : Music and Web3 – How do NFTs bring artists closer to their fans?

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The creation of Sacem Lab, a team dedicated to innovation

As early as 2016, Sacem became aware of the scope that blockchain was taking. At the time, this revolutionary technology was already causing a stir in the music world. It was at this time that Sacem began to interested in the disruptive potential of these new technologies, especially for collective management organizations like Sacem.

After several years of learning and trial and error, three years ago, Sacem set up a team dedicated to innovation, which was formalized in 2021 as Sacem Lab. It does not work exclusively on blockchain technology, as artificial intelligence has also been on the rise lately, but it devotes a lot of time and resources to it.

Under the direction of Julien Lefebvre, she gave birth to several interesting projects to evaluate the potential of blockchain, NFT (non-fungible tokens) and Web3 for the music industry. To do so, she works in particular in partnership with collective management organizations in other countriesin order to explore specific cases of use for musicians.

👉To go further: How do NFTs and Web3 stimulate creativity in the music industry?

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Sacem’s experiments with blockchain and NFT

What was Sacem’s first project related to blockchain technology?

“When we started looking at blockchain in 2016, we spent a lot of energy on things that didn’t come to fruition because the technologies weren’t mature or unsuitable for our use cases. We quickly realized that all the prophecies we had read at the time about the risk of collective management societies disappearing with the arrival of blockchain were false. On the other hand, we quickly realized that blockchain had at least one simple and proven use, for everything related to notarization. If I write something in the blockchain, it is engraved once and for all. Everyone can find it. It’s transparent, irrefutable, immutable. This is what led us to create Musicstart, which offers songwriters the opportunity to prove the authorship of their musical creations via a certificate registered on the blockchain. It took us two or three years of trial-and-error exploration to find this relevant use case, exploit it and see it through.”

Can you look back at the launch of your first NFT collection?

“Our leitmotif is really to look at anything that might be of interest to our members, even if it’s not directly related to the collection and distribution of royalties. It is in this spirit that we have launched an NFT collection linked to the Sacem Grand Prix at the end of 2022. Internally, the aim of this operation was really to experiment to realize what it implied to create an NFT collection, and this at all levels, whether it is in terms of project management, technique, communication, marketing, etc. How much does it cost? What kind of feedback does it generate? Does it really work? As Sacem is not at all known for launching this type of operation, we were curious to know if the collection would find its audience. In the end, not everything was perfect, but it went very well overall. People actually won their tickets for the Sacem Grand Prix ceremony and came to attend. And most importantly, it was a success that exceeded our expectations. We were hoping for 1,000 purchasers, and in the end we issued over 17,000 NFTs.”

What did you learn from this experience?

“We learned a lot from this collection of NFTs, which was just a contest to help us understand the technology. It allowed us to collect a lot of interesting data about our NFT holders, like the type of wallet they use for example. We also set up a Discord, to learn how to federate a community, and we were very positively surprised. But the big advantage is that today, if our members ask us for advice on how to launch an NFT collection, we can help them because we’ve really got our hands dirty. We can tell them what’s involved, how much it costs, how long it will take, what the risks are, etc.”

It was also interesting in terms of communication, because this collection of NFTs got a lot of media coverage. After this success, are you thinking of launching a second collection?

“Yes, we are working on it, but I can’t say more than that. Already, the first collection was difficult to put together because it had to suit all the parties involved at Sacem. It had to be technically not too ambitious, it had to be reputational not to take too many risks, etc. Finally, this formula around the Sacem Grand Prix allowed us to test the technology without putting ourselves in too much danger. Today, we are thinking about setting up a new operation of the same type. We are also busy animating our community on Discord and we have other types of drops in the pipeline, as well as the desire to directly accompany members who want to launch themselves in NFT and Web3.

How do you plan to set up this support for musicians in the NFT?

“Today, it remains a project. We are still studying these tools and educating our members on these subjects. There are still a lot of people for whom it is very obscure. Some don’t know if it’s something they should get into, if it’s something to be afraid of. The drop we made had this vocation to show that it exists, that it works, that it doesn’t hurt anyone. We have members of all types, all ages, all aesthetics, so it’s important for us to open them up to this new opportunity.”

Web3 is known for its community aspect, with a lot of mutual aid, benevolence and transparency. Did you feel this while experimenting with these new tools?

“We’re lucky to have recruited people who have a certain expertise in the subject, which means we’re quite autonomous and this state of mind is also asserted internally. But it’s true that this ecosystem is distinguished by its virtuous side. I was able to see this, for example, with Pianity, which came to us directly to try to do things in a square way from the copyright point of view from the start.”

You have also established a partnership with Pianity, can you explain what it consists of?

“We licensed them, as we do with all music distributors. We have a contract that allows for royalties to be paid on every sale of NFT. What’s new compared to what we’ve had with other modes of exploitation is that the songwriters are going to be interested in resale rights on each NFT sold. We are happy, because it creates a precedent. We are the first collecting society to sign an agreement with an NFT platform, even before the market is structured or standards have been defined. The standards will come much later, but it allows us to start testing these technologies. For us, it’s really great to be able to work together. And for them, it’s also very positive to be able to show that they’re in control of the whole copyright issue. It’s a very virtuous partnership.

Are you looking to convince other music NFT platforms to take the plunge?

“Of course, Sacem has the vocation to conclude this kind of contract with all music NFT platforms, and we will do it every time it is possible. It’s clear that it’s easier when it’s a French company of quality and proactive on the subject like Pianity. That’s why with them, we managed to move forward quickly and well. But the idea is that everyone who sells and exploits music should think about paying the authors, composers and publishers who are behind it.

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NFTs, a double-edged sword for the music industry

How can NFTs help protect music creators, strengthen their copyrights?

“First of all, it is important to understand that NFTs are a new form of technological tool that can be used for whatever purpose. It is a bit like any scientific invention, it can be used for good or bad purposes. Finally, if you look at NFTs from a copyright point of view, they have the potential to make things better, but also to make them worse. So it will depend on how the industry structures itself around this new tool. NFTs offer more transparency and allow for automatic or semi-automatic distribution of copyrights. So they have advantages, but they also have risks. For example, if you put a link to a music file that redirects to a shared storage system such as IPFS, anyone can access it. We are not far from Napster… On paper, NFTs also present the risk of uncontrolled piracy. And we must also be aware that artists do not fully master these new technologies, which can present a danger for them and their fans.

Could we envisage in the future that Sacem manages some of its activities through NFTs?

“We have not yet seen any innovation that is ready to replace the existing. There is potential, but it still requires a lot of structuring. Today, we would be unable to manage the activities that Sacem carries out on a large scale on a day-to-day basis with NFTs. We are still in the exploration phase.

Are you consulting with your counterparts abroad to accelerate this exploration phase?

“Of course, we are part of an international organization called DDEX (Digital Data Exchange), whose mission is to think about all the international data exchange formats, especially between the different players in the music industry. Today, their formats are used a lot for everything that is music streaming. Since September, the DDEX has set up an international working group to define the formats for NFT. One of my colleagues at Sacem is co-president of this group, so we are really involved. Around the table, we have classic industry players, collective management organizations such as Sacem, the Majors, labels and start-ups that are generally NFT platforms. And the least we can say is that it is a very complex task. Just to define the framework of standards for NFTs, there are a lot of questions that arise. What data should be put on-chain or off-chain? What should be able to evolve in the metadata? We can see that for the moment, all of this is not at all ripe for structuring, but it’s moving forward anyway.”

Whether in music or any other artistic discipline, unless you’re a real geek, it’s hard to know exactly what you’re getting when you buy an NFT. Do you own the rights to the underlying work? Can you use the purchased NFT for commercial purposes? Can the work be legally misappropriated? Are you thinking of a way to standardize and clarify this, so that everyone knows exactly what rights they have to their NFT?

“We’re not even there yet! We’re in the first step of figuring out how to collect and standardize the metadata needed so that all the rights holders of the NFTs can get paid. We also need to determine what should be editable in the NFT metadata. As much as the author and composer are rather immutable, publishers can change, so it should be possible to change some of the NFT metadata. So we have to think about what we can put on-chain, what we can put off-chain, what is relevant to make visible to everybody, or on the contrary what is private and not meant to be known by the common people, etc. There are a lot of things to take into account before studying the question of the transparency of the rights one acquires when buying an NFT. At the moment, there are no rules. The NFT can contain anything and everything and the rights attached to it can be more or less clear.”

How long do you think it will be before these technologies are mature?

“It’s hard to say… What I am sure of is that these technologies are developing alongside existing solutions. I don’t think it’s going to replace anything. Streaming will continue for a long time, as will physical media in my opinion. For the moment, NFT technology as a new way of consuming music is still in its infancy. With the general public, it’s like it doesn’t exist today, it’s negligible. The reason we’re seeing this growth and structuring of the Web3 ecosystem is because everyone would rather be ready up front than trying to catch up to the technology innovation train.”

Another big topic in Web3 is the metaverse, where NFTs are used a lot and where we see music festivals, parties, clubs… What does this new digital territory imply for Sacem?

“You have to start by distinguishing between centralized and decentralized metaverses. If it’s centralized, like Fortnite or Roblox, it’s a pretty standard business for us. We’re more concerned with the evolution of an existing model, where we negotiate licenses with the companies that manage these universes. This still raises a number of questions, but we know which door to knock on. For decentralized metaverses such as The Sandbox or Decentraland, it’s much more complicated to manage. It raises questions that are currently being studied. Who is responsible for the music that is played in these universes? Is it the owner of the virtual parcel who broadcasts the music? Is it the company that governs the metaverse, provided that one exists and that the ecosystem is not completely decentralized with governance operated by a DAO? On that, we are much more in the questioning, with a set of challenges to be met that will not be so simple.”

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Sacem at the forefront compared to its foreign counterparts

If French musical artists are not rushing to embrace NFTs, it should be noted that Sacem is at the forefront of innovation compared to collective management organizations in other countries. Moreover, Julien Lefebvre can see that this generates envy among his counterparts abroad. For him, the best way to move things forward is to work collectivelyto work with other authors’ societies to speed up.

In recent months, Sacem has gone back into a much more confidential phase of work. It is trying to understand how best to use NFT and blockchain tools for its core business, which is the collection and distribution of copyrightwhile looking for partners to accelerate the movement.

This period will allow Sacem to forge a conviction on the relevance of investing in these technologiesto see if they are mature enough today. And who knows? Maybe it will conclude that NFTs are not a suitable technology for its collection and distribution operations… NFT enthusiasts should be reassured. Even if they were, it would not mean that they are useless, because their use cases are still largely unknown.

👉 Related news: DJ Agoria tells us about his love affair with Web3

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