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Interview with Panos Panay: The Simple Formula Sparking a Musical Revolution

The Open Music Initiative may just have discovered how to leverage technology to protect and promote the artistic talent and save the music industry along the way.

By Roger Santodomingo

 

Panos Panay sees himself as a mediocre guitar player. But he doesn’t lack talent completely. His high standards inevitably skew his confession. In fact, his guitarist instinct might be the key to success on what seemed a quixotic enterprise: to save the music industry from doom protecting creator’s rights at the same time.

To fight the giant –and very real– windmills conspiring against the sustainability of music as we know it, Panay had to tap into his experience as a guitar player and entrepreneur. For him, being an entrepreneur requires the grit of a marathon runner. And to be a guitar player is not a sprint either. There is no shortcut to practice, and practice is what teaches you patience, discipline, focus, and how to slow things down. This is the way a good musician acquires superior listening skills and all the necessary attributes to understand how what you do fits into the bigger picture. All this constitutes Panay’s signature philosophy that inspired the Open Music Initiative(OMI).

Panay not only co-founded the OMI, he is the Managing Director of BerkleeICE, the Institute for Creative Entrepreneurship at Berklee College of Music where he is also vice president of Innovation and Strategy. Located in Boston, Berklee College of Music is an independent academic institution considered one of the largest organizations focused on contemporary music in the world.

 

–You have had the opportunity to learn first-hand the agony of the music industry. Is the Internet a curse for the musical artist?

–No doubt income for composers, music producers and creators has dropped precipitously in the last two decades. In a way, it has been a curse, but it also represents opportunities. We, for instance, are faced with the urgent opportunity to fix the infrastructure on which our business operates —which is over a hundred years old— adapt it to the new ways in which musicians create and the new channels consumers use to enjoy music today. Even more pressing, we need to foresee how the model could change tomorrow.

 

–How did you come to the idea that blockchain could become the great remedy for the music industry?

–The OMI is an outcome of the “Fair Music Report” that we published here at Berklee in 2015. In the report, we studied the flow of revenue from consumers to streaming services and from them to creators. We detected that much of that money goes undistributed. There we started addressing that new technologies, such as the blockchain, could be catalytic to identifying rights owners and compensating them.

 

–How did you manage to get so much attention from mainstream media and big corporations when blockchain was something, and still is something, that is pretty abstract for most people?

–Yes, this is a technology that was and still is fairly new. And importantly, the last time the industry attempted the creation of a centralized entity to coordinate music rights, blockchain didn’t exist yet. But after our report, we published an op-ed in the New York Times, and we said: at Berklee, we have the conditions to advance this subject matter. We as an academic institution realized that we have a responsibility too.

 

–How important is the blockchain for the success of the initiative?

–Frankly, this construct of the distributed ledger, a technology that permits the sharing of information, data, without the necessity to establish a centralized clearinghouse was fundamental to create the OMI. Even though the protocol that we released, the API, is not mandating blockchain as an implementation, everyone understood the concept of a distributed ledger.

 

–OMI has about 200 partners from the music industry. You work with rival corporations, organizations competing against each other aggressively. How have you managed so many conflicting interests?

–Whatever answer I could give you is going to be too simplistic. It took months and a lot of persistence. I can’t say it was easy given the history of the perceived dichotomy between the tech-based and the content companies and even the perceived antagonism between the two. Because we are talking about putting together in room, companies that not only compete against each other but that sometimes are in court suing each other over issues that are related to this topic. I would tell you that getting the three major music labels —Universal, Warner, and Sony— to join was not easy.

 

–Effectively, as you said, there are not that many forums that held technology companies like Spotify or YouTube together with entities that are involved in the creative process like record labels in the same space. How did you identify the common ground?

–Focus was key. We focused the initiative on something concrete, independent of any dogma. Our focus was primarily on the technological component. We said: “Look, everybody agrees this affects everyone in the music industry, but more importantly it affects creators and the future of the creative industries.”

 

—How did you overcome disagreements?

—Again, it was our focus. We didn’t try to solve every issue. We didn’t try to address inequity or unfairness, or any subjective matters. We avoided policy rhetoric about winners or losers, and we wanted to keep it as pragmatic as possible. This focus also played a role in us getting these entities to state their support publicly. If you think it is easy to get a public statement from Google or Universal, it is not. To make things more difficult, we wanted this announcement to come from the highest levels of these companies.

 

–But you, as an academic institution that teaches thousands of creators, had authority to talk to all of them.

–Exactly, and our motives are pure. Every year we have more than 5,500 students.  We are in many ways responsible for educating so many of the world’s future creators or the persons that are responsible for enabling the creation of the musical expressions of the future. We are an academic entity; we don’t have a commercial interest, but we believe in the advancement of the industry. That gave us neutrality, a safe environment for people to congregate.

 

—Besides music corporations and other academic institutions, you partnered with the IDB. What are the lessons of cooperating with a development financial institution?

— The IDB sponsored our 2017 Summer Lab, allowing 20 software & design students from several countries and three musicians from the Caribbean to experiment and interact with our API and its possible applications. They had real hands-on involvements in the lab and a better understanding of how these technologies could help them get revenue. At the end of the day, no protocol is worth anything unless people are adopting it. What we look for in the lab, and OMI, in general, is to help to produce conditions for adoption. Ultimately we hope someone creates the equivalent of the Netscape browser.

 

—For the IDB it also could represent a learning experience.

—Of course. A development bank could abstract the term musician to the broader term of the producer. The producer could be a coffee grower or a sheep farmer. And between the producer and the consumer you could have some intermediaries. The ability of these artists that are in effect producers of booth goods and services is a fantastic case study on how these technologies could alter the relationship between producers, consumers and the middlemen.

 

—Could we summarize your formula for success as a combination of focus on technology and academic neutrality?

— Also what we discussed, a well-defined common ground. We felt that the success of the initiative was dependent on a getting this multilateral coalition to come together. Because we needed to get the tech and streaming companies like YouTube, Spotify, Pandora, SiriusXM, Netflix, etc., but without Universal, Warner, and Sony it wouldn’t work. It was important that this had to be viewed as a broad industry effort and not an experiment of one of the labels or just a few tech companies. None of these entities could say, “we don’t care about the compensation of creators,” at least not publicly.

 

—Do they put conditions besides focusing on the technology?

—First of all, it is a voluntary initiative. They all signed a memorandum of understanding. They all committed to a specific set of principles outlined in that document. In essence: “To promote and advance the development of open source standards and innovation related to music to help assure fair and proper compensation for all creators, performers and rights holders of music.” But even that three page long, seemingly simple memorandum, was not an easy thing to get through to these gigantic corporations, especially if it later involves a public declaration of certain things. We put a press release afterward that have all of these companies listed, and you could only imagine the challenge that represented every word or the hierarchy of quotes in the text. But we prevailed because people participating were motivated by coming up with a solution to a technological challenge that if solved, can dramatically impact the industry.

 

—The members share the costs of the OMI? How do they contribute financially?

—They made financial agreements only to sustain the Summer Labs, of which the IDB is a part. The Labs were created for the advancement of particular applications built on top of the protocol. Because the API is abstract, the apps humanize it. So far, we have not instituted membership fees for this. It is something we reserve but that we haven’t done.

 

—You released your API [8] in October 2017 and is now public. What has been the response?

—We released it, and reception has been great. Now we are cataloging, creating yellow pages of sorts of all the APIs that each one of the members has, as well as the services that every one of the single members provides. When finished it will be published. After that, we will start creating a reference of implementations and getting the participants in the system to build applications on top of the API. That is what will enable interoperability to exist. For example, data that could be captured through SoundCloud that talks directly to music rights organizations or a label. Today it takes two and half years for an artist to get paid if a performer somewhere on a radio station, a restaurant or anywhere plays his music. With interoperability, we are going to see a streamlining of payment flows to an exponential tier.

 

—What we saw at the Summer Lab was just a sample then.

—That wasn’t even a small appetizer. The Lab was something to say “here are some possibilities.” But you have no idea of its potential. At this point, we already have had closed-door hackathons in a few places such as Berlin, where we brought different participants together to develop new amazing applications.

 

—Who participated in those hackathons and when can we see their results?

—I am not in a position to disclose names yet. But I can tell you they are big multimillion companies in the system. The following phase is the creation of both private and public prototyping where we are creating collaborations inviting artist and developers to come together and build possible applications.

 

—What is going to be the role of the OMI in this open environment that you have set in motion?

—Think of the API as the TCP IP protocol that governs Internet communication. In the mid-90s people didn’t know what to believe or even imagined what was possible with the Internet. We want to stoke that imagination. We are not here to implement a solution but to promote innovation. That is our job as BerkleeICE, to be an ongoing cheerleader, a coordinator, it will be up to the industry to accelerate and adopt it. The open market will determine what the future of this is.

 

—A market without regulation?

—Nothing can be above the law, but it is not up to us to determine that. The legislation only takes innovation so far. It tends to be innovation that gets ahead, and then a pendulum starts. In 1995 when the last restrictions on carrying commercial traffic over the Internet ended, what followed was an explosion of innovation. Or see the example of Uber, which forced the creation of legislation. First, we have to look at what comes from this entire endeavor.

 

About the author

Roger Santodomingo is a writer, journalist, film and television producer with vast international experience. He is a consultant for the IDB and at George Washington University he is dedicated to exploring new technologies and their applications to communication and democracy.

 

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