Content & Cryptocurrency

January 12, 2016 | Written by: Stem

Getting paid in full as a creator has never been easy. In past posts, we’ve discussed how incredibly confusing it can be to collect royalty payments on a monthly basis. However, there are new technologies that are helping to alleviate these past frustrations.

Digital currency has the potential to reduce the amount of error and confusion in identifying ownership of intellectual property while also minimizing turnaround times and transaction fees for each payment. To put it more simply, digital currency can make payments instantaneous and remove any chance of a person making an error in that payment.

Throughout each year, creators sporadically receive royalty checks in the mail with little to no context into what exactly they are for, or way to verify accuracy. Here at Stem, utilizing new technologies associated with digital currency is important to our objective of empowering creators and making sure they can easily collect their earnings.

In this post, we’ll be introducing a few core concepts, including:

Lately, there has been a lot of talk surrounding the blockchain and how it can “save the music industry,” and that notion is not too far off. With blockchain technology, pipe dreams like receiving payments for your streams in real-time, or simply ensuring that you will receive payment consistently through automated transactions, can become a reality.

Our goal with this post is to explain the core concepts we are most excited about, how they work together, how they can improve the way creators make a living and our approach to them here at Stem.


Bitcoin can be transferred directly and instantly via the Internet with little to no fees

There are a few key differences between bitcoin and the dollars, cents and credit we use to trade in our everyday lives.

With bitcoin:

Now, let’s put these points into perspective. Imagine you are based in the U.S., and want to share earnings from a video on YouTube with your editor in London, but they do not have a bank account. With bitcoin, you can send them these earnings instantly without having to go through a bank. This means that the middleman is eliminated, you aren’t charged international processing fees (or they are very minimal) and you don’t need to wait for the bank to process the payment because bitcoin is inoperable.

What exactly do we mean by the statement that bitcoin is inoperable? Consider your email account. No matter what provider you are registered with (GMail, Yahoo, AOL, etc.), you can send and receive messages from any email address in the world. Bitcoin acts in the same way; it can be traded internationally since it acts as its own currency, and any person with an account can use it to send and receive payments without delay.

Bitcoin is the first digital cryptocurrency to reach the mainstream, which has allowed it to consolidate its message and grow in value. Another major benefit of bitcoin is empowering the unbanked, whether that’s someone under 18 or an international community.

It is important to separate bitcoin the currency from blockchain technology; right now, when people say “the blockchain,” they are generally referring to the bitcoin blockchain, which is a verifiable record of every single bitcoin transaction ever made.


Records can be stored and accessed publicly on the blockchain

The blockchain acts as a shared record, or ledger, of events by every connected user that can never be erased. Events are specific actions that can be tracked by a computer, including anything from financial transfers to public records. The important thing to understand is that these events contain metadata, and this information is what is stored in the blockchain.

For Stem, example events are when:

Ledgers are central to any institution issuing payouts. Currently, if you write a song, it’s up to you to register with a PRO and claim your ownership in certain territories, and only then can you begin to collect payments. With a public verifiable ledger, artists can worry less about the complicated process of repeatedly registering their intellectual property and whether or not those institutions are collecting revenue from every outlet they are owed. This leads to less financial stress and confusion and is conducive to more automated businesses for artists.

Put more simply, public ledgers can lead to clarity, which enables more seamless payouts, no matter the currency, and allows creators to focus on what they do best: making cool stuff.

Smart Contracts

Smart Contracts automate agreements, so no more worrying that someone may not hold up their end of the bargain

Smart contracts are computer generated rules that facilitate, verify and enforce the negotiation and execution of a contract. The key aspect is automation; when technology is responsible for triggering payments, the chance of manual error in executing contracts is eliminated.

In O’Reilly’s Blockchain: Blueprint for a New Economy, author Melanie Swan reports that in 2014, contract disputes accounted for 44% of litigations in the United States, and 57% in the United Kingdom. Automated contracts ensure incoming payments are routed correctly, presenting an opportunity to build business structures that enforce themselves without the opportunity for human error. This is especially useful for royalties since they recur consistently with the same splits.

This idea could be used to power record labels, publishers and multi-channel networks as a way to automate accounting. This means faster, more consistent payments knowing that contracts are being honored.


Micropayments allow transactions to occur instantly

Bitcoin’s fee structure makes micropayments viable at scale. Think of it this way: if you register a song to Spotify and a user listens, you could be paid what you are owed for that stream as it happens. Since each piece of content has a smart contract signifying ownership rules, as payments are generated they could be automatically routed in real-time.

Stem plans to utilize smart contracts combined with micropayments to power automatic revenue splits between collaborators from YouTube, SoundCloud, Spotify and Apple Music. That means you can register your content, set your splits and never worry that they may not be honored.

Platforms generally pay creators on a monthly basis, and some distributors take up to three months to remit payments. Shifting to micropayments could increase the clarity of one’s financial situation and make being a full-time creator more realistic.


Here at Stem, we are always working to make sure creators get paid for their work, and believe bitcoin and digital currency offer an incredibly interesting opportunity to rethink and improve an industry.

At the time of publishing this post, 1 Bitcoin is worth $449.

Creators – if you have questions about digital currency, please ask in the comments below and we will respond. This is a fascinating new concept for shifting how creators can make a living, and change begins with understanding.

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