Switchchord provides tools for songwriters to document ownership of their creations and connect with music publishers who administer their copyrights. The company is bringing sophisticated digital identity and legal technology solutions to the music industry. DIF recently spoke to Founder and CEO Cole Davis, who shared his insights into the industry's workings, and his approach to modernizing the music supply chain.
Where did the idea for Switchchord come from?
I started playing the bass guitar at 15, and played throughout high school and college. After college I was playing in a band while working at a bank when we received a cease and desist letter telling us we had to change our name. It got me curious about the legal side of music and I decided to go back to school to study law.
After gaining a foundation in corporate law I switched to entertainment law. While helping ad agencies and filmmakers get the rights to use music in their productions, I was surprised by the lack of operational workflows and communication tools to enable this. In the music industry there are a mass of legal contracts that drive behavior. You need to prove you have the right to take certain actions based on these contracts, like license a certain copyright in a particular media. The identity and communication infrastructure was essentially nonexistent.
There are two sides to the music industry. The first is music publishing, which involves songwriters who write compositions–think melody, lyrics, and chord progressions. These compositions receive copyright protection, and usually songwriters sell or license these copyrights to music publishers. The music publisher makes money by licensing the composition and then shares the revenue with the songwriter.
The second part of the industry is recorded music. Recording artists make recordings of compositions, resulting in a sound recording. These sound recordings receive separate copyright protection, and this copyright is usually owned by the record company who “signed” the recording artist. So any time you hear music, there are technically two copyrights involved, and those two copyrights are usually owned by different entities.
The music publishing side gets very complex. Often songs are written by multiple songwriters who are “signed” to different music publishers, meaning multiple publishers co-own the copyright. Some music publishers then hire publishing administration companies to license their songs for them. And many music publishers hire “sub-publishers” in foreign territories for local administration and licensing . There’s no central record of ownership or administration rights. Instead, you have many third-party databases that have built up over time, all doing relatively the same thing and that are divorced from the legal contracts that actually govern copyright ownership and administration rights. Information relating to these legal relationships is usually delivered via texts and emails, often resulting in inconsistencies across the entire supply chain. The transaction costs are enormous.
I started researching the problem intensively, eventually quitting my job as a lawyer to study technology full time. I was originally focused on blockchain but eventually migrated to the W3C’s emerging decentralized identity framework.
How do these problems affect songwriters and recording artists?
Streaming fraud is a really big issue — there are estimates that 10% or more of all streams are fraudulent in some way. There are bad actors who try to “game” the system of common royalty pools. Sometimes they will hijack existing legitimate streaming accounts and turn them into a bot farm to stream the bad actor’s music. Or the bad actor will upload music they don’t own and hope to make money before the music is taken down.
Then there are ‘black box’ royalties that are unallocated, and can’t be distributed due to incomplete or incorrectly registered information. This is a global phenomenon in the music industry. In the US, these are often held in escrow by collective licensing agencies like the Mechanical Licensing Collective, which licenses certain music publishing rights to streaming platforms in the US — their unallocated royalty pool is estimated at $500M or more — who collectively try to figure it out. Eventually, after years, this money gets paid out based on market share.
There are also ramifications for attribution. If you’re not credited correctly, it can be a career killer for a songwriter.
Generative AI is the new big problem. Everything will need digital signatures at source, or you’re not sure whether it’s human or AI created.
What approach have you taken to address these challenges?
All these issues are identity problems in disguise. We need digital signatures on everything, and data supply chains based on machine-readable data.
The first requirement was to represent a copyright in a digital form so that it could interact with existing copyright management platforms, effectively turning the copyright itself into a messaging hub that can connect different systems.
The second requirement was an identity system that can map contractual relationships.
With these in place, you can build verifiable data “pipes” between different industry databases, creating a routing system to pass data relating to verifiable identities and verifiable legal relationships. That helps keep ownership and administration rights in sync across the supply chain.
Our first product is designed to move data from the point of origin, such as a recording studio, into various copyright management platforms as quickly and easily as possible.
Where does decentralized identity come in?
All our products rely on decentralized identity. It’s the key technology to make everything work.
The music industry uses lots of different types of identifiers. Some are ISO standards and others are proprietary. To get paid, you need to be identified correctly by the supply chain, which relies on getting these different identifiers into downstream databases.
We verify and bind all these identifiers to a single Decentralized Identifier (DID), enabling you to bring all of your identifiers with you without any manual data entry. In addition, these DIDs are able to make statements about their legal relationships and contractual authorizations, in the form of verifiable credentials, that can be proven to other parts of the supply chain. This enables everyone in the music industry to stay in sync, with a single identity for all their identifiers, industry memberships, and legal relationships.
With an open-source identity system at the foundation, we make data supply chains between songwriters, publishers, copyright management systems and the recorded music side of the industry, with protocols for sending metadata around the system.
What lessons have you learned during the development of Switchchord?
The key is to integrate with what already exists. We see decentralization as extremely powerful but it’s a process, it doesn’t just magically happen.
How do you babystep people into this new world? If you’re modeling legal relationships or an identity for a copyright, you can get into tricky issues with governance. For example, if you have four writers, each with a different publisher, and you want to represent the copyright with a DID, who acts as the DID controller?
There are usually two roots of trust in each of these situations: a legal root of trust and a cryptographic root of trust. You have to marry all these worlds. We’re working with the industry on that.
We use did:web for now as it’s easy. We don’t want to force songwriters to have their own wallet, or to use the same infrastructure to manage their keys. We’re realistic about that.
What is your vision for the future?
Eventually, we want everyone to be able to bring their own identity. You’ll be able to insert these DIDs directly into legal workflows, with agents controlling the data flows. The copyright itself can have a Decentralized Web Node (DWN) where data can be written to and shared. Any time you see a statement being made about copyright ownership or administration rights, we see an opportunity to present that statement as a verifiable credential. That will be very helpful at getting to the truth.
Because we see decentralization as a spectrum that can occur over time, we closely follow some of the recent upgrades to did:web that extend things like key management. So DID methods like did:plc, did:webplus, did:tdw, or did:webs, which uses KERI (Key Event Receipt Infrastructure). Until the infrastructure exists to let people BYOI (bring your own identity), we’ve left our DID method selection purposefully modular.
DIDComm is also great. If you need to contact people, we’d like to enable that within the framework of decentralized identifiers. That goes back to my original frustrations with licensing music into things like movies and the complete lack of communication infrastructure.
What do you see as the wider significance of these new types of decentralized approaches?
In my previous careers I’ve worked with other industries such as oil and gas and real estate. The basic questions are the same: how to map legal relationships within a complex supply chain, and how to represent assets as digital versions that are intrinsically tied to the legal system.
The decentralized identity framework is the future of commercial transactions. It’s the most important thing out there. There’s cool stuff you can do with blockchain and payments, but that’s not everything. You don’t need blockchain for the vast majority of these use cases, just digital signatures and verifiable data.
What value do you get from DIF membership?
DIF is a really good rallying point for people who are trying to tackle these kinds of hard problems using decentralized technology. It’s the body I’m most involved in, though I’m also involved with ToIP, W3C, and C2PA. The community is really approachable.
I was a judge on the DIF hackathon. It was so cool to see people start to use this stuff. I was really happy to be involved.
Eventually it would be great to introduce DIF to some of the music industry standards bodies we participate in, like DDEX and ISNI. I think DIF could play a role as this connective layer across different industries who are all tackling similar problems.