Spotify Turns to Blockchain Technology to Pay More Royalties to Artists

Spotify has announced its acquisition of blockchain technology company Mediachain Labs to help it reward online content owners with royalty payments.

The news, first reported by VentureBeat on Wednesday, was relayed via a Spotify press release which has since been removed from its website, explaining that the purchase of the New York-based startup was aimed at facilitating Spotify's "journey toward a more fair, transparent and rewarding music industry for creators and rights owners".

Mediachain is responsible for the creation of an open source peer-to-peer database and protocol for registering, identifying, and tracking creative works online. The blockchain component aims to help creators and rights holders prove they are the owner of a piece of work and receive due payment.

Spotify has faced legal trouble in the past over its failure to pay artists and publishers, which is said to be down to difficulties it has had in working out who to pay, a problem which relates especially to smaller artists and labels.

Last month, Spotify reached a $30 million settlement with a publishing group over unpaid royalties and agreed to put in place a system that guaranteed a "reasonable effort" would be made to match all music streams with creators and rights owners.

Spotify recently passed 50 million paid subscribers. The Mediachain acquisition deal – the terms of which were not disclosed – appears to be part of the company's plan to gain wider support from the creative community as it gears up to become an initial public offering on the stock market sometime next year.