Buying a Token, Buying Copyright? Understanding the Intellectual Property Issues Behind Machi X

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The concept of merging blockchain technology with music rights has long intrigued creators and investors alike. In 2019, Machi X — a blockchain-powered music rights platform championed by Taiwanese artist Jeffery Huang (Machi Big Brother) — launched with a bold promise: allow fans to buy digital tokens representing ownership in music copyrights. Marketed with the slogan "buying a token is buying copyright," the idea quickly captured attention. But what does it really mean to "own" a piece of music through cryptocurrency? And more importantly, does purchasing a token actually transfer legal copyright?

This article explores the intersection of blockchain innovation and intellectual property law, using Machi X as a case study. We'll unpack the legal, technical, and economic realities behind music tokenization, clarify common misconceptions, and examine whether true copyright ownership can be achieved through token purchases.

How Machi X Works: A Closer Look at Music Tokenization

Machi X operates on the Ethereum blockchain, issuing ERC-20 tokens tied to specific songs. According to public reports and platform FAQs, users can purchase these tokens using credit cards or stablecoins like USDT and DAI. Each token corresponds to a particular track, and holders are promised certain benefits.

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The platform claims that token holders receive:

At first glance, this model appears revolutionary — democratizing access to music royalties and empowering fans to financially support artists while earning returns. However, the legal and operational details reveal significant gaps between marketing claims and enforceable rights.

The Legal Reality: Does Buying a Token Transfer Copyright?

Despite the slogan "buying a token is buying copyright," the reality is more nuanced. Under Taiwan's Copyright Act (and most international frameworks), copyright ownership requires formal assignment or transfer — not just the possession of a digital token.

Key Legal Challenge #1: Co-Ownership Creates Practical Barriers

If multiple token holders truly co-owned the copyright, any licensing decision would require unanimous consent among all rights holders — an impractical standard given potentially thousands of small investors. This is governed by Article 40-1 of Taiwan’s Copyright Act, which mandates full agreement for exploitation rights unless a representative is appointed.

Yet Machi X does not establish such a representative structure. Instead, internal statements suggest that only partial copyright is acquired by the platform from artists — for example, 50% — which is then tokenized and sold as a product, not as legally binding ownership shares.

Key Legal Challenge #2: Tokens as Products, Not Property

As clarified in an Inside report footnote:

"Machi X’s legal team states that tokens are treated as products; the transaction is a sale of goods, not a transfer of copyright."

This distinction is crucial. Purchasers aren't acquiring intellectual property rights but rather contractual entitlements to potential future revenue. The actual copyright remains largely with the original creators or Machi X itself, depending on the acquisition structure.

Thus, "buying a token" ≠ "buying copyright." It's more accurately described as purchasing a revenue-sharing agreement backed by blockchain transparency.

What Do Token Holders Actually Own?

Without formal copyright transfer, token holders’ rights hinge entirely on smart contract execution and issuer reliability.

According to Machi X’s FAQ:

"Smart contracts will automatically distribute copyright income and other economic value in stablecoin form to token holders."

But critical questions remain unanswered:

Without transparent reporting mechanisms or audited financial flows, holders rely solely on trust in the platform — a risky proposition in decentralized ecosystems.

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Who Is Responsible? The Missing Link in Accountability

Another unresolved issue is who acts as the token issuer.

Ideally, artists should issue tokens directly — aligning incentives and ensuring they bear responsibility for fulfilling revenue-sharing promises. However, Machi X appears to function not just as a platform but also as an intermediary purchaser of partial rights.

As stated in the same Inside report:

"Machi X acquires partial copyright from creators and then turns that portion into tokens for sale."

This makes Machi X both platform operator and de facto issuer — creating potential conflicts of interest and centralizing control in a system marketed as decentralized.

If Machi X holds the underlying rights, it controls licensing decisions and revenue collection. Token holders have no direct claim against third parties using the music — only a contractual claim against Machi X itself. Should the company fail or mismanage funds, investor protections are minimal.

Can True Copyright Tokenization Work?

Yes — but only with robust legal infrastructure.

To make "buying a token = buying copyright" a reality, several conditions must be met:

  1. Formal Copyright Assignment: Artists must legally assign defined shares of their rights to token holders.
  2. Appointment of a Representative: Under Article 40-1(2) of Taiwan’s Copyright Act, co-owners may appoint a representative to manage licensing — avoiding deadlock.
  3. Transparent Revenue Tracking: Integration with PROs (Performing Rights Organizations) or digital distributors to verify income streams.
  4. Auditable Smart Contracts: Open-source, verifiable code that automatically enforces profit-sharing based on real data.

Without these elements, tokenization remains a marketing metaphor, not a functional legal framework.

Frequently Asked Questions (FAQ)

Q: Can I stop someone from using the song if I own its token?
A: No. Token ownership does not grant you enforcement rights over copyright infringement. Only official rights holders can take legal action.

Q: Will I earn money from Spotify plays if I hold the token?
A: Possibly — but only if Machi X collects and distributes those royalties via smart contract. There's no guarantee or public audit trail confirming this happens.

Q: Is my investment protected if Machi X shuts down?
A: Unlikely. If the issuer ceases operations, there may be no mechanism to continue revenue sharing or reclaim value.

Q: Are these tokens considered securities?
A: Potentially. If investors expect profits from others' efforts (e.g., Machi X managing licensing), regulators might classify them as securities — triggering compliance requirements.

Q: Could this model evolve into real copyright ownership?
A: Yes, with proper legal structuring. Future platforms could use DAOs (Decentralized Autonomous Organizations) to manage collective rights and elect representatives.

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Final Thoughts: Innovation Needs Clarity

Jeffery Huang’s vision for Machi X reflects genuine innovation in artist empowerment and fan engagement. Blockchain has real potential to transform how music rights are managed, traded, and monetized. However, conflating token ownership with legal copyright risks misleading investors and undermining trust.

For music tokenization to mature, platforms must:

Only then can we move beyond slogans like "buying a token is buying copyright" toward systems where fans truly share in the creative economy — fairly, securely, and legally.

Core Keywords: music tokenization, blockchain copyright, ERC-20 music tokens, smart contract royalties, digital ownership, copyright co-ownership, decentralized music platforms