In its report, A new game change for the media industry?, Deloitte says that payment-focused use cases have already been proven to work. “Parts of the media value chain are therefore already endangered by new blockchain-based payment and contract options. These can fundamentally reset pricing, advertising, revenue sharing, and royalty payment processes.”
Blockchain holds great promise for digital rights management. In fact, copyright infringements and piracy could be made nearly impossible.
Of course, the key words in all of this are “eventually,” “promise,” and “potential.” It’s still a long way from there to here, but we do have a glimpse of what’s possible.
We’ve identified several ways blockchain can do this; probably the most logical place to start is music and digital rights.
But you can’t discuss digital rights and music without talking about the future of streaming services. So let’s look at one.
Spotify last year acquired Mediachain, a digital rights management startup, TechCrunch reports. Mediachain has been working on using blockchain technology to help solve problems with attribution—an area where Spotify needs help, TechCrunch noted: It had to settle a lawsuit over unpaid royalties in 2016.
Blockchain could—eventually—-eliminate digital rights theft. Artists could release their music and control the data and terms of use. Royalties would be distributed in real time via smart contracts. “If anytime anybody uses a music file anywhere in the world, that action is automatically recorded by a public blockchain, and the transaction can be validated, you will no longer have digital rights theft,” explains Greg Cudahy, EY Global Leader, writing in “Blockchain reaction: Tech plans for critical mass.”
The Open Music Initiative is a consortium that seeks to leverage blockchain technology to resolve royalty disputes. It’s not building a platform. Rather, it’s creating an open-source protocol for the uniform identification of music rights holders and creators.
Blockchain has the potential to address the problems surrounding content access, distribution, and compensation; managing assets and digital rights; and financing, among others. Here are a few examples:
A Medium blog post outlined just how difficult it was to actually buy Heap’s song.
“Blockchain technology sounds fantastic as a concept. […] But, as it applies to music, we don’t think blockchain for music is ready, just yet, to replace existing services solely on a better promise to artists. The solution is not ready for consumers and offers zero incentive for users to switch over.”
Micropayments are not a new concept, but blockchain may make them more practical. For example, a newspaper in Winnipeg has already begun to use a micropayment system to charge per article for its news content, according to an op-ed in Bitcoin Magazine.
The blockchain makes micropayments—even a fraction of a penny—possible. As Deloitte explains, it becomes “an enabler for penny price content purchases, such as paying for reading a single news article or streaming a single song.” Moreover, traditionally ad-sponsored content can be monetized with an “ad-free” alternative for a small fee.
Such an approach opens the door to new pricing models. In addition, copyright tracking becomes more accurate, which means royalty payments are more appropriately distributed.
Consumers, especially younger ones, would rather pay a few cents for a piece of content they like—e.g., a particular music track or news story—than be charged a monthly subscription fee, according to Deloitte.
But there are challenges. For one thing, transaction quantity would be “massive,” the Deloitte report warns. And, at least where blockchain technology is today, that could make things much slower than the status quo.
In addition, users would have to register and provide payment information—not to their credit card, but to a cryptocurrency wallet. The Medium post on the difficulty of purchasing Heap’s song on Ethereum highlights the challenges here.
Another issue—not necessarily a problem—is that these approaches don’t necessarily represent disintermediation. It’s just “a new crop of middlemen,” observes Sunny Dhillon, a partner at Signia Venture Partners, an $85 million venture fund.
We’ve focused largely on music because it provides an excellent example of the potential of blockchain technology to reconfigure the media landscape. But music is just one example.
In a blockchain for research, critical aspects such as peer review, reproducibility, attribution/credit, trust, access and—where required—anonymity, can be realized and safeguarded, according to the report. “Its potential relates to almost all stages in the researcher’s workflow.” And again, a blockchain-based micropayment model would improve access, track readership, and compensate creators—bypassing the major publishers.
Eefke Smit, of the International Association of STM [scientific, technical, and medical] Publishers, isn’t predicting a massive disruption, but in a prepared statement about the report, she conceded that there’s potential: “However, I could see current players adopting and creating bits of blockchain infrastructure where they can really make a difference.”
It’s more than just theory. For example, Scienceroot calls itself the “first blockchain-based ecosystem enabling the academic community to reap its rewards.” Scienceroot will trade its science tokens with Ether.
Ivory Publishing is an open-access scientific publishing platform built on blockchain technology, where all submission fees go directly to the editors and reviewers who handle manuscripts. So far, it has only a Twitter presence—no website.
“What if every audio or video app on your phone, TV news camera or your video camera automatically came set up to create blockchains that included information such as geolocation, date and time? Editing programs would also be required to use blockchain. And what if every frame that was edited had a blockchain describing what changes were made?”
That’s not exactly how it’s playing out yet, but several startups are taking on “fake news,” including PUBLIQ. It’s is a free app for sharing digital content news and articles built on top of the DECENT network. Authors are rewarded according to their PUBLIQ Score, based on reader views and feedback.
PUBLIQ also offers an intermediary-free experience to advertisers—and digital advertising is another area ripe for transformation.
“Will aggregators soon become obsolete? Probably not, because media consumers still need to discover new content. Further on, the collection and aggregation of content will remain an important stage of the media value chain. However, power in the media industry will probably shift back to the artists, and the dominating role of huge platform providers will decline.”
It’s heady stuff. The distribution of royalties could become more efficient and transparent and, thanks to smart contracts, happen in real time. Copyright and access issues could be resolved.
But much remains to be done. Perhaps the two biggest hurdles are the number of transactions and the need for common blockchain standards; both still need to be agreed on.
We’ll go back to music as an example.
The Global Repertoire Database failed to launch a couple of years ago because it could not overcome the skepticism of publishers, songwriters, and organizations such as ASCAP and BMI, reports the Music Business Journal. “Blockchain needs multiple participants sharing data in a single space avoiding third-party checks on the accuracy of the terms of trade therein.“
That requires trust and a general agreement about standards—huge hurdles cited by Deloitte’s report, among others.
And again, there’s the issues of scale and transaction time. Remember that once a record is submitted to the blockchain, it is synced and stored on all nodes worldwide. Then think of the number of transactions that would occur if micropayments were being used.
Blockchain skeptic David Gerard has been making this point to anyone who will listen—and some who won’t. Here’s an excerpt from his book, Attack of the 50 Foot Blockchain: Bitcoin, Blockchain, Ethereum & Smart Contracts.
“No single blockchain can possibly scale to the whole music industry. There were an estimated 35 million songs in iTunes in 2013; Spotify played a billion streams a day by mid-2015. If you use multiple blockchains, they will need reconciliation.
“Apart from the metadata itself being huge, there’s the encoded details of all the hundred-page contracts. Who are the participants in the blockchain who will each be keeping their own copy of all of this data? And who will pay for the computing resources to execute all the smart contracts for each song played?”
Naysayers notwithstanding, we do believe blockchain will transform media, from news to music to academic publishing—and countless other areas. It’s going to happen—just not as fast as some would like.
