5 Ways Blockchain Could Disrupt the Media Industry
Blockchain-based technology will eventually transform how we deliver, consume, and pay for media content, from news and academic papers to music and entertainment. This transformation will address—and perhaps even resolve—some of the most acute pain points in the media industry.
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.
1. Music and digital rights
Entrepreneurs are turning to blockchain to make content sharing fairer for artists, and several companies have emerged to build a blockchain for music. Smart contracts would allow revenue on purchases of creative work to be automatically disseminated based on licensing agreements, according to CB Insights.
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.
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:
- SingularDTV, using Ethereum, is turning to tokenization to eliminate the middleman. Those who buy an artist’s tokens acquire shares of the artist’s creations and its revenue flows, Business Insider reports.
- British blockchain startup JAAK is developing an Ethereum-based platform that allows media owners to convert their repository of media, metadata, and rights into “smart content” that can self-execute licensing transactions, according to CB Insights.
- Stem is building a blockchain platform “to bring clear and timely payments to the creative class.” They allow creatives to publish content, manage contracts and transact payments all from a single portal.
- British singer and songwriter—and Grammy Award winner—Imogen Heap is aiming for “fair trade” music to give musicians more ownership over the money and data produced by their work, Quartz reports. In 2016, she released what’s believed to be the first song on the Ethereum blockchain. Heap articulated her vision in a Harvard Business Review article entitled “Blockchain Could Help Musicians Make Money Again.”
So, as with much of blockchain, it’s a work in progress.
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.”
2. Micropayments to monetize content creation
Blockchain technology would allow for cryptocurrency micropayments to create new monetization models for content creators who are often not fairly compensated for their intellectual property, be it music, photos, news, or videos.
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.
3. Academic publishing re-envisioned
Blockchain technology could transform scholarly publication, communication, and research, according to a November 2017 report, “Blockchain for Research – Perspectives on a New Paradigm for Scholarly Communication,” from Digital Science.
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.
4. Cleaning up fake news
Blockchain technology could eventually give people access to other sorts of facts: Some believe it can be used to weed out fake news. Henry Newman, CEO and CTO of Instrumental, writes about this in Enterprise Storage Forum:
“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.
5. Advertising: More targeted, less intrusive?
In a blockchain model, advertising budgets could be better targeted, because media use could be directly linked to content, according to Deloitte. Some of these models have already been launched.
- In late 2017, The Marketing Group launched the very first blockchain-enabled advertising agency. Truth will use Ethereum, an alternate blockchain, for its smart contract technology to underpin its media buying and planning platforms so clients will be able to see where their money goes.
- Brave‘s Basic Attention Token (BAT) compensates advertisers and users. As Brave describes it, advertisers will list directly onto Brave’s blockchain-based browser. Users will see fewer, better-targeted ads without the malware—and be paid for looking at them. Advertisers get better data on their spending. Users can also pay content providers with BAT
- Algebraix Data’s permission-based advertising network allows consumers to choose what ads they see. They control who gets their data, and they are paid for viewing these ads via the ALX token. Mashable called it one of its favorite blockchain pitches of 2017—without commenting on its odds for success.
Shifting the balance of power
Blockchain’s disintermediation will shift the balance of power to the creator, but it won’t completely do away with the players in the middle, says the Deloitte report. At least, not yet.
“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.