Media buzz around blockchain technology is characterized by a paradox: despite the tendency to highlight the disruptive potential of blockchain across industries, little attention has been paid to how blockchain can transform the media industry itself. Interestingly, Marco Iansiti and Karim R. Lakhani, professors of Business Administration at Harvard Business School, believe that the blockchain-led transformation of business is still a distant prospect because blockchain is in fact a foundational technology: contrary to popular belief, it will not disrupt traditional business models with lower-cost solutions, nor will it overtake incumbent firms quickly. More importantly, it has the potential to build new foundations for the existing economic and social infrastructure. “The process of adoption will be gradual and steady, not sudden, as waves of technological and institutional change gain momentum,” note the professors.
This article will present 5 blockchain use cases in media to highlight the transformative potential of blockchain technology in the media industry.
Use case 1: Per-use pricing
As Deloitte, a professional services firm, observes, media consumers increasingly demand a personalized content experience and flexible payment options. More specifically, they want to create their own content portfolio and be charged only for the content that they actually consume. Instead of paying a monthly or annual subscription fee, they expect to be charged per content use. For example, many digital natives prefer to pay a few cents for each music track that they like rather than be charged a monthly subscription fee for all the library content.
Deloitte sees several positive outcomes of the per-use payment model: (1) Individual pieces of content can be sold for cents “without disproportionate transaction costs”. (2) Even micro-cent payments are cost-efficient as there is no need for costly monitoring of contractual agreements and complex profit distribution schemes. (3) Low-priced content can be marketed competitively and with a profit thanks to reduced transaction costs. (4) Copyright owners can track the usage of their content and receive fair compensation for it, based on accurate calculations. (5) Ad-sponsored content can be monetized with an ad-free micro-payment alternative.
Use case 2: Copyright protection and content monetization
Digitally distributed content is plagued by piracy. “I personally believe that a lot of piracy comes from friction in the legal distribution mechanisms. Blockchain technology can enable more frictionless monetization of content to better compete with pirates,” says Phil Gomes, Senior Vice President of US B2B Digital at Edelman, a communications marketing firm.
Blockchain can ensure more efficient content monetization by giving users the opportunity to easily access and purchase legal content, thus making it an attractive alternative to illegal content.
According to Accenture, a professional services firm, blockchain technology can facilitate the legitimate use of copyrighted content by small creative firms and individuals. It can ensure accurate tracking of content usage and per-use royalty payments to content owners. Blockchain-enabled content licensing can especially benefit prosumers who would like to use copyrighted content for their own purposes (e.g. DJs, video creators or app developers) as they often face the challenge of licensing that content.
Use case 3: Bypassing content aggregators
A 2015 study by the Berklee Institute for Creative Entrepreneurship found that “[…] anywhere from 20–50 percent of music payments don’t make it to their rightful owners.” This situation is the result of the dominant role of content aggregators in ad-based media business. As Deloitte explains, “There are several intermediaries between the content creator and the potential advertiser. The slice of the monetization cake for the initial creator of digital content becomes smaller with every additional party involved.”
Deloitte believes that blockchain can help any content creator bypass content aggregators and generate advertising revenues. Thanks to blockchain-enabled accurate tracking of content usage and micro-payments, content creators can directly market their content wherever they want and get fair compensation for their work. “In an extreme scenario, aggregators could even become obsolete in the future,” notes Deloitte.
Riz Virk, Executive Director of Play Labs @ MIT, a startup accelerator, believes that blockchain technology could lead to media decentralization, where no single website or authority would have the final say on what content would be distributed, and how it would be distributed. He also stresses that blockchain would prevent content blocking, and would help establish a decentralized content distribution network: “No website would be able to block specific content. With DApps, or Decentralized Apps for Entertainment, whether it’s for live streaming or on-demand video, thousands of computers around the world would act as “broadcasters” in a mesh network that is not hierarchical.”
Use case 4: Content authenticity
The Brexit referendum and the US presidential election in 2016 gave rise to unprecedented media manipulation of public opinion with “targeted false content”, reflected by an increase of about 2,000% in the usage of the term post-truth in 2016 and a 365% increase in the usage of the term fake news since 2016.
Announcing post-truth as Oxford Dictionaries’ Word of the Year 2016, Oxford Dictionaries President Casper Grathwohl stressed: “It’s not surprising that our choice reflects a year dominated by highly-charged political and social discourse. Fuelled by the rise of social media as a news source and a growing distrust of facts offered up by the establishment, post-truth as a concept has been finding its linguistic footing for some time.”
To combat the proliferation of fake news, social media platforms have started to work with independent fact-checkers. Sunny Dhillon, a partner at Signia Venture Partners, a venture fund, believes that blockchain technology can help overcome outsourcing the process of content authenticity verification to third parties. He acknowledges the efforts of startups like Prover, which uses blockchain technology to verify the authenticity of user generated video files.
Use case 5: Crowdfunding of creative productions
In December 2017, Indiegogo, a crowdfunding platform, launched an initial coin offering (ICO) vetting service in partnership with MicroVentures, a broker-dealer. The partners aim “to hand select quality cryptocurrency investments”.
“We want to bring a brand of trust to the entire industry, which we think will bring ICOs to the mainstream,” says Slava Rubin, Co-founder of Indiegogo.
To achieve that, Indiegogo has decided to register some ICOs as securities. “While a security designation significantly restricts investors’ actions, it’s worth the trade-off to achieve a legally compliant platform that is secure and sustainable,” Bill DeLisle, a blockchain writer at CryptoSlate.com, comments on the decision.
At the same time, Indiegogo uses utility tokens, which provide future access to a product or service. By making a clear distinction between security tokens and utility tokens, the firm can clarify what investors’ money is spent on. That, in turn, helps market ICOs effectively, DeLisle notes.
“Creative productions could also leverage ICOs for crowdfunding,” says Nelson Granados, Director of the Institute for Entertainment, Media, and Culture at the Pepperdine Graziadio Business School. He forecasts that the number of ICOs for films and other creative ventures could increase in 2018 if not hindered by securities regulations.
References: Marco Iansiti and Karim R. Lakhani, Harvard Business Review | Deloitte, Blockchain @ Media: A new Game Changer for the Media Industry? | Nelson Granados, Forbes | Accenture, Blockchain: Reengineering the Media Value Chain | rethink-music.com | Riz Virk, Hackernoon.com | Nadja Bester, Invest in Blockchain | Alison Flood, The Guardian | CollinsDictionary.com | Sunny Dhillon, Forbes | Prover.io | Indiegogo, ico.indiegogo.com | Nathaniel Popper, The New York Times | Bill DeLisle, CryptoSlate.com