In preparation for our ‘Creatives: Unblocked’ conference on 29 June in London we’re examining six ways blockchain will revolutionise the creative industries.
We are living in the age of the creative. Countries around the world are shifting towards a knowledge economy, where the quantity, quality and accessibility of information are of central importance. At the heart of this system lie the prized creators and disseminators of the creative industries.
Publishing, music, film and TV, advertising, architecture, fashion, and gaming among other sectors make up the creative industries and together they account for 3% of world GDP. The recent boom in consumption is thanks, in part, to increasing connectivity and digital distribution platforms (see the UNESCO and EY report of 2015). However, digitisation has created new problems society has yet to solve. Digital content can be reproduced again, and again, and again with little limitation. How can you fairly compensate artists when enforcing intellectual property rights in an online world is such a headache?
Enter blockchain. Entrepreneurs and artists around the world are now waking up to the value provided by blockchain and distributed ledger technologies. Blockchain makes possible a form of decentralised immutable, transparent and programmable record-keeping which was simply not possible in the past. In the worlds of music, art, media and advertising in particular, blockchain has the potential to revolutionise operations and open up entirely new business models as well.
Faster Royalty Payments
For many artists, making a living from their work still proves extremely difficult. Royalties generated from digital streaming, sales and public performances come in fits and starts owing to changes in fan interest and demand. Micropayments are an established part of streaming culture with Spotify paying in the region of $0.004 per play and YouTube only $0.0007 per play. Increasing your reach is a game of Catch-22 – you need money to get the word out but you need to get the word out before you can make any money. Ultimately, this challenge is compounded by the fact that artists across sectors can wait for months before their compensation is calculated and issued to them.
Payments is an area where blockchain shines. If plugged into creative distribution platforms, applications of blockchain could provide an automated payment processing service that reduces the time it takes for money to reach an artist’s bank account.
Blockchain can also handle the distribution of royalties through programmable smart contracts. Those managing artists currently claim responsibility for this complex process. In the case of a song, royalties could go to the songwriters, singer, musicians and numerous others; in the art world, curators, galleries and patrons may be involved. The cost of policing royalties is criticised by some as an additional tax on artists. And despite this, organisations are still not fully successful: Royalty Tracks identify artist’s missing income, believing that $1.1bn per annum is lost each year in missing royalties. This is a ready opportunity for blockchain companies like Blokur and Artlerey to leapfrog ahead of the current system.
Stronger Copyright Enforcement
Content creators’ ability to protect and exploit their material is fundamental to a creative economic system. Tracking your content in a digitised, global age is hard, but it’s nothing if you can’t prove you own the content. This examination of copyright infringement in the music industry explains just how difficult it can be. Those lucky enough to be signed to big labels or major organisations can have teams of lawyers dedicated to protecting their rights. But just like royalty processing, all this increases operational expenses and eats further into an artist’s share of revenue.
Blockchain’s value as an auditing tool makes it a natural fit for this industry. It can be used to create time-stamped, immutable records demonstrating the origin and ownership of creative assets. IPchain is one company working on just such a tool, where hashing – a digest of digital content that acts like a digital fingerprint – makes it easy for a creator to prove ownership: any content can be compared with these digital fingerprints to find a match and identify who owns the copyright to that material. KODAKOne is aiming to provide a similar ownership ledger specifically for photographers.
There’s also potential for blockchain to increase automation when it comes to licensing copyrighted materials to others. Ascribe are developing a system that will allow creatives to assign rights to companies and individuals, using smart contracts to track and enforce fair use. In the arena of video distribution, Screener Copy uses forensic watermarking and blockchain technology to be able to identify the exact source of leaked film. Between 20% and 60% of all early-release movies are leaked; with its first 100,000 protected films Screener Copy has been able to reduce this number to 0%, all thanks to the power of blockchain.
Despite digitisation, transparency, or a lack of it, is still creating issues across the creative industries. In the worlds of high-end fashion and art, the value of products is undermined or lost completely by paper trails that leave provenance and authenticity in question. Another hot topic is programmatic advertising where advertisers are seeking reassurance that ads are being served up to humans of the right profile rather than bots.
These are not worries each sector can ignore: the Association of National Advertisers estimates that $6.5bn was lost in 2017 due to ad fraud, while art forgeries discovered in 2016 put in doubt the authenticity of over $200 million-worth of paintings. In this climate, it’s natural that providers are looking to blockchain to provide an immutable record of activity: then you know that what you see is really what you get.
Blockchain companies have jumped in to provide this service. In London, EnvisionX work to provide greater transparency between buyer and seller of ads, while Verisart from L.A. are moving us one step closer to having a decentralised registry of the world’s art. But blockchain may serve a purpose beyond authentication. Integrity and transparency are the watchwords for the blockchain community and it’s possible that this ethos will seep into the creative industries in other ways. The music industry for instance is notorious for lengthy, boilerplate contracts: one lawyer counted 74 pages and 38,000 words in a contract with a major label. If calls for greater transparency pervade into other areas, lawyers may start to have a lot less paperwork.
New Business Models
Since the advent of the internet, media businesses and content publishers have been debating how to make money. Today, things are still in flux. Digital ad-blockers are restricting revenue sources, while paywalls have been accused of limiting user experience and discovery (you don’t pay for what you don’t know you’re getting).
Though micropayments have taken off as a way of managing compensation for artists, their use as a source of revenue from consumers has been limited. Micropayments are often difficult or expensive to process through traditional credit card systems and so intermediaries are required to track accounts until they accumulate into single, larger payments. However, some companies still see the benefits. Blendle and LaterPay are both encouraging media to leverage micropayment strategies – the former allowing people to get access to individual articles at a fraction of the price of a full print edition, and the later acting like a tab, where consumers access content at tiny prices until they hit a certain total and are are asked to pay the balance.
If this does become an area of interest for businesses, blockchain could go one step further and enable “nanopayments”. Cryptocurrencies can allow direct payments that equate to fractions of a cent or pennies. Bitcoin for instance can be divided into smaller units known as satoshis, with one satoshi equaling 0.00000001 bitcoin, or £0.000064 ($0.000089) at the time of writing. SatoshiPay claim its nanopayment solution can offer up a “whole universe of new monetisation possibilities” enabled by blockchain technology. Their approach is to divide content into small units of consumption – think seconds of a video or paragraphs in an article – and calculate payments based on these. Here blockchain can be utilised to create a system of micrometering, processing payment automatically, as and when a user accesses content. Though these ideas have yet to be adopted in the mass market, it’s possible that an organisation that takes the plunge and educates users could see a major new monetary strategy emerging.
The internet has increased rather than decreased the number of middlemen in most sectors. Sitting between those who create a film and those who ultimately pay to watch are numerous parties you may not even be aware of: online retailers, streaming services, cinemas, film producers, distributers, TV services – the list goes on. If a song makes it big, it could have 700,000 different sources of revenue around the world with up to 50 intermediaries between listener and creator. That’s a lot of people to please, and a lot of people wanting a piece of the pie.
All this can make artists frustrated with the bureaucracy, poor pay and lack of autonomy that results from this complex web of interdependencies. Musician Imogen Heap is one such artist who is pursuing a more artist-centric approach to music distribution. In 2015, she experimented with Ujomusic and Ethereum, releasing song “Tiny Human” online along with lyrics, music video and all the song’s stereo stems – tracks for each instrument – for purchase with clear, upfront licensing information. Asking the question “wouldn’t it be nice if I could decide what I wanted to do with my music?”, has led her to establish Mycelia. A collective of creatives and music lovers, Mycelia run hack days and support musical projects that help put artists firmly at the centre of technological developments in this space. But it’s not just musicians who want to claim back control. Publica is seeking to disrupt the publishing industry by allowing authors to pre-sell books with tokens, giving them the opportunity to fund their advance themselves. As new blockchain initiatives make peer-to-peer, creator-to-consumer platforms more viable and more attractive, it seems the creative industries will be a ready audience.
Produced by Liberty York. Liberty is Founder of Tech Tales and a writer, researcher and trainer for Unblocked Events.