The Morning Note — Friday Deep Dive — How can creative industries benefit from blockchain?
A morning bulletin offering fresh news, pithy opinions and pioneering insights cultivated straight from the heart of blockchain ideology and technology.
As you ease into your weekend — we give you something a little deeper to ponder with our Friday Deep Dive. Enjoy! — Brought to you by the Keynote team.
31 August 2018
This week we examined the impact of blockchain on different aspects of the creative industries. From film to fine art. Museums to the music industry.
And there is so much more to explore — new business and economic models; creative entrepreneurship and artistic identity; copyright; visual analytics; and digital forensics — the potential innovation is astounding.
There are also the risks and barriers to adoption that need to be considered. On one hand there is great hope, that the adoption of digital ledger technologies will lead to a more balanced, transparent and equitable market to help artists monitor what their art is worth and collect royalties due to them. Equally — there is great fear, that such technologies might be applied to the art market by a single entity which would extract even more economic rents from artists, leaving them at risk and disenfranchised.
With the right stewardship, blockchain could and should fundamentally change the role of artists in society. At its heart it’s a leveling technology, and so it has the promise of simplifying much of the complexity around ownership and rights, with the potential outcome of re-empowering the world’s creative forces. And just imagined what a world of empowered artists might look like?
With this in mind — let’s look at five forces of blockchain technology that could dramatically affect the creative economy:
Force 1: Enabling ‘smart contracts’
Blockchains can host “smart contracts” to help artists manage digital rights and allocate revenue shares to contributors to the creative process. Such smart contracts have the potential to replace conventional contracts, which can be esoteric and leave some artists with little power over the terms for the content they generate.
Force 2: Establishing transparent peer-to-peer transactions
One of the biggest appeals of blockchain is its public nature. All of the transactions for a creative work could be seen and validated, including who accessed the work and how much revenue the work is generating at any point in time. This will allow stakeholders to have a better sense of the overall value of the creative work that is being produced, all in the form of a digital ledger provided in the blockchain.
Force 3: Promoting efficient, dynamic pricing
Creative content can be mispriced. By tracking the demand for creative content, pricing could be more dynamic. Prices for creative content could fluctuate according to supply and demand. Moreover, artists could control prices and have the ability to set prices themselves without having to go through a complex web of intermediaries.
Force 4: Allowing ‘micrometering’ or ‘micromonetizing’
Digital music stores such as iTunes allow consumers to purchase individual song tracks. Using blockchain, snippets of creative works could be made available for a price, for example, a few seconds of a song for use in a movie trailer. This kind of “micrometering” works by having the blockchain record the precise components of the creative work that were used, defining the smallest consumable unit of creative content.
Force 5: Establishing a reputation system
Blockchain can help link reputations to specific “addresses” on the blockchain, thus allowing both producers and consumers of creative content to verify one another. This could encourage stronger collaboration and better behavior, by promoting cooperative terms for content creators and consumers alike. Participants who repeatedly don’t fulfill terms in a contract or try to game the system would have their actions recorded, acting as a deterrent against bad behavior.
Risks, challenges, and the future
The benefits of blockchain obviously run deep. But as we warned earlier, there are risks and challenges that need to be addressed — and addressed in the right way, by the right people. More universal uses of blockchain technology may require solutions to “off-chain” issues, especially around business, technology, and legal challenges. The key areas of focus for risk management that therefore need to be explored include:
- Licensing issues and challenging the status quo.
- Artist promotion.
- ‘On-chain’ versus ‘off-chain’ storage.
- Methodology for micrometering/micromonetizing.
- Intellectual-property (IP) frameworks.
- Governance/permissions.
Defining value in creative work
Blockchain holds enormous potential to break down barriers that could lead to more efficiency, greater accountability, lower costs, and increased remuneration for artists.
This will enable creatives globally, to benefit from a more efficient marketplace to sell and receive payments — empowering people across the globe to create, share and enjoy. Artwork can be showcased on the internet, purchased in cryptocurrencies, or funded thought ICOs. It does not matter where you live, it is accessible to all.
To reap these benefits, however, the technology will need to be developed responsibly with the right stewardship that understands the subtleties of how creative works are valued based upon their cultural, societal, or political value. What we don’t want is further commoditization of creative works, however how blockchain can digitally ascribe these subtleties to creative works is not yet evident. A deeper conversation… to be continued.
We are always on the look out for the hearty stories and pithy ideas underpinning the future of blockchain. If there is something you’d like us to include in The Morning Note, please email clare@keynote.ae and we will be sure to take a look.
