Blockchain: Opening the Door to a New Media Era
We are entering an exciting new era where businesses founded on blockchain technology are disrupting existing ecosystems and creating new business models. According to recent Deloitte research and analysis, one industry experiencing significant disruption in today’s digital arena is media. This comes as a result of the increasing “commoditization” of content, which is being undermined by the rise in digital piracy. In the new crypto-economy such challenges can now be met with micropayment-based transaction models, airtight security protocols, monetization of P2P content sharing and the ability to link media usage to specific content.
Deloitte asserts that blockchain technology places power back in the hands of copyright owners, enabling them to take back control of their content from platform providers content aggregators and royalty collection services. The decentralization of advertising revenues and cost-effective automated revenue distribution based on smart contracts are disrupting the entire industry.
One aspect of blockchain that is being used to great effect to shake up the advertising ecosystem in novel ways, is its ability to answer the need for trust. The transparency and tracability offered by blockchain platforms results from the fact that all transactions are published openly, on a public ledger. Content providers can see precisely what they are being paid for and by whom, while marketers can trace audience information and targeting data.
The decentralization of the system further enhances the trustworthiness of blockchain-based platforms. No single individual, company, body or institution controls the transaction flow. In addition, decentralization makes it practically impossible to forge transactions, as do other inherent blockchain characteristics such as consensus and encryption. Moreover, the finality of transactions, whereby once a transaction is added to the blockchain, it cannot be reversed also engenders trust in the system.
To illustrate the point, let’s take the example of Liberdy, an advertising data management platform provider that is exploiting these innate characteristics of blockchain to send shockwaves through the industry. The consent-based platform pays users for use of their personal information, making them equal partners in the ad ecosystem for the very first time. It also provides advertisers with access to accurate, reliable data, which up to now could not be obtained outside the walled gardens of Facebook and Google. Liberdy enables an end user to trade their personal data, data that organizations already collect, and will soon have to provide to the user, in accordance with the new GDPR bill that states the user is the rightful owner of their data. When a demographic is targeted, the marketer pays the user a fee for being a part of the target audience, and pays Liberdy, a fee for running the system.
A key factor of the system is trust. Users need to trust the system to handle their data responsibly, and pay for data usage in a fair and transparent way, while marketers need to trust the system to providing accurate, transparent, first hand user data. None of this would have been possible prior to the emergence of blockchain technology.
Another way in which blockchain is being used to overhaul the media industry is by simplifying and streamlining processes, cutting out the middleman between the content creator and the advertiser so the creator receives their rightful share of the proceeds for their contribution. The blockchain facilitates a direct relationship between parties, allowing for allocation of advertising budget directly to the content creator, while enabling precise tracking of content usage. Marketing performance can then be monitored with greater accuracy, while transparency and efficiency are enhanced. In such a manner, the power dynamic is shifting, and an artist can reach their audience directly without having to lose a substantial chunk of their profits to intermediaries.
Blockchain technology also enables new pricing mechanisms for paid content. Blockchain-enabled micropayments offer a per-use payment option for consumers looking to enjoy a personalized content experience that overcomes the problem of prohibitive transaction costs. The blockchain makes micro-cent payments incredibly cheap and so the consumer can enjoy a single song, or t.v. episode cost effectively, since cryptocurrency payments can be in units as small as a fraction of a cent. For publishers, this allows for profitable distribution and monetization of smaller items of content, while smart contracts allow for a clear record of material usage. Equally, print and digital media can change their pricing models to move away from costly subscriptions to offering consumers access to individual articles that specifically interest them.
Another factor of blockchain technology that is changing the game for content providers is its global accessibility. Subscribers to many paid content services cannot access their content while abroad, due to lack of integration of many Digital Rights Management (DRM) systems between countries and licensing issues across borders. However, since smart contracts record every transaction on the blockchain, linking it to a specific user, geographical location is no longer an issue and payment can be processed automatically in real time in a secure and transparent fashion.
An additional facet of blockchain technology that is disrupting the media industry is the distribution of royalty payments. Currently, national copyright collection bodies handle compensation for copyright holders, using complex contracts that attempt to reflect the consumption of the content across numerous channels based on dedicated statistics. This leads to an obscure and inaccurate computation and distribution of proceeds. However, blockchain injects the process with transparency and accuracy. A permissioned, consensus-based blockchain music ecosystem could be created, using collection associations as trusted 3rd parties.
This would require collection bodies to change their whole business model. For example, a band could store a directory on the blockchain with all the artists’ identities and files of their content. Smart contracts could clearly state the compensation terms and the division of profits among the artists and any other relevant parties. In addition, embedded mechanisms could track downloads of their music via radio, tv, streaming services, allocating and distributing the relevant payments.
Blockchain will also radically change the way many consumers access content. Inherently transparent the technology enables piracy to be combatted effectively. It offers total visibility of all the users of a specific asset recorded on the blockchain, like a show, movie or song and the number of downloads. P2P content sharing can be completely controlled by the content owner who can create new marketing models for consumer to consumer sharing, generating new revenue streams such as for example when content subscribers share data with non-subscribers.
The media world has gone through many iterations with dramatic upheavals and far reaching consequences for the industry coming with each new emerging technology, from the advent of the internet, to 3G mobile and now blockchain. While it undoubtedly threatens the status quo, blockchain also holds great promise for content owners of a more democratic, equitable and transparent media business model.
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