Free Association Friday: Blockchain and Betamax
Last week, Blythe Masters, the CEO of Digital Asset Holdings, a leading blockchain technology company that develops solutions for financial services companies, was asked about the timeframe for adoption of blockchain tech.
Her answer? Two years for deployment in some commercial settings, but five to ten years for mainstream adoption. (See our prior post for a similar prediction).
She then noted three obstacles to adoption. First, uncertainty about regulation. Second, getting multiple parties to “agree on sharing infrastructure.”
But it was her third point that really got my attention:
And the last, number three, is the question of the creation of common standards, so you don’t have the risk for an early adopter that they inadvertently selected a solution that became the equivalent of Betamax when in fact the rest of the world goes in the direction of VHS.
Masters’ reference was to a technology that was the center of arguably the most important legal dispute over copyright and content delivery systems over the past 50 years. While she may have intended it merely as a convenient example of her point, for someone who practices in the copyright and technology fields, it resonates deeply.
The Videotape Format Wars
Some quick history. Back in the late 1970s, Sony’s Betamax videocassette/recording technology was competing with JVC’s VHS format for dominance in the consumer market. Eventually, the VHS format would win the videotape format war, presumably because the VHS format was cheaper and had longer recording times (although Betamax was perhaps a higher quality format because of its resolution, sound quality and other factors).
Both formats, obviously, were eventually superseded by DVDs — although interestingly Sony did not discontinue sales of Betamax cassettes until last month (maybe that’s why it was on Ms. Masters’ mind).
Despite VHS’s eventual dominance, it was the Betamax format that was earliest to market, so in 1976 that was the format which became the subject of a major copyright infringement lawsuit brought by a number of Hollywood studios. The studios claimed that the distribution of devices that allowed home users to record television programming constituted secondary copyright infringement.
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The case wound its way to the US Supreme Court, which in 1984 issued a landmark decision holding that “time-shifting” of free broadcast television programs by users for their own personal use was a fair use, and thus the manufacturer of a device that could be used for such a fair use (even if some users employed it for other, infringing uses) was not a copyright infringement.
Arguably, this decision opened the doors to the wide range of devices and apps we all use today to consume content of all types.
We talk a lot on this blog about using blockchain in the context of copyrighted content. But one thing blockchain technology is NOT: It is not an efficient content-delivery system. It can help create permanent registries of information about content, which can facilitate a whole range of transactions around that content, but it’s not so great as an actual conduit.
That’s because while we talk about “blockchain technology” as convenient terminology, in reality it is not a new technology at all. Distributed peer-to-peer computing is the underlying technology, and it’s been around for years. The blockchains is simply a very, very clever combination of that existing technology with cryptographic solutions and an incentive system, to eliminate a persistent problem that occurs when dealing with decentralized structures (the double spend issue).
Okay, so it’s splitting hairs whether that constitutes a new technology — it depends on how we define “technology” in the first place, since most technologies are combinations of existing ones. My only point here is that distributed peer-to-peer computing already has robust, well-established implementations for content distribution, from torrents to the new Interplanetary File System.
So blockchain technology (I’m not going to stop using that term) can complement and enhance content delivery systems, and although on this blog we primarily discuss implementations that work within the existing copyright structures and facilitate distribution of authorized content, I have no doubt that others are working on blockchain-based solutions for distributing unauthorized content. Like most technical solutions, blockchains can be used for legal or illegal purposes, as we’ve already seen with Bitcoin.
Upending Existing Law
But going back to the Betamax, what stands out for me from the legal battle is how the new technology blasted through the boundaries of existing law, and recast the law at the highest level. The Supreme Court’s recognition of a “home use” exception for copying content required the Court to go back to first principles, including the fundamental purpose of the copyright laws — serving the public interest:
The monopoly privileges that Congress may authorize are neither unlimited nor primarily designed to provide a special private benefit. Rather, the limited grant is a means by which an important public purpose may be achieved. It is intended to motivate the creative activity of authors and inventors by the provision of a special reward, and to allow the public access to the products of their genius after the limited period of exclusive control has expired.
The Court expressly recognized that allowing home use serves the public interest and overrides any limited interest the copyright holder might have in not allowing time-shifting:
But a use that has no demonstrable effect upon the potential market for, or the value of, the copyrighted work need not be prohibited in order to protect the author’s incentive to create. The prohibition of such noncommercial uses would merely inhibit access to ideas without any countervailing benefit.
Could the blockchain, despite the fact that it’s not a true content delivery system, cause such a return to first principles? Maybe. We’ve discussed in a prior post that some of what the blockchain offers could potentially shift us back from a primarily copyright licensing economy to more of a sales-based copyright economy.
Some observers also wonder if more ubiquitous documentation/registration of information about all types of content, allowing ready attribution for even the lowliest cat video, might even disrupt the entire idea of content as property, in favor of a system that recognizes content as rather a vehicle for attention (this assumes that attention is the chief “currency” of online life). In other words, could the driving principle of copyright — the constitutional “bargain” that awards monopoly ownership power over one’s content in order to serve the public good of bringing that content to the market and eventually committing it to the public domain — be better served by some other system?
The fact that people are starting to have some of these discussions is perhaps the best evidence that the blockchain may in fact press the boundaries of existing law in the IP space, just as the simple videotape did, way back when.