The 5 Most Important Points From Our Conference Call on Crypto’s Impact on Intellectual Property
On June 26th, we held a conference call titled “Crypto’s Impact on Intellectual Property.” Economic value has shifted substantially to the intangible, and intellectual property (IP) is one of the most significant forms of intangible value, yet much IP is not even captured by conventional financial ledgers. There is increasing pressure on media companies to find new ways of creating, developing and monetizing their IP. The increasing pace of innovation is a catalyst for large organizations in all industries to improve their methods for finding and using IP developed by third parties.
The registry, accounting and valuation of IP are likely to be among the foundational applications of blockchain and cryptocurrency technology. For our conference call, we brought together three key executives of groundbreaking projects addressing applications of blockchain and cryptocurrency technology to the creation, discovery, and monetization of IP:
Jarrod Dicker — CEO, Po.et. Po.et is a shared, open, universal ledger designed to record metadata and ownership information for digital creative assets. Po.et completed a token sale last year. Join Po.et on Telegram here.
Matthew Iles — Co-Founder and CEO, Civil. Civil is building a newsroom platform using blockchain technology and crypto economics to create an open marketplace for journalists and citizens. Civil is launching an MVP, as well as doing a token sale. Join Civil on Telegram here.
Raj Malhotra — CEO, RiteCoin & InvenTrust. The mission of RiteCoin and InvenTrust is to use blockchain and cryptocurrency technology to enable anyone with specialized know-how anywhere in the world to be discovered and rewarded, quickly, fairly, and transparently. Join RiteCoin on Telegram here.
Below are our five key takeaways from the call.
1. Crypto addresses key challenges for go-to-market strategies of a wide range of IP.
Each project is using crypto to address failures in existing go-to-market strategies for various types of IP. Jarrod did note that blockchain solutions often would likely complement, rather than replace, current approaches.
The Po.et protocol — for use across the full range of creative industries, including music, journalism and video — addresses key components necessary to take IP to market, including proof of existence, verification, discovery, transparency, attribution, and reputation. One of the many existing challenges for owners of creative IP (e.g., a screenplay) is how to share it with those who could invest in its further development, without compromising the IP’s value. A shared ledger on the blockchain should facilitate this process.
For journalism, Civil is looking to overcome the detrimental impact of the advertising-supported model, which has been aggravated by the spread of programmatic advertising.
One key contribution of RiteCoin to IP management is to address two fundamental market failures. The first is the struggle of organizations to deal with accelerating innovation cycles, which necessitates better discovery and licensing of IP from outside their organizations. The second is how to capture the value of IP when the average lifetime of the rights (e.g., 17 years for patents) exceeds the average lifetime of the firms using those rights (~13 years).
2. Distributed ledgers can help restore control which creators have lost over digital assets.
Loss of control over digital assets, and most direly their outright theft, is another key challenge for distributed ledger technologies to address. Jarrod noted as an example the long history of theft in the music industry, with Napster being just one of many high profile cases. Although subscription pay walls are now more prevalent for music, they remain vulnerable to circumvention, for example, simply through the sharing of passwords. Securing IP like music through a trustless blockchain network could help improve control of access, and open up new ways of monetizing IP on a global scale.
3. Tokens can be used for proof of existence, content curation, and know-how monetization.
Tokens can be instrumental at several key stages of IP management, from creation to monetization.
Po.et incorporates time stamping of IP, essential to verification of authorship, ownership, and attribution for creative works.
Core to Civil’s mission is its token-curated registry for enforcing the purpose, values and ethics of its journalism-centric community. Matthew said that curation would be a popular use for crypto. Initially, Civil is focusing on recruiting publishers and establishing acceptance of governance of its network of newsrooms organized around the CVL native token. A participating newsroom states its mission and roster of participants and commits to the ethical standards in Civil’s constitution. As part of the curation process, community members can challenge newsrooms for potential violations of journalistic standards in the constitution, supporting the challenge with evidence as well as a token stake. At least initially, Civil’s curation will focus on whether content meets the community’s ethical standards.
One of RiteCoin’s key missions is to provide a platform for monetizing “un-banked” innovation. Methods for IP monetization are most developed for marquee rights, often bundled into portfolios of patents and copyrights. There is a large opportunity for blockchain technology to reduce the friction for registry, discovery and monetization of a broad array of know-how, such as techniques of 3D printing or quantitative models for energy trading.
4. Tokenization can move monetization from subscription & membership to user ownership & support.
Tokenization naturally leads new platforms to try new methods of monetization, not simply better execution of current methods of monetization. Matthew noted the longer-term implications of Civil’s building a growing registry of newsrooms curated through a community-approved whitelist. This invites a transition from the current model of supporting journalism primarily through advertising, subscriptions and memberships to use of the Civil token as a means for the community to have a deeper commitment to the producers of journalism, akin to share ownership. Tokenization becomes linked to adherence to the shared values of the network. Jarrod gave an analogy to the music industry, where the path to profit has shifted from the music labels to fan clubs and their current iterations in social media fandom.
5. Will IP increasingly be monetized at more atomic levels? There is some debate.
The potential for blockchain to greatly improve the tracking and use of IP and for tokens to permit virtually infinitely divisible increments of payment lead to questions regarding whether digital assets will be increasingly monetized at more atomic levels. The transition to digital allowed for the disaggregation of albums into singles in music, and the disaggregation of network bundles into individual shows in TV. Nevertheless, Jarrod and Matthew see the continuing importance of brands in delivering value to IP creators. This is one reason why Po.et facilitates the building of reputation, which is crucial to trust in the IP industry. Matthew sees payments for journalism as often motivated not simply by the value exchange in a particular story, but by a desire to support the work of particular creators. Readers invest in scoops by their favorite reporters, with a view to helping them come up with more scoops in the future.
Raj took a slightly different tack in addressing the trend to ever-more granular IP transactions. He sees the potential for crypto to allow assets like know-how to be used through increasingly granular transactions. On the other hand, he notes how the potential to surface new forms of know-how and their creators could give rise to new types of brands, more akin to affinity groups.
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