200k Copies Protected Later — Looking at why we use blockchain tech to stop piracy
In April of this year, we celebrated our 100 000th film protected. It took us over 4 years to get to our first 100 000 copies — it took us just 6 months to get to 200 000. Things are really heating up, with Custos protecting content from piracy for customers on four continents. I thought it would be a good time to reflect on why we do what we do — why do we consider stopping piracy using blockchain technology a billion dollar idea.
“But piracy helps the content creators, right.”
This is something you hear a lot — the argument here is that piracy drives exposure that will lead to increased sales. It’s an intuitive argument, and even has some anecdotes supporting it. Unfortunately, as my favourite Economics lecturer loved to say: “the plural of anecdote is not data.” The data shows that the net balance of gained sales to lost sales from piracy is negative, and significantly so for content that is leaked early in its lifetime.
Yes, it’s not the same as stealing a car, yes, you can make infinite copies, but stealing is stealing. As with the promotion argument above, it’s definitely tempting to think that because it’s digital it’s not stealing, but that’s also stupid. I’m a knowledge worker. Although I dabble in cross-stitch and woodworking, the things I sell are not physical objects, but data — and you bet I expect to be paid for it.
Some of the data I produce finds its value in its scarcity. All of the data I produce can be copied as easily as a PDF. How valuable is the data? Well, exactly the amount I’m willing to sell it for and someone else is willing to buy it for. If I set a minimum price for my work and someone thinks it’s too expensive, they don’t need to buy it. I have no market power over them, just like a studio has no market power over you. They have the power to set the price for a movie, and you have all the power in the world to choose not to buy it at that price.
This is about property rights. In South Africa, we are currently facing a potential challenge to our property rights by the government, and that’s scary. The economy is feeling the pain as investors get skittish and pull out their money. My dad is an architect, and no one is willing to build anything because they might lose it. It’s scary stuff. It even managed to rattle the usually stoic Trump:
(As an aside, if you ever need to check for fake news in South Africa, including claims about ‘large-scale killing of farmers,’ go to Africa Check. Also, feel free to donate to them, it’s a great cause!)
I’m an anarcho-capitalist. I want the state to be as small as it possibly can be, but property rights are non-negotiable for any functioning state. Our lives are already digital. Digital property rights is already a cornerstone of our modern economy.
Protecting digital property rights is hard. Scarcity is intrinsic to physical goods, but need to be enforced in digital goods.
People in the digital property rights space were very excited about blockchain technology because its core feature is creating digital scarcity. There was a hope that this would translate to creating digital scarcity in media items. Unfortunately, this is not possible because of something called the analogue-hole — if a human needs to be able to view the content they are able to copy it. See our recent white paper for more details on this. This essential feature of digital goods is what has made the traditional attempts to limit piracy ineffective.
A new approach was needed, and blockchain technology made that possible. A digital and distributed approach to fight a digital and distributed problem.
Most of our customers are not the big companies to whom the losses of millions of dollars from a piracy leak means a drop in share price. The blockchain technology enables us to provide better-than-Hollywood protection at a fraction of anything you’d find there.
We specifically price our products to make it accessible to even the smallest indie-studio, for whom a pirate leak means they have to close their doors. These are the people putting their hearts and souls into creating movies that push our culture forward and help us understand ourselves and each other better. Today we have protected over 200 000 copies of their movies.
Custos means guardian or custodian in Latin. We are the Custodians of digital property rights.
