Photo Credit: Chris Moody

Want to rent Star Wars? May the force be with you…

Could the blockchain save us from the evil empire of price gouging?

Over the holidays, I tried to rent Star Wars Episodes I–VI and quickly realized it’s virtually impossible. I first checked Netflix — no luck. Next, I tried iTunes. Great, they have it, but wait, I have to pay $89.99 to buy the whole set? I just want to rent it. On to Amazon Prime Video — again, no luck, but similar to iTunes, I can buy the digital version for $89.99.

Starting to sound fishy? It gets worse. In a last-ditch effort, I go to Yelp, type “DVD rental store,” call the only one in Washington, D.C., and ask if they have Star Wars in stock — eliciting this cringe-worthy response:

“Sir, we don’t have Star Wars. You’ve called an adult video store.”

Everyone loved the convenience of Uber during inclement weather, until they implemented surge pricing. No one minded giving up their MP3 collections and subscribing to Spotify, until they couldn’t listen to Taylor Swift’s or Adele’s new record.

In a way, selling Star Wars at $90, with no rental version available, is the movie industry’s surge-pricing moment.

So how did we get here, and why does it matter?

When Blockbuster filed for bankruptcy a few years ago, in part due to competition from companies like Netflix and Redbox, we all cheered against the tyranny of late fees. We thought we were on the verge of getting more — rather than fewer — options to affordably enjoy content.

I didn’t realize the significance then, but when I traded in my DVD player for an Apple TV, I unwittingly gave up three critical features:

  1. the ability for anybody to rent or sell me content;
  2. the ability to truly own content, and lastly;
  3. the ability to preserve content as it was originally published.

What I did gain was one-click convenience to a vast amount of movies and TV shows, which is incredibly powerful. And, at least I still had a DVD player on my laptop, right?

That brings us to the unfortunate position we’re in today, that Urs Gasser and John Palfrey started researching back in 2007. When we have a limited number of platforms from which to purchase, resell, or rent content, companies like Disney don’t have to offer an option for digital rentals of popular movies like Star Wars. Instead, everyone must purchase them at a higher price — after all, video rental stores have largely been put out of business.

And the secondary market for digital video and music sales bought on platforms like iTunes? Well, that’s illegal — no competition there.

Ugh! So what now?

Artists like D.A. Wallach, students and professors at Berklee College of Music, and companies like Stem, have suggested using the blockchain — a distributed public ledger that tracks the ownership of assets — to better manage royalty distributions. I think an outgrowth of this work leads to an open and interoperable digital rights management platform. And it’s gaining traction. Imogen Heap recently offered her song “Tiny Human” for developers to build prototypes of these types of solutions.

1) Truly own your digital content

When you purchase books, songs, or videos from Amazon or Apple, for example, you don’t really own it — it’s more like a lifelong lease tied to their private digital rights management (DRM) system. In a way, these private DRM systems create powerful network effects that bind you to a particular company. Try reading the electronic book you purchased from Amazon on a Barnes & Noble NOOK. Prominent venture capitalist Fred Wilson calls this “Winner takes most,” suggesting that the blockchain might weaken powerful network effects like these.

2) Regain the ability to resell or rent your digital content

Using the blockchain, it’s possible to create an open and interoperable DRM system that enables consumers to buy, sell, or rent music, movies, and books to each other or from content producers without an intermediary. Under the “First Sale Provision” of the U.S. Copyright Act, owners of a VHS or DVD, for example, were able to resell them or even rent them. This provision is what allowed video rental stores to legally operate. I wonder if this will hold true for a blockchain-based DRM system? If it does, it could dramatically increase our options for access to content — content that can be played by any application able to verify the right to view it.

3) Preserve content as it was originally published

As it turns out, every time George Lucas has re-released Star Wars, there have been modifications to the movies. There is an entire wikipedia page chronicling the changes — one of the most controversial is “Han shot first.” When we are dependent on digitally-streamed content, the version you watch today could be different than the version you watched yesterday. Not only are they modified, thousands of movies have been lost because fans weren’t able to own a copy of the film. Jeremy Rubin makes an interesting point when he says, “Preserving our cultural products should be seen as a much more important thing than individual ownership — an entire generation owns a film like Star Wars, not just the creator.

We’ve been struggling for more than a decade to find the proper balance between protecting the rights of artists and the increased costs enabled by proprietary DRMs.

As a result, today it’s virtually impossible to rent Star Wars, first released almost thirty years ago.

This movie franchise inspired legions of people to become developers and engineers, inventing the future we live in today. Here’s hoping this surge pricing moment inspires technologists to build DRM on the blockchain — increasing competition and lowering prices so more families and young kids can afford to watch inspiring movies like Star Wars.

Special thanks to Michael Casey, Chelsea Barabas and JeremyRubin for reading drafts of this post.

Brian Forde is Director of the Digital Currency Initiative at MIT Media Lab