How Blockchain is Set to Revolutionize IPR Management in the Media Industry
This article is the first issue of Overtheblock.io IPR Management Series, which looks at the intersection of blockchain, IPR management and Media. The work presented in this post has been conducted in the context of MediaVerse, an H2020 innovation action sponsored by the European Commission.
The advent of the Internet has brought several paradigmatic shifts in almost all socio-economic contexts through digitalization. In the media industry, digitalization has become the new standard for the creation, dissemination, and transfer of contents. Many types of content fall within the definition of digital content, such as digital images, 3D images, and videos, digital videos, video games, web pages, websites, social media, electronic documents, digital audio, e-books, etc. In general, we can distinguish among four main content categories: video, image, audio, and text, making it clear how digitalization plays a key role in all the market segments of the Media & Entertainment Industry.
However, most of the value created within the media industry is internalized by intermediaries, leaving little or no value to those who produce media content. Moreover, the phenomenon of commoditization of content, which we will discuss later in this article, tends to cancel out both the replication and distribution costs of such multimedia products, eroding, even more, the profit margins of content creators.
In addition, in this context, there is a cumbersome system for managing intellectual property and related rights (i.e., IPR), which does not allow for the valorization of content for those who produce it and makes the bureaucratic procedures necessary for the management of these rights excessively onerous. This makes the content production process more expensive, not only from an economic point of view but also in terms of the effort involved in the distribution process of copyright creations.
Therefore, there is an urgent need for a renewal of the entire system that brings value back into the hands of those who created it and that allows for more streamlined management of copyrights to make the media industry and the various reference markets agile and responsive. The answer to these needs is called Blockchain and the evolution is already underway. In this first issue of the OverTheBlock.io IPR Management series, we analyze the impact of blockchain technology on the Media & Entertainment Industry and, more specifically, on its value chain. The article presents the main characteristics of this ecosystem, highlighting the necessity to implement new solutions to boost the technological transition of the Media Industry and the IPR management framework.
Digital Media Value Chain
The first step is to look at the value chain of the Digital Media Industry shown in Figure 1. An industry value chain focuses on the value creation of an entire production sector rather than a single entity. Specifically, the Digital Media Value Chain includes five different stages: content production, media preparation, content distribution, monetization, and consumption.
The content production phase focuses on the processes required to create and/or produce media content and principally involves content creators. The media preparation phase, instead, include the activities needed to transform media contents’ format into one that is optimal for the distribution channel (transcoding and packaging) as well as the activities aimed at protecting (Digital Right Management (DRM) license software) and managing (Content Management Solution (CRM)) the contents already created. The subsequent phase, i.e., content distribution, covers the choices related to how and with what technology content should reach the end-users.
Once the format, the quality of the content, and how it will be distributed have been defined, the next step is to choose how to monetize content. Moreover, monetization can also depend on the rights granted to content distributors (if any). Finally, the consumption phase comprises all the necessary activities related to those services that allow end-users to consume the media content created and distributed. In this case, the focal point relates to the content visualization rights of each end-user. Indeed, the management of these rights consists of verifying the permissions and authorizations that each user holds to access the content distributed by a particular platform.
Copyright Management
Within the Media Industry, a series of rights are created belonging to different actors involved in the process that goes from creating media content to their consumption. Therefore, a fundamental aspect of this industry relates to the management and negotiation of these content rights to avoid illicit use and protect the intellectual propriety of the creators.
Copyright is the main legal instrument used to protect the intellectual property of content creators, with the aim of encouraging inventiveness and creativity. However, since its creation in 1710, copyright has been based on the idea that few parties are equipped to carry out the business of mass production, reproduction, and distribution of works.
The advent of digitalization and the Internet have allowed the creation of tools able to dramatically decrease (if not cancel completely) the marginal costs of production and distribution related to contents [1]. As a consequence, they can be copied and transmitted at almost no cost. This phenomenon has been defined as commoditization, which makes digital content interchangeable with other products of the same type (i.e., digital information items). Furthermore, commoditization of digital content is strictly related to its demonetization [2] defined as one of the 6 D’s of Peter Diamandis, which in fact refers to the possibility of creating virtual copies of the contents and allow access to a multitude of services at costs approaching zero.
Digital abundance has called for the adaptation of the copyright institute to manage copyright in digital works. In this context, in order to protect authors without slowing down the time of production or increasing its costs, it is necessary to implement (or use) technological tools that complement copyright. These tools must be able to allow content creators to impose technological constraints on the use and copying of their intellectual products.
Blockchain-based IPR management
Blockchain technology has proven to be particularly well suited to drive the digital transition of the Entertainment & Media industry. The innovative solution that blockchain proposes is based, first and foremost, on the disintermediation of the media industry by means of the decentralized nature of the technology. In this way, only consumers and authors are involved in the copyright and monetization processes, without depending on third-party entities such as record companies, film studios, social media, etc. Indeed, through the registration of artworks on the blockchain, it is possible to manage copyrights, while the implementation of smart contracts allows the management of licenses and royalty payments.
Along with disintermediation, the most relevant concept to consider when talking about blockchain and digital media is digital scarcity. As already mentioned, the main problem in managing intellectual property rights in the digital sphere is that the fruition of content by its intrinsic characteristic cannot be limited. The blockchain technology, thanks to its features and the tokenization processes to which it gives access, has all the potential to introduce digital scarcity for media content with the advantage that this property stems from the technological nature of the network itself and not from a limitation imposed by software owned by a third party.
In other words, if up to now, the media industry has tried to make “rare” its content on the network through a limitation to their access using centralized software systems and adapting to the constraints imposed by them, with the use of blockchain it is possible to register a content in the network making it unique and rare precisely because it is stored as information on the blockchain.
Therefore, blockchain can be used as a public, accessible, and secure ledger to verify the attribution of a piece of content and its authenticity. An artist who wants to protect his/her content will simply need to record it on the blockchain via its hash or unique identifier (e.g., ISBN for books). By storing this information on the blockchain, a timestamped record will exist that will certify the attribution of that specific work to that specific artist, and it will not be possible for other users to register the same work under their name since the hash functions always produce the same result from the original input data. Moreover, thanks to tokenization processes, it will be possible to create a real “digital twin” of any asset, both physical or already digital.
A fundamental role in this context is played by Non-Fungible Tokens (NFT), through which it is possible to create a unique and non-fungible digital asset that is not interchangeable with others, thus acquiring the characteristic of absolute uniqueness of the information and data it contains. These tokens realized through special smart contracts (ERC-721 of Ethereum is the most widespread) can be purchased and collected by the network users. In these cases, we will have the transfer of the “physical property” not modifying, instead, the intellectual one as the information related to the creation is stored on the blockchain that, as already said, is able to certify the attribution of content securely.
In addition to affecting aspects of content attribution, copyright management, and royalty distribution, the blockchain can bring innovations to the content monetization phase due to the payment system it implements. The most relevant innovation that blockchain can get to this stage of the value chain is to enable creators to implement new pricing options for paid content. By leveraging the divisibility of digital assets (also known as cryptocurrencies) into their decimal units, it is possible to implement pay-per-use business models with micropayments at efficient transaction costs.
In the context of a creative industry increasingly made up of prosumers and based on the concepts of collaboration and instantaneousness, the blockchain is able to introduce micro metering and micropayment functionalities that allow creators and consumers to access small portions of content by paying only for the corresponding portion of the value. These innovations also allow new creators to make new artworks by collaborating with other artists by exchanging content or portions of it in a context where transitions are governed by smart contracts and recorded on the blockchain. Figure 2 graphically shows the impacts of blockchain technology on the media value chain that have been discussed above.
The OverTheBlock.io IPR Management series will continue with a second issue that will focus on the existing ecosystem in the context of blockchain-based IPR management solutions. We will analyze the main players currently on the market and the characteristics of these players to understand the strategic choices that have allowed the success of these businesses.
Stay tuned!
[1] Shapiro, C. and Varian, H. R. (1998), “Information rules: a strategic guide to the network economy”, Harvard Business Press.
[2] Diamandis, P. H. (2016), “The 6 D’s”, Retrievable at link.
Please cite as:
Moncada R., Ferro E., Santamaria M. (2021) How Blockchain is Set to Revolutionize IPR management in the Media Industry, Overtheblock Innovation Observatory, retrievable at link
OverTheBlock is a LINKS Foundation’s initiative carried out by a team of innovation researchers under the directorship of Enrico Ferro. The aim is to promote a broader awareness of the opportunities offered by the advent of exponential technologies in reshaping the way we conduct business and govern society.
We are chain agnostic, value-oriented, and open to discussion.
