New York’s Tribeca Film Festival is known for being at the forefront of cutting-edge technology and so it comes as no surprise that this year, as part of the Future of Film series of talks, the festival hosted a thought-provoking panel entitled: “Can Blockchain Breed Blockbusters?”
Leaving aside the elegant alliteration of the title, this is a smart question to ask, especially at a time when the industry as a whole is undergoing tremendous change and upheaval.
However, there is one thing that never changes and any filmmaker can testify to: it’s a struggle to get a film made, no matter how established you are as an artist. And the same goes for every creative in the arts, media, music and entertainment industries.
But does it have to be so? While it is true that movie-making is one of the riskiest ventures from a financial standpoint, is it possible that we got so used to the idea that the whole process must be a cumbersome one that we can’t even imagine a smoother way of doing things?
As it is always the case, while the majority is busy plodding on doing things the old way, there are fortunately a few individuals who are willing to take risks in order to improve on the way things are done.
And this trait applies to all the speakers on the blockchain panel. Mitzi Peirone, writer-director of the 2018 Tribeca selection BRAID — funded entirely by cryptocurrencies, Peter Guglielmino, the CTO for IBM’s Media & Entertainment Industry, as well as SingularDTV’s very own VP of Entertainment Finance and Development, Daniel Hyman. If you missed out on this passionate discussion, here are some key takeaways for you to ponder on.
One of the most important issues the panel addressed was to dispel some of the myths and misconceptions surrounding blockchain and the use of cryptocurrency to fund films.
“It’s not drug money!” said Mitzi Peirone jokingly, but also slightly apprehensive that the subject of her feature film (two lifelong friends making ends meet by dealing drugs in New York City) might get this idea more deeply entrenched in the minds of those who associate cryptocurrencies with something shady. “It’s actually safer and more visible”, she added.
Another common misconception is that blockchain is first and foremost about eliminating the middleman. This idea is so rife that article after article on blockchain keeps reiterating it. Quoting from a recent piece in TV Technology: “Whether the goal is better security and customer privacy or more flexibility, the end game is the same: eliminating — or at least lessening the impact of — the “middleman.”
But this is definitely not the main goal of using blockchain, as Daniel Hyman cogently pointed out during the discussion. “I’m not here to take anyone’s job, I’m here to create solutions to efficientize your process all along the supply chain. I want more money in the pockets of producers, like myself”.
Having successively occupied a role in every stage of the process, from production to sales, distribution and financing, Daniel can see the big picture clearly. “Every single person in the film industry plays a very important role. The problem with all of these people is that they are all operating in silos. This is where the inefficiency comes from”.
The tools SingularDTV is providing are going to efficientise the settlement of cash, the spread of goods and services, as well as record-keeping, thus tackling the core problems producers are faced with. “The biggest problem in this industry is inefficiency and overhead, with 10 different steps of the process which should be simplified into one”, he added.
While blockchain is not a panacea and “won’t cure everything”, as Peter Guglielmino pointed out, it can still solve a lot of problems that people in the creative industries are forced to deal with every day.
Here’s a few specific things that blockchain can facilitate for you as a filmmaker, producer, studio exec, distributor or film investor:
- Blockchain technology enables professional investment in a film
As things stand, reporting and accounting for film investment is almost archaic and while traditional crowdsourcing such as Kickstarter & Indiegogo succeeded in giving people a platform to support projects they are interested in, they are donations-based systems that don’t incentivise investors to contribute to a project, unless they love free T-shirts, as the witty moderator remarked!
Compared to these platforms, blockchain technology allows for investors to directly partake in what they are investing. With equity crowdsourcing, which is what SingularDTV is doing, investors have the possibility to participate in the profitability of the projects they support. This idea was inspired by what David Bowie did in the early 90s: he came up with the idea of “Bowie bonds”, a way of monetising the future royalties of his albums and concerts which provided a fixed income through the purchase of securities. “People who believed in David Bowie the product, were able to reap the benefits of David Bowie’s profits”, emphasised Daniel.
In this way, not only are investors directly invested in what they are contributing towards, but due to the distributed ledger, they are able to see every detail of how they are going to spend the money, which helps build a relationship of trust and transparency between filmmakers and investors. “Our investors knew everything we were doing, we had a very open, supportive relationship”, said Mitzi.
2) Artists can retain creative freedom
It is often the case that when you’re pitching a project to a production studio, the execs will tell you to simplify the script or dumb it down. Your creative freedom will be taken away and you’ll have to compromise on the story.
In contrast, as Mitzi pointed out, using blockchain to decentralise the economy means democratising the arts. It also means enabling independent artists to “truly follow their hearts, to follow what they think is worth portraying, instead of having to fall back on pre-established algorithms of storytelling that we’ve heard and seen over and over”.
In relation to that, Daniel emphasised, “We are creating a true supply and demand market for what people want to see”. This saves you as an artist, from the pressure of having studio executives green-light your project. “If people want to consume your content, if they believe in you as a creator, they will fund you, and this is what we’re looking to enable”.
3) Every creative is paid fairly using new royalty payment mechanisms
As things stand, it is difficult to pay fairly for creative work in a digital world where it is easy to share and distribute copies, so royalty payment mechanisms are ripe for disruption. This applies in particular to the music industry — one of the first use cases for blockchain.
“The way rights are handled in the music industry sees the top 20% get 80% of the revenues” and “it is the creative individuals who are least likely to get compensated”, added Peter Guglielmino.
Traditionally, the music label keeps the ledger and you may be allowed to look at it if you sue them. In contrast, blockchain, by virtue of being a shared ledger, is a set of nodes that link to each other, where no single entity owns the system of records, where everyone who has access can see the chain of transactions, enabling the collection of metadata.
Peter: “Once you have this immutable ledger that has provenance (you can’t backtrack), you can annotate everyone who contributed, what they contributed. Then in an automated way, you can track your royalties and make sure that everybody who has contributed is duly compensated. That’s the big problem we need to address in the creative industries”.
Regarding the technicalities involved, Daniel gave a concrete example: “If you’re a musician and a sample of your song is being used for a different project, by using blockchain you will be able to see that part of your ownership being transferred to someone else, and with that also the rights and royalties associated with that transfer of IP. And because this is all linked in one web of information, any revenue that is derived from that shared piece of IP will flow back to the original smart contract system, which then filters down your cash flow, settlement and revenue with the rightful owners of the IP.”
This is an important way forward for music streaming sites and rights holders who often struggle to agree on compensation for song streams, leading to legal fights such as the recent $1.6 billion lawsuit against Spotify.
Overall, the panel did a great job in raising awareness that traditional models for raising funds and distributing content are quickly becoming obsolete, due to the inefficiency involved and the sheer frustration resulting from it. Thus, the arts, media, music and entertainment are great use cases for blockchain, since the participants would greatly benefit from both security and transparency, like payments, funding, monetization and contract enforcement. Being able to efficientise the whole process, while retaining creative freedom and offering investors a clear and transparent investment mechanism are just a few of the amazing advantages of this new burgeoning technology that’s taking the world by storm.