Can Media Make Blockchain?
Our love for content may transform into our need to own it.
Co-written by Asher Fishman
For most of history, there has been an imbalance between the creation, distribution, and consumption of such entertainment. Since the birth of industry, the majority of content ownership resided in the hands of the distributors: newspapers, TV channels, record labels, radio stations, and the like. As a result, the division of ownership and royalties from the entertainment content has been one-sided in that it has allocated the significant real estate of brands, characters, storylines, and melodies to these distributors and middlemen. The internet tilted this scale significantly with two more positive subdivisions of distribution: community-driven (i.e. YouTube, Soundcloud, Wikipedia) and subscription based (i.e. Netflix, Spotify, Wall Street Journal). While community-driven and subscription based business models are better for users than the original systems of distribution, they create new difficulties of advertisement, priority listing, and censorship. Nonetheless, hybrid models of these two forms have spurred the creation of freemiums and ‘pro’ versions of similar concepts that further the development of innovative media sharing and communication platforms.
In music, subscription-based platforms siphon off much of the potential gains of artists by taking an unfair share of streaming revenues. For example, Spotify controls 51.51% of the US music market and is valued as a $19 Billion company. Despite a user average of 1,300 song streams per month, which at a $10 price tag comes out to $0.00769 per stream, Spotify only pays $0.00397 to its artists — in other words, taking 48% for themselves.
In writing/blogging, Medium has developed a paid content environment, paying each writer based on how many claps (similar to likes) their article gets. It is still unclear how the system works exactly, but we know that only members’ “claps” are counted and that some claps are worth more than others. Additionally, only certain writers are registered for this concept, and the rest of us aren’t getting paid per clap. Clear or unclear, people are rarely making enough under Medium’s model to pay their rent. On top of that, inconsistency due to their funky algorithm makes it extremely rare to make thousands of dollars a month off of it. I have yet to meet a writer living solely off of Medium’s payment structure. Considering the fact that Medium is valued at more than $500 million makes it clear that contributors are only getting a fraction of the revenue they could and should be getting.
“Sometimes Youtube spreads its cheeks so wide, it’s hard to not grab a bucket of mayonnaise and go in for a full thrust.” — h3h3
In video, YouTube’s payment system seems to have done a slightly better job of paying creators. On YouTube, creators not only make an average of $2–4 per video, but also get paid for ads. In this way Youtube is putting more money in creator’s pockets, but is it the profit they deserve? Probably not. Consider this: the richest YouTuber of 2017, PewDiePie, made $16.5 million this year on YouTube. That is a great paycheck, but considering that YouTube is reported to make $20.4 billion in ad revenue, PewDiePie only made 0.004125% of Youtube’s overall income.
More specifically, PewDiePie received 2.3 billion monetized views out of YouTube’s yearly total of 156 billion, meaning he created 1.5% of the business that year. Despite this, he received $16.5M out of total ad revenues of $20.4 billion, which is .08% of earnings.
Based on raw numbers, he is earning ~5% of what he produced. Doesn’t he deserve more? Granted, YouTube management created and maintains this successful model so they deserve a big chunk of the profits, but a 95:5 split doesn’t sound fair to me. And as YouTube has grown, so have the barriers to entry for ad revenue; as of 2017, YouTube channels must have 1k followers and 4k hours of watch time before they can monetize their videos. This produces new obstacles for rookie creators trying to profit from their work. Additionally, where is the incentive for contributors to be first movers or community builders? Besides money, control over a network you helped build is extremely important. There are many tales of YouTube determining which videos are trending regardless of views or engagement. Last year, YouTube removed PewDiePie’s ad rights, limiting his ability to garner ad revenue, and he had no corporate power to do anything about it. This is called Selective Enforcement. The community also has no say in it, and refer to this dark period on YouTube as The Adpocalypse. We see again that although YouTube’s partnership program is better than other platforms, and their site is immensely important to the internet, but creators should be getting more for their hard work and have more control over their network. The payout for producers is far from fair. That’s where decentralization comes in.
Decentralization means more money in your pocket.
More money — the magical words. Distributed ledgers allow for unchanging ownership of digital assets such as data to be validated and transacted. In other words, data and content can be exclusively owned and permissioned in the same way that personally storing Bitcoins can ensure singular access. The owner himself will choose who can access the data and who can’t. This is huge because it creates space for direct transactions between creators and users as well as content and advertisers. This direct communication translates into more money for the creator, and creators have more power than ever before in the centralized world. In addition to the trade of content, token economics allow for other means of producing value; Token-Curated Registries (TCRs) to crowdfund and invest in specific channels, increasing value of tokens as the network grows and many more interesting concepts are being developed.
This is all game-changing, but will decentralized media be an easy transition? No. Issues such as speed, power, and updates for the use of smart contracts are very possible to overcome, and solutions are currently being proven. But there are bigger problems of friction, limited content access, user experience, and lasting added value that have yet to reform into an attractive product. There is also the concern of censorship, but it stems from the double-edged sword of the freedom of speech.
Let’s run through some interesting projects in decentralized media.
Steemit & D.tube:
Steemit rewards both the creators, those that post content on its site, and the curators, those that support posts by up-voting, commenting, or sharing. This is done through a 3 token economy, where Steem is the speculative currency and the dollar-pegged Steem Dollars inflate over time to distribute rewards to posts that receive likes. They also receive a portion of Steem Power, which controls the network; the more an account is active on Steemit, the more power they have over the network. This means that they have more say on the witnesses (like delegates in DPoS) of the consensus as well as the value added to liked content. Now content creation has a more fair business model thanks to the Blockchain.
While Steemit the website is mainly article-focused, its underlying content marketplace makes it more powerful. Not only can people post on Steemit, but devs can also make their own social medias as a layer above the Steemit network. For example, D.tube is a YouTube-like interface built atop Steemit to reward video content creators. Using Steem Connect, a ‘sign in with Steemit’-type function, users can post videos to the Steemit Blockchain, reap similar rewards, and influence the network using those same rewards. This is a perfect use of the network effects of Blockchain: different social medias on top will significantly increase the value of the tokens, likes, and the network as a whole. Can you imagine Steemit’s own YouTube, Instagram, Snapchat, Twitter, Medium, and Tinder? Well, these are all currently being developed to grow the size of Steemit’s network. Before the addition of D.tube, the estimated number of users on Steemit was barely over 170k. Now, after nine months of it being part of Steemit, user count has raised to 950k and counting (as of April 25th, 2018). That’s a growth of 425% in approximately nine months.
Steemit is worth over a billion dollars but has less than a million users and 50k active users. These are baby numbers in the social media space, so why haven’t they grown faster? Like many other things on the blockchain, there is serious friction on the user experience of the platform. In order to sign up on Steemit, there is a 3-day verification process, which is terrible for onboarding. On top of that, users don’t get to choose their password but are given one that is 24 characters long which makes remembering it practically impossible. Besides annoying passwords, you can NEVER change your username or delete a post once submitted — immutability on the Blockchain amiright?? I don’t know if late-night twitter fingers can handle a world where their tweets exist forever. Additionally, Steemit totes the decentralization of their network, but they have yet to solve issues of distributed file storage. This means that if Steemit the company was hacked, your video on D.tube might disappear– your ownership of it’s address wouldn’t and neither would the money you made off of it. Nevertheless, this is a serious hole in the concept.
SingularDTV is an Ethereum-based token “for a Blockchain Film & Television Entertainment Studio & Distribution Portal, with a Smart Contract Rights Management Platform”. The initial project plan consists of several parts — an original television series, a documentary division, a digital rights management (DRM) platform built on Ethereum, and a video-on-demand portal based around Ethereum.
The idea is to essentially crowdfund yourself and your creations. In other words, you sell your royalties, like your Youtube channel, and tokenize it with an Ethereum-based token. Those who buy your token will get a certain amount of your revenues. They call this the Tokit platform.
There is a great team behind the project, including Co-founder Joseph Lubin who also co-founded Consensys / Ethereum. Besides that, the names associated with this project could concern any critic. Some notable artists have begun to use the platform; Gramatik, world-famous DJ and SingularDTV partner, raised $7 million for his GRMTK coin despite a lack of information on implementation and a notice that warns that you should “Only participate if you don’t expect anything in return.”
DRM will remain a big hurdle, especially for existing media. For example, how do you prevent users from uploading blockbuster content without the gateway function centralized entities play? AKA how do you stop people from uploading things they don’t own? SingularDTVs existing documentation doesn’t address other benefits blockchain management brings to the media space, particularly creator attribution in major projects. Licensing existing content is also a main issue: users want access to old movies and new movies on the same platform, and it isn’t cheap. In 2013, Netflix reported spending $2 billion on content and that “the vast majority of our spending is on movies and prior-season TV shows from other networks.” That number has only risen. There isn’t enough detail on how SingularDTV plans to address this concern. Also, how would the platform force artists to pay out, and how would they know how much you made? It seems from there that one could easily cheat the system. These are the costs of decentralization.
Viewly’s goal is to make it easier for content creators to make a sustainable living from the content they created. From the user side, they have the user only pay per second for what he has watched rather than per video. If I watch only 15 seconds of a seven-minute clip, that’s all I pay for. Viewly also plans to provide full support to content creators in terms of vote based tipping, recurring payments, and business sponsored endorsements.
Viewly also promises to be ad-free, making viewers feel less intruded upon and more comfortable in the space and giving the creators a chance to build a community and increase engagement. The last thing they plan to implement is the solution to the problem of storage. Viewly will offer payment to those who let their unused resources be used as a place to host data and videos. Although their project is looking great and is backed by Charlie Shrem as an advisor, along with many big names in the film industry, the problem with this project is that they are still in development. Viewly just released their alpha version, which looks interesting and has a great media player, but is lacking in content. They also have no network effect, meaning that there is more incentive to join D.tube because you will automatically be a part of Steemit as well. In order for Viewly to become more powerful, they need to branch out more, and not just make themselves video friendly.
Everipedia is referred to by many as the “Wikipedia on the blockchain.” Why? Wikipedia has several issues: no monetary incentive to contribute/maintain the network, worldwide censorship, no ownership of content created/curated, the black market of paid wikis, and centralized barriers to entry. Everipedia attempts to solve many of these problems by providing a marketplace of wiki pages owned by creators and patrons. Have you ever tried to edit a wikipedia page? It’s not hard because there’s nothing to lose.
Everipedia has a staking model that incentivizes contributors to only produce factual content; if you’re caught writing something inappropriate, you lose your staked coins. Additionally, governance of the network is based on staking, with the annual mint rate being 5% to match the EOS inflation rate. This number can be changed by a governance action. Everipedia recently raised a venture round of $30m and will be launched on the EOS blockchain in June via airdrop. In a fun discussion Mahbod Moghadam, co-founder of Everipedia, explained to me that “Everipedia on EOS will mean no server costs / more efficient use of electricity, and it means the site is uncensorable. 20 countries censor Wikipedia but will no longer be able to starting next month, when we move onto the blockchain.” It really is incredible to think of the billions of people with no access to a website the western world uses every day for information. “This is a major step forward in obtaining freedom of thought for the human race!” Mahbod exclaims. Except for maybe Steemit, Everipedia is probably the most developed project of the ones mentioned here even though it has yet to move to a decentralized ledger and run as a true blockchain network. Additionally, it is the only one mentioned that is developed on EOS, an up-and-coming Ethereum competitor.
In an era where the internet makes it difficult to claim true ownership of content, Po.et helps creators own their content at all times as well as keep it safe and copyrighted. Po.et’s content platform utilizes Ethereum’s immutability to timestamp work once registered on the network. Additionally, it makes it easy to verify the owner by using “proof of existence” technology, making it the first non-financial dApp to use it. Creators get paid when someone wants to use their content, because in order to use it they pay a small fee to the owner, and this is the way Po.et can be monetized. Plus, the network is very flexible in the way that not all content has to be shared publicly. It also creates an open network that bridges the gap between creators and publishers so that they can automate the licensing process without the need of intermediates intermediaries. Even if you choose to not use a pre-existing license, you are still able to build one with your own terms and conditions.
Just recently Po.et released their “Frost” technology which brought them one step closer to their goal of becoming the main distributor for texts, photos, and videos on the internet. Frost allows people to access Po.et’s protocol layer and build dapps on top of what Po.et has already made, so even more media sources can be connected to the network. An example of this is its WordPress integration plan that will make Po.et available to over 300 million websites. These reasons, in addition to Po.et’s strong presence in the Chinese market, might be why we are seeing such growth on this network.
Then again, do people really care about this issue? How can you really fight it if someone does manage to rob your creations? The line between stealing content and spreading it is thinner than a sheet of whitepaper (see what I did there?). The addition of Frost helps with this issue, but we have yet to see it in action.
Fake news is a one of the grave concerns of the 21st century. Civil has a TCR for newsrooms to fundraise and contributors to govern over. News stations can tokenize their publication and launch a token sale; they can then use the tokens as voting power to maintain the objectivity of the content. Newsrooms themselves won’t be conducting token launches — all is governed through via the CVL token. Civil is a part of the Consensys mafia, the Brooklyn-based venture studio founded by Joseph Lubin. I spoke to them at the Ethereal Conference, where they explained that they just hired 15 new employees, most notably a Digg founding member, and are focused on developing this platform. “The Civil Registry exists as a curated list for newsrooms that the community has deemed ethical.” Co-Founder explained to me. “Being on it unlocks publishing access on the platform.” Of all of the projects mentioned in this piece, Civil is in its earliest stages but is one of the more impressive projects. In the past, content platforms would moderate what is posted and what is not. In a decentralized model, it will be more difficult to censor — if an alt-right group starts its own publication and is posting fake news which is supported by all of its token holders, how will Civil stop that? Just because something is voted on as correct by a majority doesn’t quite make it correct: logic is the madness of many, madness is the logic of one. Civil has a Constitution and checks and balances in place specifically to help prevent such an extreme scenario. Civil will need to create a scale of biasness to make transparent the views of a station and a writer as well as a board of ethics to determine what is acceptable and what isn’t. Nevertheless, it is interesting to see a quality attempt at pushing the envelope a few steps further than Medium dared to go.
Lbry is a decentralized marketplace for content creators to upload anything from videos, movies, books, music, online courses, and more. What makes it so special is that it is completely decentralized and the creator has complete control and rights over it. That includes not being censored or governed on the price of the media, if any. Creators can charge for some things and upload others for free. Users are paying such a small amount of money that they will still be paying less than their monthly payment to sites like Netflix and Spotify. In other words, users are watching quality content for basically nothing. If they don’t watch, you don’t pay. In addition, no party other than the publisher can edit or remove the content once it is up there, and the best part: there are no third parties collecting their share of any revenue. The money goes 100% to the creator and they are in control. The reason that this is so big is because today places like YouTube are censoring videos and demonetizing them whenever a creator chooses not to make the video ad-friendly.
The cons are that Lbry is still in its beta version, so you need the app to use it. Additionally, because it’s so new, it’s unstable and doesn’t work particularly well. Lbry also doesn’t have the same security and audience that mainstream sites like YouTube have. But these are concerns for all of these projects.
As if profiting off content wasn’t enough, Livepeer and Theta are pushing envelopes to provide a network for distributing bandwidth and computer resources to provide cheap access to high quality live video. This will effectively incentivize users to allocate their extra bandwidth. Getting paid to engage in a network that delivers us all HD video sounds pretty good to me. Cheaper video-streaming networks also encourage creators to produce better content. Sick of paying big bucks for an ESPN subscription? It’s not all going to ESPN.
Theta’s innovation is set to disrupt today’s online video industry much in the same way that the YouTube platform did to traditional video back in 2005. One of our biggest challenges had been the high costs of delivering video to various parts of the world, and this problem is only getting bigger with HD, 4K and higher quality video streams,” — Steve Chen, Co-Founder of YouTube.
Additionally, Content Delivery Networks (“CDN”), needed for good video streaming, require points of presence near users to work well, which makes it difficult to run in under-developed nations. Decentralized Video Streaming and Delivery Networks may disrupt this.
It is clear that there are both key advantages and disadvantages to decentralizing media. The world still seems hesitant to identify these products as superior to the status quo and I don’t blame them. None of these applications are good enough to compete with the Spotify’s of the world as of yet. Nevertheless, I believe that it’s a mistake to neglect the need for decentralized media marketplaces for the sake of fair distribution, social mobility, objectivity, and political messaging. I strongly recommend trying some of these products out for yourself: find the improvements to the norm as well as the flaws of the new system.
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