Blockchain: A Promising Outlook for Iran’s Creative Economy
By Arame Bandari on ALTCOIN MAGAZINE
Last year was a turning point for all technological developments in the future of humanity. Bitcoin’s astronomical record high in mid-December showed that the world has embraced this new currency with open arms and the financial world is undoubtedly trying to adapt itself with this emerging phenomena. No one can deny Bitcoin’s revolutionary role, and all the fluctuation in Bitcoin’s value reflects its strong impact on global financial systems.
In fact, it’s the “Blockchain” technology which lies behind all these conversions. Since 2009 and its first implementation in Bitcoin’s structure, Blockchain has proven its competences and also applications in various industries.
In other words, Blockchain is tied to all the developments in forthcoming years and many scholars such as Klaus Schwab believe that Blockchain is a leap toward the 4th Industrial Revolution.
Nowadays the world is preparing to welcome 5G internet. By 2020, with vast implementation of 5G internet, the traditional centralized concept will give up its place to distributed approach. Distributed ledger concept in Blockchain will greatly extend the use of the IOT in every industry.
From another perspective, in modern economic concepts, Creative and Cultural Industries (CCI) are considered as fuel for the modern economy. These industries, alongside digital distribution, can hugely benefit from Blockchain technology features such as distributed ledger and smart contracts.
Blockchain will affect the economy of the developed world; but it should be considered that the widespread use of this technology might lead to economic renaissance in developing countries.
Iran is one of the developing countries that can utilize Blockchain features in various SME’s, which are classified as subsets of “Creative Economy”.
Why is it important to use this technology in countries like Iran? And how can the Creative Economy lead to widespread use of Blockchain in developing countries? These are the two main questions which the rest of this article will address.
A brief look into Iran’s economy and opportunities of Blockchain in Iran’s Creative Industry
Middle Eastern countries are among the world’s pivotal energy providers and most reliant economies on oil, both as an export and as a share of GDP, and their annual government budgets are highly dependent on oil sales. Hence the oil market fluctuations greatly impact their long-term national development plans and policies. Nowadays, the policy makers in Iran, Saudi Arabia, Qatar and the UAE are seeking a solution for reducing their dependence on oil and gas sales. In this way Blockchain can pave the way to economic diversification and fulfill the infrastructure requirements for emerging alternative economies. Investing in renewable energy and moving towards knowledge-based economy have been some of the major activities implemented by the policy makers. But there are also less costly alternatives that have been neglected. A related point to consider is “Creative Economy”, which is introduced as a prominent alternative in economic diversification.
Also, in addition to negative impacts of oil market fluctuation, Iran has experienced a complicated situation among other Middle Eastern countries. Over the past four decades, Iran has been frequently faced with international sanctions and complexities in diplomatic relations with developed countries. Long-term sanctions, which took a serious form since mid-2007, have severely restricted Iran’s relationship with many industrialized nations, and the country’s economy has been in absolute isolation for several years. This isolation has seriously damaged Iran’s industrial and banking infrastructure.
Furthermore, the high unemployment rate among young educated Iranians is one of the main challenges.
However, dramatic changes had occurred following Iran’s nuclear deal with world powers in 2015. For more than two years Iran was embracing foreign investors and the gained FDI was mainly invested in Iran’s oil infrastructure to rebuild its oil-based economy.
Even optimistic analysts indicate that shot-term sustainable growth in Iran’s economy is unexpected. Nevertheless, there’s still hope.
From this outlook, natural resources such as oil and gas play no role in the country’s economic growth. Instead, creativity in human resources and capability in knowledge, accompanied by cultural background, would be considered as key actors. The rich history and culture, as well as the young population are the essential potentials of “Creative Industries”. These potentials can break ground for the transition from an oil economy to an appropriate alternative called “Creative Economy”. Application of Blockchain technology in the vast majority of Creative sectors is essential for the formation of a national creative ecosystem.
What is “Creative Economy”?
For nearly a decade, CCIs have been the fastest-growing part of the global economy. Advertising, architecture, books, gaming, movies, music, newspapers/magazines, performing arts, radio, television, and visual arts are the most profitable subsets of CCI. These eleven sectors of CCI generate 2,250-billion USD global revenue (3% of Global GDP and more than India’s GDP). Also, 29.5 million jobs worldwide are classified as CCI’s employment.
The digital distribution and sales lead the way for global contribution of CCI, and nowadays 200 billion dollars of global digital sales include CCI products and services. In addition, global B2C digital cultural content sales exceeded 66 billion dollars and ad revenues from online media and free streaming is 21.7 billion dollars.
Creative and Cultural Industries in Iran
In recent years, CCI has grown in Iran. The formation of CCI subsets requires the modest capital. Also, the high rate of job creation in these sectors has caught the eyes of policy makers. Unfortunately, there’s no official statistics about CCI sectors contribution in Iran’s GDP and job creation. In fact, several ministries are responsible for various sectors of creative industries, and this causes non-convergence in policies. A couple of CCI sectors which are highly dependent on digital distribution, are promising despite these industries still being in the early stages of development.
With an astronomical 104% internet penetration rate, 33 million connected mobiles and 48 million smartphones, a suitable environment has been provided for digital distribution of creative products in Iran.
The digital distribution channels play an important role in CCI products’ profitability. Online stores, streaming services, Internet Protocol TVs, gaming platforms, and application stores are the most grown digital distribution channels of CCI products.
Creative content such as online video content and advertisement, digital books, visual arts, music, mobile applications and games, audio books and podcasts, and online novels are among the most popular products of Iran’s CCI.
Due to sanctions and diplomatic issues, Iran’s market has been out of reach for international online retailers, marketplaces, and service providers. In such circumstances, the local services seize the opportunity and strengthen their position in the market.
Digikala is by far biggest retailer and marketplace in Iran, with a worth of 500 million dollars. Constant blocking of YouTube since 2008 has provided the opportunity for a local video sharing service called Aparat. Aparat, the leader of the video sharing market, along with Namasha and Tamasha, play the role of YouTube in Iran. Four thousand videos are uploaded every day and the monthly traffic of Aparat is 15 million hours.
Café Bazar is the local alternative app store for android devices which is worth 300 million dollars. It has shaped a particular ecosystem for app and mobile game developers. In addition, many early stage startups are highly dependent on revenues through Café Bazar. Café Bazar contains more than 130 thousand Iranian applications and games which are developed by 21 thousand developers. At the moment, it is installed on over 32 million android devices. These successful platforms attract local and even foreign investors.
Online video platforms such as VOD and video sharing services provide a suitable situation for shaping an Online Video content ecosystem containing a value chain of content creators, providers, and aggregators. The demand for creative content in online platforms is increasing. Same goes for local music streaming services like Beeptunes and Navaak that are trying to fill the void of Spotify in Iran. Also, E-book sales platforms such as Taaghche provide hundreds of thousands of electronic books which facilitate the publication industry barriers such as high paper costs. Monetizing of artists in online platforms is a growing phenomenon in Iran. Online platform micropayments can guarantee and stabilize the current creative flow in local digital economy.
How Blockchain can disrupt the Creative and Cultural Industries in Iran
At the moment, Creative and Cultural Industries in Iran is faced with two main challenges; IP rights protection of the CCI products, and the online monetizing transparency. These may break down the promising perspective of creative economy in Iran.
Blockchain can solve the IP challenges
As mentioned above, the value creator factor in CCI is their intellectual capital which must be protected under laws and regulations. One of the major problems of CCI in Iran, which causes huge challenges in the monetization of CCI products, is the lack of appropriate governmental support for copyright-related works. Five decades ago, the first copyright law in Iran was passed. Hindrance in judicial review of copyright infringement cases causes profound disappointment in CCIs.
On the other hand, in the digital era and internet expansion, widespread copyright infringement has occurred in the entire country. With regard to high dependence of CCI on intellectual property, this situation can frustrate the emerging economy.
The inadequate IP Law conditions of Iran’s CCI are not limited to national challenges and are even worsened in international aspects. Due to the fact that Iran is one of a few countries that hasn’t joined the “Berne Convention” yet, CCI products and their right holders are not protected by international copyright laws outside of Iran’s borders and their products are considered as Public Domain. In fact, Iran’s CCIs are unable to sell their products in global markets.
Blockchain can solve the intellectual property challenges and bring transparency
Blockchain can redefine the IP protection and consequently the monetization of CCI works in the digital era. Ownership of works can be easily tracked via immutable records on distributed ledgers which can provide the essentials to archiving the chronology of right-owners. Tracking of IP owners can bring transparency in payment processes. On the other hand, the intermediaries between CCI works’ creators and consumers can be omitted by the transparency of ownerships, thus reducing many unnecessary costs.
In a condition such as Iran’s digital market, where the copyright protection is low, Blockchain-based IP right-securing platforms can play an active role in the value creation of CCI products’ digital distribution.
In such a situation, every CCI participant such as the creator, author, artist, or producer can register their works through Blockchain-based platforms. These platforms can create an artist-centric ecosystem where artists, authors, and creators of CCI products are in the center of remunerations.
The recorded right-owners in ledgers can be accessible for online ICC distribution and sale platforms such as music streaming services, video sharing platforms, and app stores. Consequently, the right owners are well-defined and even the licensing process and royalty payments would be quite easier.
With a strong willingness on part of the government and support for Blockchain-based IP right platforms, security will take place in CCI products value chain. The government can actively support the authentication platforms and the CCI products ID can be used in every online distribution channel.
The Blockchain-based IP right securing platforms can lead to a Blockchain-based reputation system. This feature can implement trust-based transactions between CCI product producers and consumers without intermediaries. In such a platform, every product might have an ID which the right holder will recognize precisely. The CCI products verification in the market can be achieved by direct communication and collaboration between CCI actors and consumers.
The online retailers and market places might face some changes when the IP registered products are granted by governmental approved Blockchain-based IDs. Retailers and market places will transform to places where the right owners of CCI product can promote and sell their products directly to consumers.
Blockchain can bring transparency and improve Online Monetization of CCI
The monetization challenge of online creative content can be solved by Blockchain. In the digital era creative content such as advertisements, books, videos, audio, and visual arts are products of CCI. Video content can gain considerable revenue flow from video sharing platforms. One of the main revenue flows of creative video content comes from advertisement revenue. Advertisement revenues play a significant role in developing creative ecosystems. It is worth mentioning that advertisement itself is one the most profitable CCI products. Video sharing platforms are the main distribution channels for many creative works.
In 2018, online video sharing net advertising revenues in the US are projected to reach 3.96 billion US dollars. Considering YouTube’s constant filtering in Iran, Aparat can expand the creative content ecosystem not only in Iran, but even in the region’s Farsi-speaking countries, namely Afghanistan and Tajikistan, given its dominant position in the video sharing market.
Presently, in dominant creative content sharing platforms, owners of creative content do not get any share of advertising revenue. Some efforts have been made to allocate a particular stake for content owners. The efforts of new video sharing platforms such as Jaabe and Shabake Ma haven’t met a comprehensive solution for online monetization as of yet.
Establishment of Blockchain-based platforms similar to Google Adsense can break ground for creating a sustainable creative economy. An ecosystem where creative content owners can be easily recognized through Blockchain-based platforms and get a fair stake of advertisement revenue, and on the other hand, advertisement companies can get direct feedback from the advertisement influences due to Blockchain implementations.
The same circumstances occur in app stores such Café Bazar, where the intermediaries and third parties gain the most stake of advertise revenues and developers and CCI product owners get a negligible amount of income.
On the other hand, music streaming services like Navaak and Beeptunes suffer from the same problem. Much like Spotify, it would take hundreds of streams for right-holders to receive their first revenue. The fair amount of money from the streaming of music can save the lives of many artists in Iran who are faced with a lot of governmental barriers in their professional carrier.
The high commission for selling the CCI product in online marketplaces such as Digikala is another major problem. The pricing of creative works is a frustrating process. Blockchain’s transparent structure can provide the dynamic pricing mechanism which operates according to consumer demand.
The smart contract in the Etherium protocol can play an essential role in the monetizing process of creative works. Smart contracts can autonomously allocate the shares of each beneficiary in CCI products value chain. With the implementation of smart contracts, royalties could be designed to be more inclusive, offering fairer terms for each participant in CCI works’ value chain.
Conclusion
The aim of this report is to present the opportunities of Blockchain in countries where the development process has not followed the prevalent patterns. Iran has its own particular situation in the global scene. The sanctions and complexity in diplomatic relations with developed countries form a unique and complex economical structure. Preventing the entrance of global online services laid the groundwork for the formation of local services which can meet local demands. On the other hand, Blockchain technology can be utilized in Creative and Cultural Industries which have shown the most promising perspective in the national economy. Some of Blockchain’s remedies for Iran’s CCI are equal to global prevalent challenges (such as fair revenues from advertisement and allocation of revenues to beneficiaries), but it has some particular functions (such as local digital-right issues) which can solve the major CCI development problems in this country and break ground for the enhancement of the Creative Economy in GDP.
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The purpose of ALTCOIN MAGAZINE is to educate the world on crypto and to bring it to the hands and the minds of the masses. This article was written and composed by Arame Bandari on ALTCOIN MAGAZINE.
