Blockchain Technology – The Film Industry Use Case
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The film industry of the 21st century can benefit from Blockchain technology, an innovation that can digitally support a dynamic and connected global network of content producers, distributors and audiences.
As usual, these are my personal views, thoughts and musings. Please feel free to chime in with your own observations and examples.
The blockbuster success (pun intended) of Bitcoin, the world’s most popular digital currency that is just eight years old, has generated worldwide interest in Blockchain, the technology or protocol behind Bitcoin. Blockchain technology is heralded as the next digital disruptor with the potential to transform centralised social, government, business and economic structures across the world.
Blockchain technology presents opportunities for all stakeholders in the film industry from global studio powerhouses, small independent producers, traditional distributors and exhibitors to modern Internet based content streaming platforms.
The One Minute Guide to Understanding Blockchain Technology
A Blockchain is a publicly accessible and decentralised database that is distributed over the Internet. It maintains transaction records publicly in cryptographic form. Transactions are trustless, meaning they can be computed, verified and recorded using automated consensus methods, across a peer to peer network of computers, which eliminates the need for an intermediary or third party to manage or control information.
As the Blockchain grows, tampering or takeover is virtually impossible using today’s technologies, creating an immutable chain of records.
For the film industry, Blockchain technology provides innovative opportunities to address issues related to distribution complexity, management of creative rights and digital piracy.
Smart Contracts for Distribution
The landscape of film distribution has undergone radical change in the last decade. Film releases reach a global audience with the rise of digital distribution models. Content digitisation and a connected network of distributors and exhibitors enable simultaneous worldwide theatrical release windows to be exploited.
Traditional distributor and exhibitor networks have expanded to include international partners who control local distribution. Online distribution platforms have brought technology companies such as Netflix, Apple and Amazon into the mix.
In such environments a Blockchain can serve as a decentralised and scalable solution to manage the increasing complexity of contemporary global networks and digital distribution models.
A smart contract on a Blockchain can register and enforce distribution and release agreements between producers and distribution partners. Smart contracts can also apportion distribution rights with contract tokens and business rules. These rules can be automatically invoked based on pre-defined criteria or events such as the release of a film.
Once recorded on the Blockchain, smart contracts can also be potentially used to trigger actions such as enabling automated distribution of revenue when collections are received and recorded. Automatic collection sharing via smart contracts can be recorded on the Blockchain in minutes, increasing transparency in the distribution process and faster realisation of revenues.
As an example, this scenario could benefit independent producers and small, local exhibitors who can accept ticket payments in cryptocurrencies from audiences and share collections even before the screening is completed.
Copyright and Ownership Provenance
For the film industry, establishing and protecting copyright is both complex and costly. A film is a collection of rights and titles covering screenplays, derived works from books, music, trademarks, artistes’ performances, technical and design creations to licensing rights on film characters, merchandise and so on.
Copyright infringement can be a major insurance expense for established studios. But for smaller, independent producers and distributors, ensuing litigation and fines can be a major barrier threatening their existence.
On the other hand, content creators with high quality, original story ideas or independent films that achieve major box office success, can be exploited through incorrectly assigned or unacknowledged rights.
Blockchain technology can address this problem by creating an immutable record of transactions on any asset, including an idea, story, script or character. Once recorded on a Blockchain, this asset can be tracked throughout its lifetime, even as ownership is exchanged, sold, transferred or assigned.
For example, the creator of a story idea or script can register it on a Blockchain. Subsequent transfer of rights to a studio that is interested in producing it, or, recording a chain of titles for distribution rights, will build a transaction history on the Blockchain. Smart contracts can also be set-up that can define rules governing the assignment of such rights to TV and airline versions, international releases, merchandising licenses and so on.
Combating Digital Piracy
Piracy is the one battleground that the film industry hopes to combat using Blockchain technology. Despite improved capabilities to protect content and track illegal distribution, incidents of leaking films online have also increased.
The problem is compounded with growing consumer acceptance towards accessing illegal content and, expectations of free content. MUSO, a technology company that tracks online piracy has reported visits to film and TV piracy sites reaching over 102 billion in 2016, with over 76% of these visits to illegal online streaming sites. Piracy continues to impact the film industry with revenue losses estimated to be in billions of dollars for the worldwide industry.
While Blockchain does not represent a silver bullet for eliminating piracy, it can be used to deter the process of leaking content illegally.
Film content meta-data can be encoded with a cryptographic transaction on the Blockchain. Access to upload or modify content can be made only with transactions on the Blockchain creating an immutable history of records that can deter unauthorised transfers.
A near future, global solution can be designed with collaboration from the film and content technology industry. This can be achieved by creating a feature film Blockchain registry for the industry. The Blockchain could utilise smart contracts and tokens to enable legitimate film uploads, screening and broadcasting and thus signal to content owners, search engines and ISPs when non Blockchain enables instances of content are discovered online. A simple solution could link such an activity to one of the many automated DMCA takedown services or even embed its own proprietary solution.
Breaking Barriers for Smaller Players
Digital content and online platforms have enabled smaller independent players to realise projects at low costs and establish a direct relationship with their audiences.
Blockchain technology represents further opportunities for independent production houses and emerging regions with limited reach to audiences and infrastructure.
Blockchains such as Ethereum can be used to set-up distributed autonomous organisations or virtual entities to fund projects with ownership and shares assigned on the Blockchain. This model has advantages of transparency, allowing access to a global pool of investors and allowing investors to purchase, sell or trade their equity.
If the rights of an independent film are purchased by a larger studio, the resulting profits can be shared on the Blockchain with absolute transparency following the pre agreed waterfall.
The Landscape of Blockchain Start-Ups and Solutions for the Film Industry
The landscape of Blockchain technology start-ups has already ventured into applications for the entertainment industry. The start was made with solutions for the music business, aimed at copyright protection and direct transactions between artists and consumers.
Music streaming giant Spotify’s recent acquisition of license attribution Blockchain start-up Mediachain Labs, has turned attention to the film and TV industry as well.
The earliest use case for films is, as in music, ownership rights and protection against piracy. Custos Media Technologies is a South Africa based start-up that uses an embedded bitcoin bounty in the content license file to incentivise downloaders to report illegal distribution of film content and enables media owners to track leaks.
Veredictum is an Australian Blockchain start-up that is developing applications to register scripts on the Blockchain. They are also developing products to digitally sign content by hashing it on the Blockchain, enabling illegal content to be recognised and reported.
Blockchain start-up SingularDTV, has entered the market in 2016, with a vision to become the ‘decentralised Netflix of the Internet’. SingularDTV is a Blockchain entertainment studio, smart contracts rights management platform and video on demand portal running on the Ethereum Blockchain. SingularDTV is also organised as a “Centrally Organised Distributed Entity” or CODE, on Ethereum. SingularDTV’s model will enable content registration, direct distribution and access via smart contracts, in a truly disintermediated model.
Outlook for The Film Industry
Blockchain is still an emerging technology and perceived as a threat to the controlling power of intermediaries such as agents and larger studios. As a result many larger or more established participants in the film industry remain cautious about its approach to adoption.
However, tech start-ups have formed to become the early evangelists for film industry oriented Blockchain applications and as history has shown in other sectors, there are no boundaries to disruptive innovation and the film industry will be no different.
As Blockchain applications become more prevalent and mainstream, and smart contracts deliver benefits in licensing and distribution, the film industry is bound to adapt to the technology in the near to medium term. In my own personal experience, this can only benefit the entire industry and enable stronger commercial returns for independent studios otherwise struggling with collections transparency once their film makes it into its first and subsequent release windows.