Can blockchain help solve the woes of the media and entertainment industry?
Media and entertainment isn’t quite the industry we think of when it comes to blockchain. Often misunderstood and mistakenly used interchangeably, blockchain has gained both popularity and notoriety due to its association with the ever-controversial bitcoin.
The lowdown on Blockchain
There are multitudes of practical applications for blockchain technology due to its security and transparency – cryptocurrency is just one of them.
A blockchain is a highly secure, decentralized database system that stores records of data in a cryptographic format. Unlike normal databases, blockchain data created by users (transactions) are not stored in a central location (like a data server). Instead, they are stored on the machines or systems of the people who create the data, across a network. As creators store that data themselves, they ‘own’ their data, thus the system is considered ‘decentralized’.
Normal data stored on data servers risk being accessed and/or manipulated by the data server owner, or may even be lost due to accidents; also, it may be difficult to have a record of these events. However, with blockchain, every transaction created and recorded is permanent and secured with a cryptographic ‘lock’, and the transaction is broadcasted to everyone who owns copies of the blockchain. It is immensely difficult to hack into it to change transaction details, hence why blockchain is transparent and trustworthy.
As blockchain cannot be tampered with, is fully owned by the data creator, and stored across many machines, it won’t face the same security risks that normal data does.
Media and entertainment challenges for creators
Currently, the global media and entertainment industry faces several challenges that blockchain’s secure and transparent nature can help to solve.
- Intellectual property infringements (aka data/content piracy);
- A lower share of revenue due to intermediaries;
- Lack of clarity and transparency with royalty agreements;
- Slow and unsecured transactions, especially financial, and
- Inefficiencies of existing content micropayment systems
- Content creators including musicians, artists, and game developers may often find their intellectual property (IP) rights violated by individuals or groups that distribute their content without paying for it (aka online pirates). The popularity of peer-to-peer (P2P) programs also enables and facilitates online piracy, making it difficult for creators to track who, how and when their content is unethically/illegally accessed and distributed.
- Furthermore, creators often find themselves forced to go through intermediaries (aka middlemen) in order to reach a wider market or to receive IP rights protection, which is sold to creators at a premium, which then increases costs to the end-user. Furthermore, digital management rights (DRM) software is not robust enough to withstand hacking.
- As streaming sites gain popularity, especially during pandemic times, their market share of users is large and enticing to creators. Royalties are the main form of revenue for these creators, but access to fair compensation may be muddied by opaque or unclear royalty agreements and a lack of accurate content consumption tracking (such as the number of songs or shows played). Furthermore, the payment ecosystems in the media and entertainment industry are controlled by monopolistic intermediaries, who may delay compensation due to complex or overly manual processes. Sometimes, creators may also suffer from unsecured transactions.
- Lastly, online news or media platforms, especially smaller, independent ones, often have trouble with access to optimized, efficient, and affordable micropayment systems. As such, they miss out on the market of consumers who do not wish to commit to a longer subscription, and instead, only make one-off purchases on articles or videos that interest them.
How blockchain can help
- The nature of blockchain technology allows creators to accurately and securely track the movement of their blockchain-hosted content by verified, paying consumers, and analyze distribution patterns due to its transparency. Unlike DRM software, blockchain is secure, so it would be nigh impossible to ‘hack’ the data to unethically distribute it, thereby eliminating content piracy at its source.
- Blockchain-hosted content allows creators to bypass intermediaries, thus reducing content production costs, and pass the savings on to consumers. This thus increases the attractiveness of paying for content. In fact, P2P programs can actually help to facilitate sales and distribution directly to the end-user, thus increasing revenue share to the creator, whilst their IP rights remain protected.
- ‘Smart contracts’ built on a blockchain and attached to content would facilitate the accuracy, speed, and trust of the royalty system. Clear contract terms can be defined and automatically executed amongst involved parties as well. Content will also be easily and accurately tracked each time it is used, thus eliminating disputes on usage, and fairly divide revenue amongst creators and stakeholders.
- The implementation of a blockchain-based pay-per-use micropayment system would be more efficient and more cost-effective to implement than existing systems. Content such as articles, graphic art, or videos may be sold on a per-use basis in an automated fashion, thus saving administrative and software costs for the creator.
Overall, blockchain technology allows content creators and media companies access to more just and equitable revenue arrangements by shifting the market power to them instead of intermediaries.
In addition, it can also help to stem the spread of fake news and allow consumers to take back control of their data while innovating the advertising and marketing industry.
The SEA impact
According to data released by Research and Markets, the blockchain in the media, advertising, and entertainment industry was valued at USD 166.6 million in 2020. It is predicted to grow to US$ 4.3B by 2026 with a massive 71.4% CAGR (2021 – 2026).
Globally, the blockchain market is estimated to reach US$ 23B by 2023, with a CAGR of 81%. Aside from cryptocurrency, blockchain has multiple applications across a variety of industries, thus making it an attractive choice for companies to adopt its use. As with other digital market growth forecasts, the APAC region is projected to grow the fastest.
Aside from other countries, authorities in Southeast Asia (SEA) have been rather receptive to exploring, improving, and implementing blockchain regulatory frameworks. A well-regulated blockchain ecosystem will make it easier and attractive for companies to set their systems up in the region.