Is blockchain the next gamechanger in the media industry?
The media industry is versatile, but volatile. It has grown exponentially over the past decade, thanks to the swelling wave of digitization and the implosion of the internet. The global pandemic notwithstanding, the media market has therefore continued its growth trajectory through a crisis and clocked $2.34 Tn in revenues in 2021 and is expected to $2.51 Tn by end of 2022, according to Statista. On the heels of this evolution is blockchain technology, which is slated to become the most prominent technology disruptor in the media industry.
But the rapid digitization of content production has a flip side. It has resulted in a spike in unbridled duplication and circulation of existing content, bypassing the heterogeneous players between a content creator and the end user. Blockchain technology is swiftly finding a place in the media industry to reduce this rampant piracy of Intellectual Property (IP).
So, how does blockchain technology help here?
A digital and distributed ledger technology, blockchain allows users to maintain identical and encrypted digital copies of records that can be independently referenced to verify information and are linked through a peer-to-peer network. It also allows compilation of real-time transactions chronologically with a permanent timestamp, to ensure data the authenticity and error-free records.
The breakthrough technology secures data against attacks, by validating transactions through the application of network consensus method and deployment of cryptography. Additionally, its decentralized structure boosts data security by allowing sharing of data across business ecosystems with no singular entity in charge. This feature facilitates trust in transactions when several entities are involved. Lastly, the hashing technique records every transaction in each node in an immutable manner, as user information is sealed in the chain, and the system does not allow any user to delete, edit, or copy digital assets. It simply adds a new block after the existing block if any information is to be altered, removed, or incorporated.
How can blockchain add value?
The blockchain technology has the potential to bring transparency to the media ecosystem and mitigate losses by reducing fraud, streamlining intercompany transactions, tracking usage of content, and proper distribution of royalties. No wonder then, that the market for blockchain in the media industry was $ 166.6 Mn in 2020, and is expected to grow consistently to reach a share of $4,371.31 Mn by 2026, at a CAGR of 71.4%, as per a study by Business Wire.
The advent of Blockchain-as-a-service (BaaS) has further made it feasible for the media players to scale realistic returns on investment. This technology has already seen several successful use cases in the market. For example, the same study states that real-time consumption-based pricing against digital assets can reduce costs by 40%-80%. Pay-per-use consumption is utilized by blockchain-powered micropayments. This allows tracking of copyrighted content. Ethereum-based FilmChain provides transparency on the distribution process by collecting, allocating, and analyzing revenues in TV, films, and other digital media.
Then there’s Vezt, a mobile platform backed by Sony and BMG, where fans can buy a share in the royalties of their favourite songs and recordings. These royalties will be tracked on-chain and the song rights are encoded. Fans can purchase a percentage of the song's rights, which effectively amounts to owning a portion of the success that they have helped the artist to achieve.
Another example could be the Non-Fungible Tokens (NFTs), which are blockchain-based tokens that assign ownership to digital content. Using NFTs, artists or creators can monetize their work. Instagram and YouTube recently announced that they are incorporating NFTs into creator tools to empower creators to earn money directly from users who purchase the rights to their videos.
Blockchain has also been useful in securing and streamlining the contracting process in the media industry for content sharing and transactions. Smart Contracts are programs stored on the blockchain that will perform certain automated tasks, such as automated transactions without manual intervention of third-party intermediaries. Ethereum, the second largest blockchain network, was the first to introduce a smart contract.
Still, a long way to go…
While blockchain technology is speeding towards mass implementation, some hurdles should be navigated before the application can be declared a resounding success. The revenue generated in the media industry is based on the contracts between the content creators and other middlemen, including publishers. These smart contracts that are decentralized in blockchain are not regulated by any authority, which becomes an issue when content distributors undertake copyright infringement. If disputes occur between parties of different countries, the picture is unclear on how the dispute will be settled. Also, the media industry collects a huge amount of data in the form of author details, content, third-party data, payment details, and end-user personal information. These details can be stored in blockchain, but regulatory aspects specific to blockchain have not yet been defined.
In addition to this, different organizations are adopting or developing blockchain technology with varying characteristics, such as technology versions, consensus models, governance rules, etc. Though there is no universal standard for blockchain technology networks for organizations to follow, separate blockchain versions do not work together as of now. Most organizations are now looking to bridge the gap between different blockchains, and this approach is going to be more useful in the future.
Finally, implementing blockchain solutions is an immense digital feat for any organization and is always coupled with challenges like implementation cost, scalability, lack of partners, data privacy, and transitioning difficulty, that have forced many media companies to think twice before investing in it.
The media industry has slowly started adopting Blockchain technology with more successful implementations. Blockchain Technology is evolving at a great pace and its possible benefits in terms of applications and future innovations will have a far-reaching impact on revenue, cost, and social stake. This will help to remove the layer of uncertainty from a multifaceted ecosystem built on trust and will improve collaboration and reduce the gap between organizations in the business ecosystem.