Although blockchain technology remains far from mainstream adoption, it is poised to change the status quo in a wide range of fields. In this article, I want to focus on one industry that could be particularly positioned for disruption – entertainment.
The State of Content Creation and Consumption
Arguably more so than any other industry, entertainment has a gatekeeper problem. Until recently, it was impossible to put out music without getting a record deal and relying on a label to record, distribute, and monetize your music as an artist. The same was true in film and television: You could not distribute a movie or TV show without studios and production companies throwing their weight behind you, and movie theaters or cable channels agreeing to showcase your creation.
While the internet has now democratized content creation and distribution in entertainment and creatives no longer have to get in bed with the likes of Interscope or Disney, a new crop of middlemen have emerged in digital content. Today, users rely on platforms to consume music and video content. Platforms like YouTube (1.5 billion users), SoundCloud (175 million), Spotify (140 million) and Netflix (~110 million) control user consumption across the globe and act as the new distributors, responsible for both collecting subscription and ad revenues and divvying up payments to artists.
This amount of control favors the major labels and streaming platforms, and has led to disputes around artist compensation and treatment, most famously Taylor Swift vs. Apple Music and Spotify. As artists grow increasingly disillusioned with these platforms, they are looking for new options. Enter the blockchain.
By offering a digital public database that stores an ongoing record of transactions, the blockchain has given companies the ability to have completely encrypted records of ownership, as well as execute smart contracts (i.e. automatically enforce the exchange of anything of value without the need for a middleman). There are currently several attempts to create blockchain-based companies and currencies of relevance to media and entertainment. When applied to media consumption this technology solves the problems surrounding content access, distribution and compensation; managing assets and digital rights; and financing, among others.
Arguably the main problem blockchain has solved, at least when it comes to content consumption, is micropayments. While platforms such as Patreon are focused on helping creators raise money from their fans, these platforms are still in the middle as a facilitating platform. The use of cryptocurrencies helps eliminate any and all middlemen by securing payment and reducing transaction costs, freeing up a greater portion of each sale for the creator.
Grammy winner Imogen Heap is one of the most prominent musicians to embrace the blockchain. She recently teamed up with Ujo, a company looking to be the one-stop shop for independent music distribution and payments, to release the first song on the Ethereum blockchain. The concept of smart contracts is at the core of Ethereum and allowed Heap to enjoy absolute control over how she and her collaborators on the track were paid and under what circumstances (e.g., buying licenses to download, stream, remix and sync the song).
A company building out the necessary platform for blockchain-based payments is Stem, which hopes to be the payment distribution platform for creators. They allow creatives to publish content, manage contracts and transact payments all from one easy-to-use portal. While micropayments are far from the norm in content consumption today, a promise of lower transaction fees and more secure records of sale and consumption could make it an interesting business model for artists, authors and filmmakers.