Digital content has disrupted the media industry. According to NME, web-based music streaming sites saw more than 30 billion visits last year, while Coin Telegraph notes that digital advertising revenues for the first half of 2017 alone were a record-breaking $40 billion.
But the rise of digital media also creates new challenges for producers, distributors, and ad makers – ensuring creators are paid fairly for their work, making sure media isn’t pirated, and working to provide transparency for ad revenue streams.
One potential solution is another market disruptor: Blockchain. Historically used to secure financial transactions, this crypto-based transaction model offers multiple benefits for digital media.
Why blockchain matters
Blockchain is well known as the backend of cryptocurrency Bitcoin, but it can do far more than simply secure digital money exchanges.
Why? It’s all about the fundamental premise of blockchain: a distributed ledger of transactions secured by encrypted data that can’t be modified without alerting users along the entire blockchain network. Each new “block” is added to those before it and encrypted using a combination of data contained in the uploaded file and data from the block immediately preceding it in the chain, making it almost impossible for attackers to access and alter data without being noticed.
Consider the example of digital media ownership. Using blockchain, production companies can embed rights and reuse data directly into digital media content and then upload these files to shared blockchains. If users purchase access to these files and then attempt to remove copyright information and re-upload the media, blockchain entries will detect a mismatch.
Blockchain offers five key benefits for digital media transactions:
- Distributed networks: All network users have access to all transaction records, providing multiple verification points.
- Digitization: Ownership data, usage rights, and artist details can be embedded digitally into media files.
- Consensus: As noted by research firm Deloitte, a majority of parties across the network must authenticate transactions, in turn reducing fraud.
- Continuous updates: Blockchains are time-stamped and updated with each new transaction, providing an easily accessible file history.
- Cryptographic protection: All blocks are cryptographically sealed and cannot be changed after being added to the network.
The art of ownership
For artists, ownership and royalties are paramount. In the age of digital streaming, it’s easy for content creators to lose revenue when media is quickly consumed, repackaged, and presented as publicly accessible rather than specifically attributed. As noted by Forbes, streaming music service Spotify is now facing a $1.6 billion lawsuit over royalties and compensation.
Blockchain-based ledgers can solve these problems by embedding ownership data and “smart contracts” into digital files. Files without these markers can be easily identified as pirated, allowing owners and producers to track their content and take legal action as required.
Smart contracts, meanwhile, are bits of computer code designed to execute under certain conditions, such as when a file is downloaded. Once triggered, these contracts can prevent access to media if permissions haven’t been obtained or royalties haven’t been paid. Already, tech companies like Microsoft are developing rights- and royalty-tracking platforms built on blockchain in an effort to reduce royalty processing time and ensure better record-keeping.
Advertisers also stand to benefit from the rise of blockchain-based disruption. As the Forbes piece points out, anywhere from 40% to 70% of advertising dollars go to intermediaries, leading to an ad system that’s vague, opaque, and frustrating for content owners. Privacy is also problematic, given the ability of sophisticated advertising toolkits to capture and leverage consumer data. Without transparency around data collection and usage, digital advertisers can find themselves on the wrong side of emerging legislation such as GDPR, which mandates user consent for the collection and use of any personal data.
Solving problems around revenue transparency and privacy demand the ability to audit transactions, something current ad models don’t support, because each intermediary in the digital marketing process has their own way of handling, storing, and validating information. Blockchain eliminates this problem by providing a single, shared ledger that all parties can use to distribute advertising data. Because the ledger is continuously updated as files move across the network, stakeholders from all points along the ad cycle can view the chain of data custody and payments. This allows advertisers to track exactly where media dollars are going and evaluate their return on investment (ROI) for digital media marketing.
Blockchain has established itself as a reliable and secure method to conduct financial transactions. Its abilities to encode critical file data, track file movement, and provide an unbroken chain of custody also speak to its potential in digital media sales and advertising. From creators concerned about receiving fair compensation for their work to advertisers looking for greater transparency and accountability, the evolving benefits of blockchain offer real potential to positively disrupt digital media distribution.
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