Hey Entertainers, Start Entertaining Blockchain.
As 2020 winds down, it’s time to begin looking towards the future. With the world in somewhat of a standstill as COVID-19 cases continue to spike and cities across the United States begin to implement stricter measures, we can look forward and plan ahead for a post-pandemic world that is better, more advanced, and more innovative.
The media and entertainment industries are more important than ever right now. Given the circumstances it is no surprise people are seeking an outlet, something to help forget about all the madness. We are seeing growth and increase of usage across video streaming and music streaming.
A survey conducted by Deloitte from May 2020 showed that roughly 80% of U.S. consumers subscribe to at least one paid video streaming service, up from 73% reported from December 2019 through January 2020, and up from 69% the year prior. In music, the Recording Industry Association of America (RIAA) reported that the average number of subscriptions to streaming services was up 24% from the first half of 2019 to the first half of 2020.
We’ve entered a digital-dominant world of entertainment, and away from traditional forms of media. This era of entertainment has endless potential as technology continues to develop. Content is more accessible and the quality of the content itself is increasing exponentially. As promising as these numbers of video and music streaming are, there are always complications that come with the expansion of any industry.
Some of the earliest cases in both film and music revolve around ownership rights and protection against piracy and copyright. In film, copyright protection must be established as there are so many elements to consider in order to make quality content. You have trademarks, screenplays, artists’ performance, licensing rights on film characters, derivative works, merchandise, and even music that’s intended specifically for a move or show. Insurance expenses against copyright infringement can be very costly for both well established studios and smaller studios looking to protect their works.
Another battleground for the film industry is digital piracy. For the last two decades, different outlets are created constantly that make pirated films easily accessible. These sites are becoming smarter and keener about avoiding getting caught and becoming exposed. There are improved capabilities to protect film content and track illegally distributed content but there isn’t a permanent answer. Hollywood films worth up to $150 million dollars have been leaked and distributed, proving even the biggest productions aren’t able to avoid this issue, costing them ratings and revenue.
You can’t blame the creators of the films though, nor can you blame the digitalization of media and entertainment. There is certainly some responsibility on the many individuals who consume the pirated content. There isn’t a threat to people that consume pirated films and shows. They are easily accessible and if they’re smart they won’t get caught.
MUSO, a technology company that tracks the piracy of films and TV online, reported that in 2016 there were over 102 billion visits to piracy sites and that over 76% of visits were to illegal online streaming sites. This cost revenue losses upwards of billions of dollars to the entire film industry worldwide.
Music much like film has always had issues of copyright and piracy. People are illegally downloading music and building a library for listening pleasure, or going even further and sampling those tracks to create their own music. The Digital Millennium Copyright Act (DMCA) helps protect artists by taking down songs that are infringing on copyright, but there aren’t a lot of barriers stopping the initial downloading of music.
Another issue that is a bit more publicized and has further implications on the music industry is that of artist ownership and distribution of records. Like record players and radios in the late 1800’s and early 1900’s, online music streaming has expanded the music industry while also making it more accessible. In 2019 nearly 79% of music industry revenue in the U.S. was from streaming. Yes, that is a substantial percentage of revenue, but of that 79% the musicians who actually create the music are paid only 12% of that revenue. This movement into the digital space of music consumption has exposed some foundational problems of the imbalance between artists and record labels.
There are a few systems in play here that make it this way. First and foremost, the foundations of the music industry favor the labels and institutions over the artists. Thanks to several medium sized record labels and most major labels, the music industry is notorious for signing artists to exploitative record deals, taking the majority of money from streaming revenue and sometimes taking percentages of things like merchandise.
In defense of the record labels, when they are seeking talent and have found an artist they want to take a chance on, they are taking a risk by signing the artist to a deal. There is no telling whether an artist will boom or bust, so if the label spends money on an artist with little to no returns it is not good for business. However, there are far too many instances of artists’ careers harmed by deals that lean far in favor of the label.
There are plenty of relationships between management and artists that are positive, take Justin Bieber and Scooter Braun for example, but the relationships that turn sour are the ones that seem more common. Megan Thee Stallion is one of the most popular rappers today and is a victim of unjust record deals. Her situation is a perfect example of the flaws within the music industry concerning ownership rights. Back in March, she sued her label after claiming they signed her to a contract that was unfair and exploitive when she was 20 years old. Meg went very public with the situation taking to Instagram Live to tell her story. In the midst of this public sage, Megan and her team reported that she had received over 1 billion streams across streaming platforms and sold over 300,000 track downloads earning roughly 7 million dollars in revenue. Despite this, Megan made a mere $15,000.
Artist ownership is one of the most prevalent problems that must be resolved. The overhead for an artist, especially a young one, to create, market, and distribute their work is too difficult to do alone without the backing of a label. Labeling the labels as the bad guy is a tale as old as time itself though. It unfortunately sounds repetitive. And it’s not just labels on the metaphorical “opposing team,” the streaming sites aren’t the most ethical entities themselves. Spotify is the most dominant of the music streaming services, accounting for 35% of total subscriber share. Spotify’s pay-per-stream is about $0.005, and that payout has a priority to go to the label before it even reaches the artist. In addition, just last month Spotify announced that it is offering a new deal to artists and labels where in exchange for lower loyalty payments from Spotify to labels and artists, Spotify will boost their algorithm to prioritize an artist or a specific song. This is problematic because according to The Trichordist, 87% of music on Spotify comes from the top four music labels in the business.
100 years ago, the issues surrounding protection of content in a digitized entertainment industry would have been unimaginable. Even now, solutions that are sustainable to the ever evolving digital media landscape are hard to come by.
So what can the media and entertainment industry do to solve these problems?
Enter Blockchain.
Blockchain is a type of database that stores data and information. It is also a word that makes most investors water at the mouth. Blockchain collects data and puts it together in groups known as “blocks.” Whenever new data is entered, it is placed into a new block. Once a block is full of data it is connected to the original block of data linking and creating a chain if you will. By connecting the blocks it organizes the information and creates a timeline for the data. Using this system, whenever a new block is added it works as a timestamp in the timeline. Unlike a regular database, blockchain is decentralized, meaning that instead of being controlled by a single authority, it is dispersed amongst several computers across many locations. This system makes the timeline of data irreversible and immutable and ultimately very secure.
The cryptocurrency Bitcoin was the first to implement blockchain. Blockchain is mostly used as a ledger for transactions. The records in a blockchain are publicly accessible and extremely transparent, which makes every transaction verifiable and therefore trustworthy. Since each block is ordered chronologically they are secured. If someone were to go in and attempt to hack the contents of a block, you could go into the Blockchain and cross-reference copies of blocks and timestamps and stop the hacker from taking any information or data. In order for the blockchain to change the majority of blockchain would have to verify the change in a block to be approved. So unless a hacker controls 51% of the Blockchain, it cannot be changed. In order for a hacker to control the majority of the blockchain it would take far too much time, money and effort.
So how can this be used in the entertainment industry?
Blockchain transactions don’t have to be a transaction of just currency, it can keep record of transactions of any type of asset. For the film industry, that could be stories, scripts or characters of a film. Anytime an asset is exchanged, sold, transferred, or assigned, the blockchain can track it. These records restrict the ability to copyright infringement and protect ownership of the intellectual property of the creator.
Blockchain can also help to protect smart contracts for the distribution of films. With smart contracts on a blockchain, distribution and release agreements between the filmmaker and their distribution partners can be communicated and enforced. Also, using its decentralized network the films can be digitally distributed easier across the globe. A film distributed through a blockchain is far more protected, with the blockchain monitoring any interaction with the block that contains the contents of the film.
In regards to piracy in the film industry, film content meta-data can be encoded with a cryptographic transaction on a blockchain. The only way to access a film or TV episode that has been encoded with blockchain is through a transaction within said blockchain. And with the immutable history of records, and checking system, any unauthorized transfers are denied.
Blockchain in the music industry can also be groundbreaking, with potential to redistribute industry earnings, alter the power structure, and help artists retain a bigger piece of the pie.
Like the assets protected in film, music in the blockchain is protected from copyright. Music that is distributed using blockchain removes any and all intermediaries, allowing direct artist-to-consumer transactions. Instead of being charged all sorts of distribution and publishing fees artists have the power to distribute their music themselves. And a system that currently favors established artists at established labels will then turn into a system where smaller artists and independent musicians will be able to better monetize their own work, bringing a bit more balance to the industry. It’s not as much taking power away from the current powers that exist in labels, music publishers, and streaming platforms, as much as it is giving artists the power and monetization they rightfully deserve.
From a global perspective, with blockchain’s decentralized structure, there is potential to break down geographical parameters restricting ownership to certain territories. As mentioned earlier, streaming services are growing and musicians are building worldwide audiences. Blockchain helps music become more accessible in emerging markets like Asia Pacific and China and accelerate growth of the industry. It is a much more decentralized solution and can help artists better scale their reach and make smarter decisions themselves.
It isn’t hard to see how blockchain can help cure the flaws of the digitized entertainment industry. More artist empowerment, copyright and piracy protection, easier global distribution, faster transactions. There’s a lot to be excited about. Now, how can these solutions become actualized?
There are several tech startups already in entertainment who are blockchain, proving there is undoubtedly an interest in implementing this technology into entertainment. However in an industry with cemented systems of power that control nearly everything, it does seem a bit far-fetched to think the entire entertainment industry will switch entirely to the blockchain. After all, film and music are multi-billion dollar industries that would require a complete overhaul in order to make the transition and for these solutions to be effective, on an international level no less.
It would require some major buying power and major influence to have an industry move all its assets into the blockchain. The only people that have that combination of power and influence are the people who are running these major media companies. Unfortunately though, these people are the least affected by these issues, and therefore the least likely to be willing to drastically change things up. Sure when a $150 million dollar film gets leaked and pirated there are ramifications, and it isn’t ideal, but recovering the revenue lost from a leaked film is far less strenuous than converting the whole industry to blockchain. There either has to be one CEO at a dominant company who makes the switch and forces the hand on the rest of the world, or a collection of CEO’s at a few companies who make the change and push the envelope.
Either way, in order to make the switch, there must be a new type of media CEO. They can’t be scared to make this immense change. They need to have the power and influence to flip a global industry upside down. They have to care enough about the little guy too, and think past their own interests and think of the interests of independent artists, independent studios, and the industry as a whole. The change to blockchain can happen, it just needs the right person (or people) at the helm.
So, what is the next wave of CEO’s in media and entertainment going to look like? Look no further than the most influential people in today’s world, entertainers and media personalities themselves.
Entertainers are going to be the ones to take the entertainment industry to new heights. Look at one of the most influential people in the world over the last four years, Donald Trump. He went from TV personality to President of the United States, one of the most powerful positions in the world. And he did so by leveraging his fame and notoriety. He’s not the only person in entertainment to do something like this either. Arnold Schwarzenegger went from actor in the Terminator to Governor of California. A newer example is TikTok celebrity Josh Richards, who at 18 years old has the title Chief Strategy Officer at Triller. He is already in the C-suite.
This is what the next wave of CEO’s will look like, internet celebrities who have mass followings with a knowledge of marketing themselves, and leverage themselves into positions of power. These are the only people who have enough influence to change an industry. Thanks to social media, musicians, actors, athletes, and influencers have the most power out of anyone because everyone knows who they are. For this to play out, media conglomerates like Sony, Disney, and NBC Universal must be willing to hop on this trend. If these future CEOs are able to surround themselves with the right team, I don’t see why a media conglomerate wouldn’t take the chance and have a celebrity be the face of the company. The right candidate would have enough knowledge as a former creator in the industry themselves. I think these are the people who are also open minded enough to do something as massive as putting the entertainment industry on blockchain technology.
