Digital Catapult
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Unblocking the creative industries

Libby York from Unblocked Events discusses and demonstrates the potential value and opportunities that blockchain presents for the creative industry and its artists.

We are living in the age of the creative. Countries around the world are shifting towards a knowledge economy, where the quantity, quality and accessibility of information are of central importance and at the heart of this system lies the prized creators and disseminators of the creative industries.

Collectively, the creative industries account for 3% of world GDP which is growing fast thanks, in part, to increasing connectivity and digital distribution platforms. However, digitisation has created new problems we have yet to solve such as, how to enforce intellectual property rights by fairly compensating artists in an environment where digital content can be reproduced again and again with little limitation.

The solution? More and more are starting to believe that blockchain, a form of distributed ledger technology, will provide a workable solution to these conundrums because, at their core, distributed ledger technologies make decentralised, immutable, transparent and programmable record-keeping possible. That means in the world of music, art, media and advertising in particular, they have the potential to revolutionise business practices. From fair and fast compensation for work, to more power in artists hands, the creative industry is making giant strides to ensure artists remain firmly in the driving seat. 

Faster Royalty Payments

For artists, making a living is still extremely difficult. Micropayments are an established part of streaming culture with Spotify paying in the region of $0.004 per play and YouTube $0.0007 per play. In addition, royalties come in fits and starts owing to changes in fan interest and demand and a successful musician can have as many as 700,000 different sources of revenue around the world. That means it’s not uncommon for artists to be waiting months before compensation is calculated and issued and even then, they may not be fully reimbursed. In fact, Royalty Tracks, a global dashboard that reports and analyses royalty income across all agreements, has identified that artist’s missing income in lost royalties could be as high as $1.1bn per annum. 

But it’s not all doom and gloom. Blockchain technology could be used to provide an automated payment processing service that reduces the time it takes for money to reach an artist’s bank account and on top of that, programmable smart contracts could be used to automate the distribution of royalties and cut the cost of policing them. If this is improved, more money will find its way back into artists’ pockets.

Stronger Copyright Enforcement 

Across all industries, the ability to protect intellectual property (IP) is of paramount importance, and none more so than in the creative industries. Being able to protect and use music material is fundamental to a creative economic system and its value as an auditing tool makes blockchain a natural fit for this industry. Rather than relying on costly legal teams, blockchain can create time-stamped, immutable records demonstrating the origin and ownership of creative assets. IPchain is one company working on just such a tool, where hashing – a digest of digital content that acts like a digital fingerprint – makes it easy for a creator to prove ownership. This means that any content can be compared with these digital fingerprints to find a match and identify who owns the copyright to that material. 

There’s also potential for blockchain to increase automation when it comes to licensing copyrighted materials to others. Ascribe is developing a system that will allow creatives to assign rights over companies and individuals, using smart contracts to track and enforce fair use of their materials.

More Transparency

Despite digitisation, many aspects of work in the creative industries remain stubbornly opaque. For example:

  • In high-end fashion and art, the value of products is undermined or lost completely by paper trails that leave provenance and authenticity in question. 
  • Inprogrammatic advertising, advertisers are seeking reassurance that ads are being served up to humans of the right profile rather than bots.

Ignoring the need to improve transparency can have catastrophic consequences for the creative industry as the Association of National Advertisers estimates that $6.5bn was lost in 2017 due to ad fraud, while art forgeries discovered in 2016 made many question the authenticity of over $200 million-worth of paintings. To ensure that what the buyer sees is what the buyer gets, providers are looking to blockchain to provide an immutable record of activity.

New Business Models

For content publishers, revenue generation options can feel like being stuck between a rock and a hard place. Digital ad-blockers are restricting revenue sources from advertising, while paywalls have been accused of limiting user experience and discovery.

Though micropayments have taken off as a way of managing compensation for artists, their use elsewhere has been limited. Many cite that reason as being that they are often difficult or expensive to process through traditional credit card systems and so intermediaries are required to track accounts until they accumulate into single, larger payments. That’s all changing though as companies like Blendle, LaterPay, and the Brave browser project are encouraging the media to leverage micropayment strategies by either allowing people to get access to individual articles at a fraction of the price of a print edition or providing a metering or tab system as people browse content. 

Blockchain could go one step further and enable “nanopayments” – direct payments that equate to fractions of a cent or pennies. SatoshiPay is one such solution where content can be divided into small units of consumption – seconds of a video or paragraphs in an article – and these tiny payments can be instantly made in cryptocurrencies as people read or watch.

Artist-Centric Platforms

And if all that wasn’t enough for artists all over the world to be cognisant of, looming large is and always will be, the cost of the middleman. The internet has increased rather than decreased the number of middlemen in most sectors, so sitting between those who, for instance, create a film and those who ultimately pay to watch are numerous parties you may not even be aware of: online retailers, streaming services, cinemas, film producers, distributors, TV services – the list goes on. All this can make artists frustrated by the bureaucracy, poor pay and lack of autonomy resulting from this complex web of interdependencies. 

To help overcome this problem, Musician Imogen Heap is for example pursuing a more artist-centric approach to music distribution. Her company Mycelia run hack days and support musical projects, including those leveraging blockchain, that help put artists firmly at the centre of technological developments in this space.

Blockchain holds enormous potential to break down barriers that could lead to more efficiency, greater accountability, lower costs, and increased remuneration for artists. To reap these benefits, however, the technology will need to be developed responsibly and with an eye firmly focused on regulatory frameworks. Digital Catapult has been exploring this area, working on projects around the creative process in games with the UK Games Fund and rights management in the music industry with Blokur. 

Digital Catapult is also media partnering with Unblocked Events who will be exploring the benefits of blockchain to the creative industries at ‘Creatives: Unblocked’ on 29 June at Rise London. Find out more and register for tickets here.