Road to Success

This post is about how people in this real-world use case can use bitcoin and blockchain to improve the process by which content is distributed globally. The traditional content distribution model, first and foremost, is about the art and science of ‘distribution’ – that is, how to get a work from creator A to creator B. However, a secondary layer of tension is getting content from B to market C. 

The key here is that in the traditional model, distributors are incentivized by chance to create value for their customers in exchange for lower margins; thus, they seek a more significant share of revenues/profits with each sale. On the other side of each sale lies a creator who seeks control over ownership to avoid an ‘expiry date’ of sorts and thus maintain control over the proceeds.

The traditional model of content distribution:

The traditional content distribution model involves many steps similar to any other goods or services distribution (there is a wholesaler intermediary, which involves its margins, shipping, etc.). However, the content remains under the control of the distributor until it reaches the channel or venue (theatre/cineplex or other location) where consumers can consume it. In most cases, distributors do not tend to sell both to creators and consumers simultaneously, with one notable exception being iTunes.

 In some cases, distributors buy from creators at wholesale prices and resell directly to consumers (such as in the case of Netflix). Regarding content distribution in entertainment, there are three major players: theatres, telecom companies, and app stores (such as iTunes) which include providers like Apple Inc. and Google Inc., respectively.

 The wholesale models of distributors are large corporations owning their exhibition licenses, selling a small fraction of that to theatrical partners who, in turn, license them to exhibit the content. In the case of Apple’s iTunes store, for example, publishers pay a fixed fee for every song/album to be listed on iTunes – but only after agreeing to share their rights with Apple.

How do bitcoin and blockchain disrupt the traditional model of content distribution?

Bitcoin and blockchain can potentially disrupt the traditional content distribution model. For example, imagine a large theatre chain that wishes to use blockchain to handle a form of financing from fans. If the theatre sells out on the opening weekend, those who purchased tickets at discounted prices will be credited with Bitcoin or other cryptocurrencies. 

Thus, instead of carrying on business as usual (adhering to this example for the sake of illustration) and losing money, the theatre would be able to generate revenues by selling tickets at a discounted rate, thus getting more people in their seats.

In addition, because Bitcoin is built on a distributed ledger (i.e. blockchain) and is not dependent on a central authority for its existence, it can be used by people to make the process of payment much faster and more secure, meaning that theatre chain can pay their service providers (such as actors, musicians, etc.) faster.

For instance, imagine a music band that has a few songs with Apple iTunes but wants to be able to sell other albums/singles in a given week. The band could pay Apple in advance for selling all of their new material within a given period. In this example, it would also give the band more control over their work, as they, in turn, can sell it themselves directly to customers.

A World with Decentralized Distribution

Currently, most content creators are not paid enough for their services. But what if they could sell their content directly to the consumer with a distributed ledger without needing a third-party intermediary (such as Apple) who owns the right to distribute the intellectual property? How cool would it be if we could cut out that middleman who has taken over a third of the creators’ income?

Additionally, one could imagine that in the case of large-scale piracy, it would be much harder for pirates to pass off their pirated copies as legitimate ones. Instead, products would have to be digitally signed before being sold, and thus, this would eliminate virtually all forms of fraud and spoofing. In addition, because digital certificates are easily verifiable through blockchain, artists and content holders will have more control over their work. 

These are just a few examples and how people can use the distributed ledger to create more value for creators. The traditional content distribution model was highly inefficient, as shown by a 2015 US Department of Commerce report. The report found that 82% of global payments made via credit or debit cards are spent on services, advertising, and shipping, with less than 2% going to creators of intellectual property. Blockchain and bitcoin have a gigantic effective use case in the content distribution industry.