CAN THE BLOCKCHAIN DISRUPT ENTERTAINMENT AND MEDIA?

Blockchain is a technology invented to serve as a transparent public transaction ledger for the cryptocurrency Bitcoin. Its design has inspired the creation of hundreds of other distributed applications (dApps), often backed by their own Bitcoin alternative currencies via Initial Coin Offerings or ICOs. In 2015 the value of ICOs was in the $5-10 million range, growing to around $5 billion in 2017. This year to date it’s around $10 billion. The global market for blockchain is projected to reach $60 billion by 2024.

Beyond this new way of raising capital, many entertainment and media entrepreneurs see the blockchain as a way to disrupt a broken media ecosystem deformed by immense centralized power, secretive dealmaking, complicated and unfair rights and payment systems, and poorly structured incentives for both artists and consumers.

I spoke to the founders of some of these businesses to understand why blockchain may enable better business models than other startups in the entertainment sector.

Documenting the Creative Process

Sendergram​ provides a blockchain-enabled file sharing, review, delivery, transaction and payments platform for digital media such as fine art, photography, and video. I spoke with cofounder Andy Rosen, who started his career as a rock photographer covering the punk music scene in London before moving to LA to build companies that produced music videos, web design, and then database software.

“There are two sides in our business,” said Rosen. “Pick your side – screwing the artist or not screwing the artist. I always want to protect the artist. So two years ago we set out to build a ledger for the creative process from the artist’s point of view. The creative business is quite abstract, things get lost in translation, are often subjective.”

Sendergram offers a blockchain registry for creative work, a function which is offered by other startups; but then, it tracks every contact, email, discussion, contract, update, and payment with its own communications system that records it all on the blockchain. Sendergram also aggregates a user’s media files whether they are housed in various cloud storage systems or even on their own hard drives, allowing users to easily find and safely share files. Sendergram can be seen as a cross between email, Slack channels and file sharing --- all tracked and secured by the blockchain.

Rosen is especially interested in the growing class of creator/prosumers, as well as distributed creative teams, agencies, and corporations with multiple vendors contributing to projects. Right now single accounts for the Sendergram beta are free, with business subscriptions paying a fee based on number of users on the account. The company is preparing for a funding round.

The Business of Film

Gjain seeks to use the blockchain’s distributed ledger to bring greater transparency to the financing, contracts and payment systems required for media content. Gjain will offer a suite of business services built on smart (self-executing) contracts from inception to distribution, investment to profit disbursement or tax write offs.

Co-founder Vlad Lodzinski hopes to position the company between the different players within the film finance and ownership value chain with a reengineered model that eliminates the secrecy and contractual opacity that characterizes many film finance deals.  

Gjain won’t replace legacy players, just make the process more efficient, cheaper, and fairer. He sees Gjain as part of an emerging global digital economy that will be powered by new technologies like blockchain and which will transform the way business is conducted. As he sees it, blockchain and artificial intelligence will help reduce risk for investors and improve financial returns for creators.

Gjain’s client base includes filmmakers (individuals and studios), investors (institutional, high net worth individuals, retail) and service providers (finance, distributors, legal, auditing). Lodzinski and his team of six based in London, New York, LA and Poland plan to launch in summer 2019, though tests are already in development with key partners. There will very likely be versions for different territories like Europe and North America to reflect different regulatory and finance factors. Gjain financial backing is targeted at traditional sources like private equity, and not a cryptocurrency.

Democratizing the Digital Studio

Crowded Cloud is an ambitious reinvention of the content production studio that uses the blockchain’s decentralized governance model to attract working professionals who want to have a say in new projects, as well to share in profits they help create with their creative contributions.

Lead by a former aerospace engineer and digital media services executive Javier Benavente, Crowded Cloud’s studio model reflects the distributed and global character of the media workforce. But unlike legacy legal and production models, in which all decision-making is held by a centralized corporate entity, Crowded Cloud embeds democratic decision-making into every phase of production.

Benavente will seek to raise $100 million in conventional funding by year’s end, with as many as ten shows going into production next year. Most of the cash raised will convert to Crowded Cloud’s own HAVI token and held in a Project Development Pool that can be applied to projects voted upon by token holders.  As with other tokenized systems, its market value increases as its use cases generate successful projects. Benevente plans to focus initially on catalog content that is ripe for conversion for multiplatform distribution, especially AR and VR.

His passion for building a democratic studio stemmed from Benavente’s own history in Hollywood, where he came to blows with a major studio over control of software his company developed for use in a motion picture.

A Studio in the Cloud

To execute on the distributed content production model, Crowded Cloud is partnering with MetaPipe, an existing virtualized visual effects and animation studio infrastructure.  I met CEO Aaron Estrada two years ago as the company was completing ABQid, an Albuquerque NM-based seed accelerator.

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Entrepreneurship in China

China intends to win at yet one more key component of modern capitalism, entrepreneurship and the startup culture, as it has most certainly done in other areas of competition. Between 2000 and 2013, China’s non-state-owned business sector increased 18-fold, compared with the state sector that grew six-fold. Official government policy has strongly supported innovation and entrepreneurial enterprises in recent years. It is kind of mind-blowing to grasp the fact that this Communist-run economy may be the most successful capitalist in world history.

I say a few words at the pitch session during the Global Entrepreneurship Incubation Summit in Chengdu, China.I learned many nuances of the Chinese startup ecosystem during a ten-day trip, during which I visited seven business incubators and accelerators in four Chinese cities, and participated in a two-day Global Entrepreneurship Incubation Summit that marked the 30^th Anniversary of the first business incubator in China.

Representing my client, Toronto’s IDEABOOST accelerator, I was a judge during a startup pitch competition on day two of the conference, along with a who’s who of the Chinese VC community. Many featured startups reflect China’s very strong focus on artificial intelligence and IOT solutions, as well as a few VR startups. I met dozens of interesting people from both China, and from around the world. Business is flocking to China, because the opportunities are immense, and of course, so is the market.Getting ready to begin a talk about the CFC's IDEABOOST accelerator program to a group of Beijing engrepreneurs at the UIS incubabator.

My trip to China was organized by United Innovation Services (UIS), whose CEO Christine Du is an amazing businesswoman I met at a VR conference last year, and who has joined IDEABOOST’s investment advisory group. UIS operates software parks across China’s major cities, which include incubators and accelerators for startups, alongside a who’s who of international technology firms.

Christine Du, CEO of United Innovation Services, poses with me at her Chengdu incubator.

I visited UIS incubators in Beijing, Yangzhou, Chengdu, and Chongqing. UIS will soon announce its first venture outside China.

Here I am with some of the startup entrepreneurs at the UIS incubator in Beijing.

Some of the startups I met were part of the country's robust VR sector, both hardware and software. China is likely to continue as a major driver in the growth of VR, with massive investment, strong support from the government, and a media consumption pattern that supports arcades and out-of-home gaming experiences, like the kiosks I saw at train stations and airports.

I visited the HTC Vive X Accelerator in Beijing, one of a network that includes programs in Taiwan, Shenzen, and San Francisco – each of these accelerators invest in up to 20 startups per year, making HTC one of the world’s biggest VR investors.One of the startups in the Chongqing UIS incubator has developed a VR system that uses body rigging and sensors to enhance the gameplay experience.

I also was fortunate to visit the Beijing Film Academy (BFA), one of the top film schools in the world. Among the areas BFA’s digital lab program is developing are real-time interactive previsualization, immersive content (like VR), 3D visual information reconstruction, and next-generation sound stage.  The BFA will expand from its historic in-town campus to a new 110-acre campus in Huairou district, north of Beijing, where the government has created incentives for film industry companies to locate.

Standing at the entry gate of the Beijing Film Academy with my host, Lulu, secretary to the dean of the secretary of Film and TV Technology Department

The BFA case illustrates the Chinese method, in which the central government creates an industrial policy, then provides funding, infrastructure, R&D, private sector incentives, capital and educational resources to intensify the chances of success. Startups get a leg up in a favored sector, which means that entrepreneurs may start companies that stay alive, even if they are not long-term winners in the race to find customers and profits.

But once a company gains traction, they have access to a home market unlike any in the world. Just witness the amazing growth of homegrown Internet companies like Baidu, Alibaba, and TenCent – all are ubiquitous tools of daily life on a scale that is rivaled in the West only by Facebook and Google, both of which are banned by the Chinese government (although most tech-savvy Chinese I met routinely use virtual private networks to access these and other banned sites). We should expect the same results in other targeted sectors like big data, AI and IOT in coming years.

A scale model of the Xiaotao Big Data Valley outside Chongqing In Chongqing (formerly known in the West as Chungking) I visited the Xiaotao Big Data Valley, a government-directed industrial park focused on growing China’s big data cluster, including storage, cloud applications, small sensors/IOT, and data mining. A mix of Chinese and international companies have already moved into phase one of the development, which will unfold over the next decade. I spent time at Shining 3D, which manufactures 3D printing and scanning systems. The company operates a 100-seat classroom to train students (starting in middle school) on how to use 3D software. These parks generally include education, startup facilities, VC and other investment support, residential and infrastructure, including transportation.

Similar sector-specific “new cities” are under construction across China, including a “biodiversity new city” in Yangzhou that I visited. By the mid-2020’s, Yangzhou will have a new city center, planned around a cluster of skyscrapers above a bullet-train station connecting with Beijing to the north and Shanghai to the south and beyond.

Chengdu is proud of its network of innovation hubs for startups. I spent the most time in Chengdu, capitol of Sichuan province, home of the pandas, and a major inland commercial center. UIS’s Chengdu accelerator is part of an eight-building Jingrong Global Startup Center housing hundreds of startups. A few miles away is an office tower housing the Thinkzone incubator and a new Startup Bootcamp accelerator, which hosted an afterparty the last evening of the conference. Chengdu touts itself as China’s ‘ideal place for innovation and entrepreneurship” with these and other facilities built as part of the country’s 2015 national policy on entrepreneurship. 

When people ask, what do you think of China, the word I always come back to is ‘scale.’ It’s difficult to grasp the scale of this country, its built environments, number and size of initiatives, and the volume of companies and people involved in every area of modern enterprise. If you’re building a global company, understanding China is a must.

Looking for Community Partners for 'Pulse on VR' survey

My clients at the CFC Media Lab recently launched with OMERS Ventures and a host of partners, a study focused on the VR ecosystem in Canada and California. Titled Pulse on VR: A Workflow and Ecosystem Study, the study aims to identify the key players in this emerging industry and the primary workflows used to bring Virtual Reality (VR) to users. 

Click here to view and take The Survey

Click here to learn more about the study and to view the Press release

We would like to invite relevant organizations to become Community Partners of Pulse on VR. What this partnership entails is quite simple:

What you get:

• Participation for your membership and stakeholders in a wide-ranging VR ecosystem study that will help put them on the map
• Early access to findings of Pulse on VR
• Early access to register for our new VR News Aggregator site called VIRTUAL REALITY PULSE 
• Logo recognition as a Community Partner on most collateral materials, but most notably on the Pulse on VR website where we will publish an interactive map and/or visualization of our findings (Fall 2016)
• Invitation to Pulse on VR events and launches

What we need:

• Call to action email or campaign to your stakeholders and members to complete our Pulse on VR survey
• Call to action social campaign to your followers to complete our Pulse on VR survey
• Your LOGO
• Information for at least 2-3 members of your organization so we can invite them to our events

If you are part of an organization that represents VR Content Creators and/or VR Technology Companies and think you would like to be a Pulse on VR Community Partner, please send me a note, and I'll set up a call with CFC chief digital officer Ana Serrano, who is spearheading this effort. 

Ten Things To Know about Today’s Music Biz

I recently organized and moderated two music panels at the Digital Hollywood conference, showcasing the views and expertise of eleven professionals from virtually all aspects of the contemporary digital music business. There were two panels with two discussions (music & YouTube; music and social), but truthfully, this is an ongoing conversation in which music is the canary in the coal mine – trends we see now in music are trends we’ll see throughout the digital media ecosystem.

Many thanks to the panelists, listed below, for their enthusiastic and frank discussions, and apologies that I don’t have direct quotes for attribution. I was busy moderating :) Here’s some of what they said:

The “traditional” music business has collapsed – meaning consumers spend dramatically less on recorded music today than they did at the peak of the business --- whether it’s CDs, downloads, or subscriptions to streaming services. And yet, the ecosystem survives, with money flowing from more sources to more participants.

This was and still is a blockbuster business, with a disproportionate share of the revenue going to the most popular artists. In some ways, the “network effect” has cemented this reality even more than the old days when radio ruled (which, by the way, it still does, sort of).

There are only 300,000 songs that make any money, and 20+ million songs that don’t. That “long tail” can be monetized, but it takes focus and innovation to do so (and one of our panelists has a company that is doing just that). With the cost of production so low, professional musicians now compete with millions of amateur tracks.

We are in the era of music discovery, but most people don't really want to discover anything new. Socially connected apps and streaming services providing many new ways for consumers to sample new artists. And yet, statistically, in the blockbuster music economy, we find that most people don’t actually want to discovery new music. They want to listen to the music that everyone else is listening to.

Now that Everyone (including you) is a brand, all that seems to matter is the size of your audience. Emerging artists are increasingly required to conduct their lives as if they were a commercial brand – connecting with consumers on many different social platforms, and providing content (video, posts, images) well outside the creation and distribution of the music itself, in order to accumulate fans. Partnerships and additional opportunities are now determined at least as much by fan metrics as the music itself. (Ouch!)

Brand partnerships is perhaps the fastest growing source of revenue for artists, with many examples of relatively non-intrusive sponsorships of artists, music, and events emerging. Brands want the cool factor. And they want the exposure potential of the artists’ fan bases.

Social Media Platforms are the Banks; Engagement is the Currency. The savvy artist understands that the levers of their career (building a team, getting a record deal, booking gigs and tours, etc.) depend upon how much currency, e.g., fan engagement they have. In some cases, that is literal currency, because there are numerous ways to purchase fan-count and fan-engagement.

Careers can be made in A Single Event. A tune on a social platform like YouTube (or now Vine, Instagram, Snapchat) can go viral, and sometimes all it takes is attention from somebody with a huge fan base. From Justin Bieber to Shawn Mendes, talent

Radio exposure is still important for an artist, and is one of the best things a record label can get for talent.

Very few people have bad things to say about YouTube, at least in public. Google’s massive video site provides free distribution for every artist, and therefore has the most comprehensive library of music content --- mainstream and niche. Millions of people, especially millennials, use YouTube as their audio streaming service. It’s pending launch of a paid subscription service may be bad news for the Spotify's and Pandora's of the world.

Tidal Will Fail. The high-fidelity music subscription service launched by JayZ and a bevy of blockbuster artists are swimming against the tide, and, our panelists uniformly predict it will not survive. Most of the panelists thought that Apple’s new streaming service, without the “Beats” name, would be one of the survivors, because of its hardware.

Music is inextricably tied to the tech economy, which is why the battle will be slugged out between tech giants like Apple, Google, Amazon, Facebook, etc – these companies are fighting versions of this same fight over video, television, books, and much more.

Thanks to my speakers: Take a look at their sites to find out where the business is going.

• Doug McVehil, Head of Content & Programming, Vevo
• Jeff Daniel, CEO/co-founder, Starmaker Interactive
• Daniel Rosen, Senior Music Talent Manager, Fullscreen
• Ryan Tomlinson, President, SKEEmatic; Exec. Producer, SKEE TV
• Dana Shayegan, Vice President of Music, Collective Digital Studio (CDS)
• Brad Sphar, Vice President, Sony Music  
• Heiko Schmidt, CEO, Parasongs
• Rami Perlman, VP Music Talent & Influencers, theAudience
• Anthony Shannon, Cofounder & CEO, TuneStars
• Ian Roberts, Cofounder & CEO, Hive
• Damian Hagger, co-founder/Marketing Director, SixString.com

Jane Austen, Edtech, and the Promise of ‘Theatrics’

The School Library Journal published Part 2 of an interview with me today in conjunction with the launch this week of "Welcome to Sanditon" on my client Theatrics.com's collaborative storytelling platform. Here is the text. 

MAY 16, 2013 BY PETER GUTIERREZ

Following is a continuation of my talk with Nick DeMartino, Head of Business Development for Theatrics.com. This week’s first episode bow of Welcome to Sanditon, based on the unfinished novel by Jane Austen and featuring a robust fan participation platform provided byTheatrics, prompted our chat–which soon turned to school-based applications of the technology.

What’s a specific curricular example of what could be done with Theatrics…?

A literature teacher could assign a team to create a transmedia adaptation of a story–like theLizzie Bennet team did–and involve the entire class, grade, or even across distances with other students using Theatrics’ cloud-based platform. The “Calls to Action” and the responses from the participants can vary wildly–why not assign alternative endings? What would happen if Tom Robinson had been acquitted in To Kill a Mockingbird? How would Holden Caulfield have changed if he moved to a new school in Ohio instead of New York City? You get the idea.

Teachers in other subject areas can use the platform to create innovative learning experiences as well by developing their own assignments using documentary-style video production as well as fictional characters, which opens up subjects as varied as history and social studies, health education, ethnic studies–even math and science. 

To play devil’s advocate for a moment, should librarians and teachers be cautious in terms of their expectations for student engagement? That is, if they look to the success of Theatrics in relation to Sanditon, should they bear in mind that the audience that’s creating new characters and videos are alreadyfans of the central text? In contrast, in a class of secondary students I doubt that most of them would self-identify as “fans” of the literary text being used or the historical event being covered…

Yes, setting learning goals and outcomes is essential–it’s what great educators do that enables them to assess student achievement–and this is why Theatrics is eager to partner with innovators who know how to transform a toolset into a learning platform.

The meta-outcome of this kind of constructivist learning is that students learn how to learn. If they are charged with creating a character that responds to events in a story, and then to produce a video in which the story is advanced… well, there’s a lot of learning in that experience, not to mention the interaction it may trigger with the story creators and the other participants. This becomes less about producing “great” videos, and more about empowering kids to grasp the dynamics of storytelling.

Today’s kids are digital natives who take for granted the opportunity to engage with and contribute to the content they love online, whether that is expressed simply via social networks, or more elaborately as content creators on sites like YouTube, Tumblr, video games, even Second Life. Educators are recognizing that there is real learning that occurs through these mediated social interactions and narrative interventions, and are finding creative ways to make sure that learning of this sort does not stop at the schoolhouse door.

And yet many students will be familiar with Jane Austen and comparable canon authors only because of schools…

A narrative experience like LBD is compelling in part because of the great bones of Austen’s story and characters, for sure. But equally compelling is the story form, the opportunity for consumers to engage deeply with those characters, who literally can walk off the page and into the fans’ daily lives through social media and video.

So I think the driver for many kids will be the chance to participate and engage inside a storyworld. They get to be more than just fans, they get to be co-creators. And that act of engagement can be transformational, and certainly educational. Also, it may true that by some measures the quality of most student work will not compare favorably to professional content, though I’ve seen many exceptions. Talent is talent.

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