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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Digital disruption in the local TV market

If forced to pluck a single theme from my talk to a group of local television station executives this week at Disney World it would be this one: "TV is just another application." Today's consumer still loves TV, make no mistake. But technology provides more and more choice -- both types of content (games, messaging, non-TV video, and so much more) and the way it is delivered (phones, tablets, laptops, IP-TVs, et. al.).

The trend is clear -- TV viewing as we know it will evolve dramatically in the coming years into some new form. Think about the evolution of radio, from the central focus in the living room to a driving companion under the onslaught of TV. 

Over time, the explosion of choice and technologies will necessarily erode incumbant providers -- disruption in publishing, music, movies, and network TV. But what about the local TV broadcaster, lynchpin of the American system of distribution? If I can get the shows I like over the internet, and I can, why do I need my local channel? 

Local broadcasters still have immense brand power in the marketplace, derived not only from habit but because they deliver news, weather, traffic and often live programming like sports which are unavailable from other sources (for now). These and other strengths must be leveraged in the new digital marketplace, which is crowded by all sorts of competition, fueled again by the Internet. Hyper-local websites, blogs, networks and "deal" sites are going after advertisers and viewers. 

Local stations must think like digital natives and bring their brand and content to audiences where they live, especially younger consumers who may simply not have developed the same TV viewing habits as their parents. Some of my suggestions and analysis are contained in this presentation, including an endearing photo of me as a young media activist (aged 12), my first angry letter to a TV station.

Future of local tv

View more presentations from Nick Demartino

• Why Marshall McLuhan would Dig Transmedia and DIY Distribution

Marshall McLuhan's pronouncement that "the medium is the message" was revolutionary back in its day.

Nearly 50 years later, McLuhan's influence survives, with many of his ideas serving as memes for wave upon wave of new media. Not for nothing did WIRED Magazine anoint McLuhan as patron saint at the dawn of the Internet!  Digital hipster Doug Coupland even published a McLuhan book subtitled” You Know Nothing of My Work” that riffed on the old gent’s ironic appearance in that Woody Allen flick.

McLuhan asserted that the container (the medium itself) mattered more than its actual content. Or something like that. Pissed a LOT of people off back then, especially people making the actual content.

McLuhan was at heart a sociologist of media, interested more in the way media technologies impact culture and and its populations, which includes, significantly, how each medium influences the others. 

In today’s media-drenched ecosphere, we are accustomed to judging “new media” products almost solely in terms of how quickly they reach "scale," meaning a large audience – and definitely how much they disrupt their predecessors. Darwinian. And McLuhanesque, too, if you think about it. Even more so if you understand.

Like many a college student slogging through the inscrutable prose of McLuhan's seminal tome "Understanding Media” I thought: jeez, I'll never understand how to understand. In this, I was not alone.

Dallas Video Festival

Such thoughts bounced around my skull as I reflect upon my weekend at the Dallas Video Festival, where I conducted a workshop on "Transmedia" and joined a panel on "The Changing Landscape of Independent Media." 

Sure, there was plenty of talk about individual films and videos on the program, such as the fascinating "Once I was a Champion," Gerard Roxburgh's film about mixed-martial arts fighter Evan Tanner, who died in the desert after a troubled life.  

Or Tiffany Schlain's "Connected,"  a memoir/manifesto that interweaves her vision of how the Internet could save the planet with some major crises in her personal life.

Neither film (er, digital movie?) has snagged conventional distribution yet, symptomatic of the state of indie film, despite premieres at Sundance and the LA Film Festival, respectively.

Containerization of Media

For me, the juiciest conversations at the Dallas event (and most other gatherings of media makers and media lovers) focused on the container, just as McLuhan did. What is the state of distribution? How do I sell my film? How do I find an audience? How do I keep up with all this stuff?

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• MOVIE MOGULS AS DISRUPTORS

On Monday I watched episode 1 of TCM’s MOGULS & MOVIE STARS with the lovely title: “Peepshow Pioneers”. The seven-part series will span the rise and demise of the first-generation movie studio founders, roughly 1890-1970, with installment one exploring the entrepreneurial roots of the movies, including the epochal struggle between inventor Thomas Edison and the men who founded the studios.

I could not help but notice the parallels to our current media environment 100 years later in this story of a band of outsiders — Jewish immigrants who came to America by will and to “the movies” by accident — who took on and beat a powerful Edison movie cartel that controlled 80% of the business, including content production, tools creation, content distribution and consumer exhibition in a vertically integrated complex of aligned companies. The Trust defended its questionably broad patents and its oligopoly by any means necessary, including the use of roaming bands of thugs.

A Supreme Court case eventually broke up the Trust in the teens, opening the door for Edison competitors, most of who had already moved from the then-movie capital in metro New York City to the sunny climes of Los Angeles, where they found cheap land in an undeveloped suburb called Hollywood. They moved there mainly to get away from the thugs, as this documentary would have it.

These were the original disruptors in an emergent media business, unseating the incumbent and building a glorious mousetrap that turned the movies into a major global industry. Of course, these upstarts promptly did Edison one better by building their own vertically integrated system of production, distribution and exhibition that effectively froze out their challengers for a generation: This was the “golden age” of Hollywood, when their studio system controlled every aspect of the business. Subsequent episodes of TCM’s series — premiering each Monday— are devoted to the expansion of this world built by moguls with now-familiar brand-names: Mayer (MGM), Fox, Warner, Laemmle (Universal), Loew and others that followed.

Within a generation, their cozy arrangement was itself to be dismantled by yet another disruptor, namely television, and another court case, the 1948 consent decree that untethered production (studios) from distribution (theatre chains).  A new generation of Hollywood moguls, led by talent agent Lew Wasserman, were able to co-opt the new media when they integrated talent, television, and movies, creating a different sort of incumbent power base for the business, one which lasted largely intact, even with the influx of new distribution methods like cable and pay TV and home video, until the advent of the Internet. There have been waves of new entrants and would-be disruptors, but Hollywood has been successful in absorbing each successive challenge, and prospering along the way.

Most of us believe that the tsunami of digital media, most particularly broadband distribution of print, audio and then video over the World Wide Web, marks another epochal disruption akin to those in the teens and the 50s. The timing is right for this “long wave” of innovation to disrupt the status quo.

It certainly seems that the technological and entrepreneurial shift powered by Silicon Valley innovation is different in kind, and will continue to disrupt and transform media, even without a comparable Supreme Court validation, although some might argue that the breakup of Ma Bell was that shot back in the 80s. 

Already we have heroes and villains, with some of the attendant myth making (“The Social Network”, for instance).

Just seems impossible to imagine that we won’t be watching THE NEW MOGULS at some point in the future. What we will be watching this content on, well, that’s what those new moguls are probably working on, right now.