Adoption: Digital revolution: How blockchain technology fundamentally change the way business operates in the film Industry.

By VladlaneVlad | PublishLive | 1 week ago

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Technology is a significant part of the film industry and its revolution has made a tremendous impact on the way business operates. Nowadays, with new technological advancement such as blockchain, the field of opportunities is expanding even further. Blockchain technology has triggered an exceptional amount of debates among professionals, who claim that it will shape the revolutionary evolution of the film industry. This report represents a detailed analysis of the transition to blockchain technology in filmmaking in order to showcase the workflow advantages of decentralized and transparent business model.

 

The blockchain is a continuously growing list of tamper-proof digital records that are called blocks, which are linked and secured using cryptography in the network of computers. According to Wikipedia (Blockchain, 2018), each block typically contains a cryptographic hash of the previous block, a timestamp and transaction data, that once recorded within the block, makes it almost impossible to hack, erase or change it illegally. In other words, blockchain is the distributed ledger technology (DLT), that is fully accessible to anyone who is part of blockchain system, and only for some to record. One of the reasons why the blockchain has such a resilience compared to the centralized system, such as banks, is that centralized system can work but it also has a single point of failure, which means that if one database fails, everything else fails too. The distributive ledger, where the recording of all encoded transactions are happening on all the computers in the network at once, cannot be hacked and is always transparent and anonymous.

Even though blockchain technology is mostly used as an accounting tool for cryptocurrency transactions, the success of it has appeared in many other commercial industries. This technology significantly simplifies business operations and lowers the costs of handling transactions because they do not require third-party payment networks. Moreover, blockchain systems can set up smart contracts that are activated when certain conditions are met (Blockchain, 2018). Therefore, different sectors such as pharmaceuticals, jewellery, insurance, fashion, food safety, film, even humanitarian crises and others are looking to apply or have already started the process of applying blockchain technology to their businesses. For example, according to Rayome (2018), in pharmaceuticals, there are unique serial numbers created for every medication and equipment that has to be scanned, captured and verified. Blockchain technology can track and trace serialization much faster, cheaper and more secure than ever before. Currently, DHL (health and logistics company) and Accenture (operations company) are working on applying blockchain serialization in worldwide areas. The blockchain is also extremely effective when it comes to tracking food origin and safety. For instance, retail giant Walmart is using blockchain technology from IBM  to track every food item from the farmer to the retailer and everything in between (Miller, 2018). Thus, both retailer and customers can be sure of food quality and its origin. Originally, Walmart wanted to utilise the technological ledger for Salmonella outbreaks that were hard to track due to inefficient documenting and IT. Now, distributed ledger technology (DLT) has helped Walmart to completely redesign their tracking system and management processes. 

           When applied to the film industry, blockchain technology can completely transform the way films are made and also the way actors and crew are paid (Morse, 2018). Often independent productions suffer from poor accounting and as a result, people get paid less or don’t get paid at all. Here is how DLT technology can change that once and for all - blockchain enables collection of revenues and automatic distribution to every party, therefore there is no middleman who can operate with errors or even worse - underpay and take money into their pockets. Moreover, smart contracts enable efficient execution of contract statements. For example, if your contract states that you will get paid on a certain filming date, once it is this date, you will automatically get paid. Blockchain technology will also benefit copyrights, royalties, crowdfunding, distribution and many more aspects of film production (these and other benefits of blockchain in the film industry will be discussed in detail below in SWOT analysis).  

 

          Companies like FilmChain and Bitcoin Film Funding are already offering their blockchain services to film creators. FilmChain, a company started by BigCouch co-founders Irina Albita and Maria Tanjala, collects revenues and automatically assigns them to everyone who took part in film production. The company claims that their development on Ethereum blockchain will increase transparency, lower friction and cut down settlement time (FilmChain, 2018). The success of BigCouch - a “crowdfunding” platform for independent filmmakers that connects producers, employers and crews, sparked the idea for Irina and Maria to use the new breakthrough blockchain technology in FilmChain to change the way payments are made in the film industry. 

            Bitcoin Film Funding enables producers and filmmakers to raise money for their films using blockchain technology. Founded by F.Michael Johnson, the company allows to raise money for your film in the matter of hours or days, instead of weeks or months. The blockchain-led company also provides fast and fair revenue distribution (Bitcoin Film Funding, 2018). 

            The first film ever to use blockchain technology for distribution is “No Postage Necessary” by Jeremy Culver. The romantic indie comedy with a release date in June 2018 will be available to purchase with cryptocurrency via Vevue - a peer-to-peer video network built on Qtum blockchain technology (Singh, 2018). Culver believes that this initiative will trigger a change of mindset in the film industry where blockchain technology will not only benefit distribution process, but also intellectual property rights, transparent royalty payments and will potentially stop piracy.

 

SWOT Analysis

 

 

Strengths

  • Transparency (proof of ownership, digital rights management)
  • Cost-effectiveness (royalties and micropayments, distribution)
  • Efficiency (fund raising, smart contracts, production workflow)

 

Weaknesses

  • Data storage and synchronization
  • Need for mass adoption
  • Legal Regulations

 

Opportunities

  • Combating piracy
  • A chance for small productions to get noticed on a global stage

 

Threats

  • Security
  • Distribution companies and accountants becoming irrelevant

Figure 1




Strengths

 

           Not only transactions but also any intellectual asset of the film, whether it is the idea or the script, can be documented on a blockchain and tracked. Therefore, blockchain technology can solve any copyright issues, increasing the transparency for content owners. Similarly, transactions that include licensing and rights assignment can be stored on a blockchain where they are not controlled by any third party, instead, any transaction is triggered using a smart contract that ensures transparency because any type of transactions and their values can be tracked. Therefore, content owners will know exactly how much money a film made in each channel (Belyaev, 2017).

           In terms of cost-effectiveness, distributed ledger technology will be able to replace inefficient accounting and payment networks that are often costly and prone to human error. As mentioned before, film financers often make incorrect payouts which is unfair for independent filmmakers. Blockchain enables automated distribution of revenue to everyone involved in the film process without having to use middlemen. With this technology, filmmakers can be sure that their royalty payments will arrive on the stated date as triggered by smart contract, without having to chase accountants as it often happens in the industry. Costs can also be reduced during the distribution process because distribution companies take a part of the film revenue. Blockchain does not require centralized distribution companies, therefore companies like Netflix, Amazon or TV networks could become irrelevant. Peer-to-peer video sharing networks could completely disrupt distribution world and create decentralized content streaming available to anyone. 

 

           An important part of independent filmmaking is fundraising. While there are many money sourcing websites like Indiegogo, GoFundMe and others, they often take a lot of time and effort in order to acquire the desired amount of money. With blockchain technology, it is possible to raise more money in less time as your encoded intellectual assets will be available to a huge amount of people in the blockchain network who are able to make instant payments. Another feature that makes a filmmaker’s life a little bit easier is smart contracts. Here is how they work - a contract between two parties is written as a code in the blockchain. Individuals in the contract are anonymous but the contract is a public ledger. When an activation event like a certain date hits, the contract executes itself according to the coded terms (Buterin, 2018). For example, if your contract says that you will get paid $5000 on the last filming day, as soon as the date occurs, you are automatically paid. There is also good news for those who value efficient production workflow. Every filmmaker knows the pain of transferring and receiving different digital content, such as originals, mater copies and formatted copies, million times. This often causes errors and delays. With the decentralized system, any content can be transferred much faster enabling synchronized a protected collaboration on the project. 





Weaknesses

           As the amount of blockchains and unique users is exponentially increasing (see Fig.2), it creates the problem of data storage and synchronization. Blockchain technology will have to find a way to store a large amount of data but also maintaining high-speed processing. Even though the amount of blockchain users is growing, the network will need mass adoption in order to be truly effective. 

Figure 2

Another concern is legal regulations. In order to create a fully operational digital environment for financial and asset transactions, a lot of physical legal certificates must be digitized. Nevertheless, legal regulatory should be implemented within the network itself, because there has to be someone responsible for managing blockchain, admitting new participants etc. (Blockchain, 2018), otherwise there could be consequences that we might not be aware of just yet as the technology is still quite new and it is undergoing a lot of research and investigation. 

 

Opportunities

 

          Blockchain technology has a potential to significantly reduce or even stop piracy completely. Combating piracy is a costly expense to many film studios. However, due to the nature of encoded data in the blockchain, every upload or modification of content creates a permanent record and can be tracked. This allows following whether the content is being illegally leaked (Bhaleyrao, 2018). The same technology can be generally applied to stop any piracy in the entertainment industry, including music, film, series, shows etc. 

           Distributed ledger technology will also make it easier for young, unrecognised artists to get the foot in the door. While current centralized architecture is run by a small number of big studios, TV networks and distributors like Netflix and Amazon, the future of democratized and decentralized system will allow independent filmmakers to showcase their work on a wide stage without having to work for big studios or pitch for Netflix. This shift in the way that new artists can be discovered will make an incredible difference as they are currently often overshadowed and overpowered by established players.

 

Threats

 

              Even though it has been discussed above that blockchain technology provides secure and anonymous access for users, security still remains one of the biggest threats to the network. One of the main reasons for security threats is that the content encrypted in the blockchain is not regulated by anyone. Therefore, inappropriate content could be uploaded onto the network of blockchains. Most likely, algorithms will have to be created in order to recognise such content and automatically stop it from being encrypted using code. Moreover, a few banks, such as Bank of Canada and Bank of England have expressed their concern about the security of distributed ledger technology and cryptocurrencies (Blockchain, 2018). Therefore, some banks have started an investigation to prevent the loss of control over currency by the central bank. Banks are against joining the open-source network because they want to sustain the centralized control. 

             Another concern is a loss of the considerable amount of employees in distribution companies and payment networks. As it was mentioned before, blockchain operates without middlemen when it comes to making payments and distribution of content. On one hand, this means good news for film studios because they can save money on operating without third party services. On the other hand, if blockchain becomes adopted by masses, distribution companies like Netflix or Amazon and accounting companies will become irrelevant, resulting in the bankruptcy of massive corporations and redundancy of thousands of employees. 

 

Conclusion

 

          It is important to acknowledge how the new coming technological advancements impact the way filmmaking industry operates as progressive ideas can influence our everyday work and common practices. Despite being widely discussed, blockchain is still relatively young technology and it has certain aspects that require attention and development, such as security and legal regulations, in order to demonstrate its full potential. Nevertheless, a lot of new blockchain start-ups are emerging and many established corporations are introducing blockchain technology to the way they operate. It may take years before the distributed ledger technology becomes globally adopted but it is the definitely worth to follow the development of it, because as we all know technology dictates the future.






        




VladlaneVlad
VladlaneVlad

Fresh Outlook


PublishLive
PublishLive

Fresh Outlook

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