The Promises and Perils of Blockchain Technology in Publishing
Saturday, June 16, 2018
Posted by: Bill Rosenblatt
Everyone’s heard of blockchain technology. In just about every industry, claims are made about how blockchains can revolutionize, disrupt, streamline, or otherwise improve the state of the art. Although finance has been the first area of notoriety, there’s a lot of talk—and in some cases action—about applying blockchain technology to the media industry. Here I’ll discuss the types of applications that are being investigated for blockchain technology in publishing, and I’ll compare them to blockchain developments in other media industry segments such as music and visual arts.
First, for those who aren’t familiar with the basics of blockchain technology, a blockchain is a type of distributed database—a ledger of transactions that isn’t owned by any single entity. Instead, every entity that participates in a blockchain has a copy of it that is guaranteed to be complete at any given time.
It’s only possible to add transactions to a blockchain; once there, they can’t be altered or removed. When a process wants to add data to a blockchain, it constructs a block of data and appends it to the blockchain with a link. Then a protocol runs to validate the data in the new block. This typically involves other entities performing complex mathematical and cryptographic calculations on the data to validate it. The data is considered valid once a sufficient number of entities has agreed on its validity as a result of those calculations; details vary from one scheme to another. The entities performing the validation need sufficient incentives to do it correctly.
An example of a generic blockchain shows blocks that contain multiple transactions, pointers to previous blocks in the chain, and data used to validate the block.
Just as there can be an infinite number of databases, there can be arbitrarily many blockchains. Blockchains can be public or private, and entities that post data onto blockchains can be known or anonymous. It all depends on the requirements of the application. In the Bitcoin environment, entities called miners perform validation, a task that gets harder (requires more computing power) as the chain gets bigger. Miners are rewarded for validating transactions by being paid in Bitcoin.
But the Bitcoin blockchain is only one particular blockchain; there are many thousands of others.
Blockchain and the Publishing Industry
Three general types of blockchain applications in publishing are being discussed nowadays: rights licensing and royalty processing, print supply chain management and piracy tracking, and e-book ownership transfers.
Rights Licensing and Royalty Processing
The type of application that’s showing the most practical promise in media these days is rights licensing and royalty processing. The music industry is leading the way in this area, followed by image licensing.
In publishing, various organizations exist to license rights and process royalty transactions. A prominent example is Copyright Clearance Center’s RightsLink platform, which works with various websites and other services to automate those processes. The simplest way to consider blockchain’s applicability here is to think of it as a decentralized, ownerless version of a rights clearinghouse. If you’re a content licensee, such as an aggregator, foreign distributor, or other publisher (e.g., an educational publisher licensing an equation or illustration for use in a textbook), you could license some content and deposit a transaction on a blockchain. The owner of rights in that content can read that transaction and kick off additional transactions to obtain consideration from you, such as a royalty payment or permission letter.
A blockchain used for content rights licensing and royalty processing, which uses Smart Contracts to represent business rules, terms, and conditions.
In addition to the basic blockchain components, this solution relies on a technology called Smart Contracts. Smart Contracts are programs that specify rules, terms, and conditions of a contract; they are written in a programming language environment that causes programs to run on all copies of a blockchain atomically, meaning that they all run either completely and correctly or not at all. The Ethereum blockchain is known for supporting Smart Contracts.
The publishing community has long understood that automation of rights licensing and royalty processing can bring gains in efficiency as well as increased revenue opportunities from content licensing. But there has been a lack of progress in developing standards on which to base such mechanisms, as well as concerns over the investment necessary to build the systems to support them and the risk of allowing single third parties to run them.
Blockchain technology ameliorates several of these issues. It replaces the single proprietary clearinghouse with an ownerless, distributed transaction ledger, lowering costs and increasing efficiency for everyone. Standards for expressing rights and licensing terms are still necessary; the hope is that the promises of lower cost and greater efficiency will motivate the industry to develop those standards. The Book Industry Study Group’s Rights Committee is one forum that’s working on such standards.
At the same time, the idea of an ownerless rights clearinghouse brings into question the integrity of rights ownership data. Blockchain technology does not guarantee the accuracy of information about who needs to get paid and how much; this will still be up to third parties and the subject of occasional disputes. The “garbage in, garbage out” problem remains.
Supply Chain Management and Piracy Track and Trace
Another business-to-business application of blockchain technology is supply chain management of print books and other publications. The basic idea is similar to the above: use a blockchain as a distributed, ownerless version of a proprietary database—this time for tracking physical products as they are manufactured, distributed, and sold.
There are many supply chain management solutions that use monolithic, proprietary databases, not least those of major transportation and logistics companies such as FedEx and UPS. The transportation logistics industry is looking into blockchain applications through a trade association called the Blockchain in Transport Alliance, and leading supply chain solution vendors such as Oracle, SAP, and IBM are embracing blockchain technology for large customers.
An application that is closely related to supply chain management is piracy and counterfeiting track and trace. Technology has been developed to track valuable or sensitive products such as pharmaceutical drugs, electronic parts, and luxury goods. Some of these solutions involve embedding unique identifiers in each product through technologies ranging from barcodes to invisible watermarks. The idea is to be able to scan a product at any location and find out where it came from and whether it’s legitimate by looking the identifier up in a database.
Meanwhile, anti-piracy methods for print books have existed for many years; they typically involve more rudimentary techniques such as static warning statements or stickers (that are identical for each copy of a book). The thinking in the book industry has been that even for high-priced, widely pirated products such as college textbooks, the cost of individual identification and tracking is too high to be worthwhile.
A blockchain used in print book supply chain management and piracy track and trace. Unique codes printed in books with POD technology can be scanned and monitored to see if they are fraudulent, duplicate, or missing.
That’s where blockchain technology comes in—together with print-on-demand (POD) technology, which is becoming more and more cost-effective all the time. Publishers can use POD to print unique identifiers—which can be barcodes, plaintext numbers, microtext, or hidden watermarks—to track them throughout the supply chain. If an individual book is suspicious, it can be scanned to determine whether it is legitimate. If the identifier turns out to be a duplicate, fake, or missing, the book is likely pirated, and law enforcement then has evidence that can bring it closer to the pirate. Blockchain technology reduces the cost of maintaining databases of individual books; therefore it has the potential to make the cost of individualized print book piracy track-and-trace solutions reasonable enough for wider adoption.
Ownership of E-Books
The third application of blockchain technology that I’ll discuss here relates to consumer e-book purchases. When you buy an e-book from Amazon, Apple, Kobo, or most other retailers, you don’t own it as you would a physical book; instead, you license it. One of the differences between ownership and licensing is that licensing does not typically give you the right to resell, lend, or give away your e-book. The technology necessary to track changes in ownership is too cumbersome to be reliable and user-friendly.
Blockchain technology can help solve this problem by enabling ownership transactions to be stored on a blockchain. If you buy an e-book, your purchase is stored on a blockchain. If you sell, lend, or give it to someone else, the blockchain adds immutable transactions to reflect the change of ownership. The e-book ownership blockchain can be independent of retailers, which could enable greater interoperability across e-book reading platforms.
This and other “built-in” properties of blockchains have led some to believe that blockchain-based e-book distribution will be attractive. A related property is that the identity of the original source of the content can be secure and unforgeable; this can be useful in rooting out “fake news” and fraud.
Although these are interesting ideas, it’s not clear that they will succeed in the market. First, to curb abuses the technology would have to include strong digital rights management, probably even stronger than the systems that major retailers currently use. Second, the ability to resell or give away e-books would lead to a secondary market for e-books in “perfect condition,” which most publishers would probably not allow as long as copyright law does not afford full ownership rights on digital content.
Other Media Markets
Of all the other segments of the media industry, music is the furthest ahead in experimenting with blockchain technology. The world of music licensing is a “sausage factory” that is full of pain points arising from the evolution of copyright law and the massive scale of licensing transactions in today’s world of streaming music, which exceeds a trillion transactions per year. Music service providers like Spotify, Google, and Apple all have to devote major resources to essentially identical licensing and royalty processing tasks while they fend off lawsuits from rights holders alleging improper royalty payments.
Blockchains can make music licensing tasks much more efficient and less legally risky. Several startups are building solutions in this area, such as Dot Blockchain Media, a public benefit corporation that is building blockchain-based API-level software infrastructure that solution providers can build on. Major music services such as Spotify have their own internal blockchain technology initiatives. At the same time, the “garbage in, garbage out” problem is just as relevant here as it is in publishing.
The other area that is ramping up blockchain experimentation is visual arts. The visual arts world can be thought of as having three parts: image licensing, digital visual artworks (individual works of art), and physical artworks.
Image licensing is a huge business, but it’s badly in need of solutions. Unlicensed image use is rampant; on the one hand, the Internet makes it easy to find images, while on the other hand, image license information is not standardized, and automated licensing is confined to proprietary agencies such as Getty Images, Alamy, and Shutterstock. A rights licensing blockchain similar to the one described above for the music industry could make it easier for image licensees (e.g., ad agencies) to “do the right thing” while increasing usage of images from smaller collections than those of the major licensing agencies. The highest-profile of several new blockchain-based image licensing initiatives is KODAKOne from Eastman Kodak, which includes not only an image licensing blockchain but a cryptocurrency for royalty transactions.
Individual works of art are a different matter: they are about ownership, not licensing. Ownership and provenance are vitally important in art markets, particularly at the high end. The ability of blockchain technology to provide immutable ownership and ownership transfer records is more relevant for individual artwork than it is for mass-produced copyrighted works.
The field of digital artwork is very new and very tiny compared to that of physical artwork. Yet blockchain technology is especially relevant to digital artwork, as identifiers of nodes on a blockchain can be embedded directly into the art itself rather than supplied separately, such as on ownership certificates. In other words, blockchain makes it easy for unique digital artwork to have built-in ownership and provenance data. This ability to guarantee provenance over time should enhance the legitimacy of the digital art market in the long run. Startups such as Verisart and Ascribe are building solutions in this area.
In all, blockchain technology has various applications for rights management in publishing and other media industry segments. We’re at the very beginning of what’s likely to be a very interesting period of experimentation, with lots of successes as well as failures to come.
This article is brought to you through a partnership with Amnet, a technology-led provider of services and solutions, catering to the needs of businesses for content transformation, design, and accessibility.
Bill Rosenblatt is president of GiantSteps Media Technology Strategies, a consulting firm. A globally recognized authority on technology issues pertaining to intellectual property in the digital age, he has contributed to standards initiatives related to content identification, metadata, and rights. He has testified before and advised public policy entities on digital copyright and technology issues on three continents.
Bill is author of the book Digital Rights Management: Business and Technology (Wiley), technical books published by O’Reilly, and several white papers, book chapters, and journal articles on technologies related to digital media, publishing, and copyright. He writes the blog Copyright and Technology, chairs the annual Copyright and Technology Conferences, and is a media and entertainment contributor to Forbes.
Prior to his consulting career, Bill was Chief Technology Officer of Fathom, an e-learning startup backed by Columbia University. Bill’s publishing industry experience includes stints as a technology executive at McGraw-Hill and Times Mirror Co.
Bill’s publishing industry clients have included Adobe, Association of American Publishers, Associated Press, Baker & Taylor, Brother, Christian Science Publishing, Consumers Union, European Digital Reading Lab, Houghton Mifflin, HP, IDPF, IEEE, McGraw-Hill, Massachusetts Medical Society, Pearson, Quark, Readers Digest, Rodale, Taylor & Francis, University of Phoenix, and Wolters Kluwer.
Bill can be reached at email@example.com