The global media and entertainment (M&E) industry, including “new media” FANG titans, is now approaching $2 trillion, according to the U.S. Department of Commerce. However, a lot of the value is locked up in inefficient processes that are ripe for re-design using blockchain applications.
Blockchain in media and entertainment is giving companies the chance to reinvent their business models and reclaim the value they’ve lost from creation to consumption, whether through new entrants or digital intermediaries. They can re-set the digital playing field for the creators and curators using smart contracts, crypto tokens and smart content. Blockchain helps enable these players to connect directly with consumers.
Consider musician Imogen Heap’s current project, which provides a “creative passport” to other musicians and creatives in the supply chain. This passport is cryptographically linked to them and contains detailed blockchain-based data on the work they’ve done, where that content has been used and their payment mechanisms. The app uses smart contracts to channel revenue from copyright users back to the creators of the work, quickly and automatically.
Blockchain also has the potential to connect creators with curators that add value, and connect them with customers directly to facilitate the purchase of music, movies and other media using crypto tokens and micro-payments. This would help maximize artist revenues by minimizing distribution fees and put artists back in control of their own brands.
Blockchain applications may also help deter people from pirating content. Cryptography will create “smart content” with licensing terms embedded by its creators and curators. Copyright violation will likely be difficult, while legitimate purchases become more convenient and appealing to consumers.
The elephant in the (board)room
But there’s a challenge in this era of innovation. In our experience, incumbents in M&E simply have not excelled at technology-led transformation. Based on our work in the M&E industry over the past two decades, we have witnessed that change has not been core to incumbents’ DNA, and many haven’t committed to invest in new platforms or broader collaborations to compete in a highly disrupted industry.
Will traditional mergers and acquisitions drive the necessary changes? It’s possible, but the industry seems to be learning that buying legacy assets for future value is tough. In recent news, a major telecommunications company who recently acquired ad platform assets to create a new digital ad business, announced it is abandoning its grand ad vision. Recent deals are content-driven which have the potential for smarter “platform” progress within the context of a technology revolution that could fuel more success.
M&E needs a significant leap of faith to get to a blockchain-based future. But the leap must be measured and finessed. Creating scores of use cases and proofs-of-concept (POCs) won’t work. Software developers love POCs; businesspeople don’t. It’s difficult to demonstrate the value proposition from technology demos that aren’t in commercial use. On the other end of the spectrum, a radical, industry-wide blockchain program will fail because there are too many players in the sector’s complex value chain, each with their own agendas. Marshaling them all would be near impossible.
So where’s the middle ground where companies can be appropriately aggressive, yet commercially viable?
The micro option
The “microchain” is a more manageable approach for executives to invest successfully in blockchain. It is hardwired for quick wins and demonstrable value, but it’s also designed for growth so it can gain traction over time.
Microchains are well-defined blockchain projects applied to a core M&E workflow. They usually involve a handful of functional participants. For example, a small group of holding company agencies (creative, digital, retail) working together on the same client might all use the same blockchain-based system to coordinate activities — such as creative and copy development — and production across platforms in order to align efforts and streamline client approvals. Another use might be for the same set of agencies to establish smart invoices using blockchain to provide single simplified invoicing to clients.
In over view, the microchain must have several properties to prove the project is worthy of further investment:
It must be a robust minimum viable product, not a mere proof of concept, to make it real and relevant.
It must have a business case that yields value. In the example above, there would be production savings, the opportunity to streamline the account team and faster cycle/approval times.
It must have active business-side sponsorship with an associated change program and value milestones.
Carefully crafting a blockchain project with these principles can demonstrate the value of an exciting technology for an industry ripe for change. With new commercial developments such as e-sports and virtual reality joining the ranks of books, magazines, music and movies, and with new innovations in targeted advertising boosting monetization, now is the time to take the leap.
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