Blockchain is primarily associated with Bitcoin. But this technology has much more potential than cryptocurrencies. Innovation is gradually spreading to other areas of life: finance, healthcare, automotive, retail and so on. It is popular because it allows people to protect and verify data in a decentralized network. Let’s consider how blockchain works in media and entertainment.
What is blockchain?
Blockchain involves a database in the form of a distributed ledger that uses cryptography to protect all information.
Such a ledger represents a series of records or blocks that are linked together in a chain. They are copied to every computer in a network. This technology uses smart contracts that help procedures in the chain to be carried out automatically.
Each block has a time stamp, data and a unique identifier – a hash. The hash of the previous block in the chain is also in this block. Once the data inside the block is written and validated, it cannot be changed. The need to make changes is captured and tested in a new block added to the chain. Thus, each subsequent block reinforces the verification of the previous one and, consequently, the entire chain.
If a person has access to the latest block, they can examine the history of transactions, including data about digital assets and commands that have been set since the creation of the very first block. The information in the blockchain is available and verifiable at any time.
Hashes are the foundation of blockchain technology. With their help, participants in a public decentralized network agree on ways to validate a block and add it to the chain. The hash has a cryptographic function. A special mathematical algorithm converts arbitrary-length data (for example, the name Marta Stuart) into fixed-length output (for example, {1010 0110 1345 1124}). This sequence of numbers is the hash.
Hashing only works in one direction. Therefore, it is virtually impossible to decrypt the data in a given hash without a computer with enormous computing power.
Blockchain does not describe a specific database. It is a technology that has a public or private format.
Infographic 1: https://i.insider.com/615619bfb414c10018633305?width=750&format=jpeg&auto=webp
Source: businessinsider.com
Blockchain usage statistics
Blockchain is mainly used by financial institutions. In 2020, technology’s market share is for the banking sector constituted 30%. Financial institutions generate $1 billion in revenue from blockchain-based cryptocurrencies.
Venture investors see the prospects of this technology, and are investing more and more money in blockchain solutions. In one quarter of 2021, blockchain startups raised more than in the entire previous year – $2.6 billion.
Global spending on blockchain software is steadily increasing. In 2021, it grew almost 5 times compared to three years earlier and amounted to 6.6 billion dollars. Experts predict that costs will skyrocket to $19 billion by 2024.
The entertainment industry does not stand by innovation and also seeks to use technology well. According to Compare Camp, only 1% of investors support blockchain. But gaming industry leaders so that innovation makes the game safe (23% of respondents). According to 19% of the participants in the survey, the technology has won the trust of customers and will become the main engine for the development of companies.
Blockchain in the media advertising and entertainment market
There are many problems in the entertainment industry:
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unfair distribution of profits for the rental of films, publishing of books and CDs;
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consequences of piracy;
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copyright infringement;
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spam traffic from robots and other problems.
These difficulties are easily solved with the help of blockchain. Music studios, idia, video streaming servicesand gaming companies use technology in the following cases:
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Distribution of payments.
News sites and video and music streaming services provide access to their content primarily on a subscription basis. But in doing so, companies are missing out on people who want to make one-time payments to read a book or watch a movie.
The one-time payment will become possible with blockchain-based micropayments. A service owner can keep track of data and learn which client is using the content and how. The technology automates micropayments and makes the payment procedure profitable for both customers and businessmen. Consumers get access to targeted content, and creators and intermediaries get their share of the revenue.
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Royalty optimization
Blockchain in media and entertainment will eradicate the misallocation of revenue for content creators. For example, in 2018, the music industry served around 43 billion dollars. Musicians received only 12% (about $5 billion) of this. Why so little? Because of the abundance of middlemen who seek to be on the chopping block all the time.
Blockchain smart contracts will not allow middlemen to profit from the works of others. Conditions are set in contracts: to transfer a certain amount of money to a certain recipient every time their song is played or a movie is watched. Blockchain will build a fair reward system for authors.
For example, the British singer Imogen Heap is collaborating with the blockchain platform Ethereum. The performer can use it to manage money from the sale of her tracks and see where and how the funds are distributed.
Infographic 2: https://static.andersenlab.com/andersenlab/new-andersensite/cases/tui/visual-concept-extended/static-concept/tui-vc-3-1340.webp
Source: andersenlab.com
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Management of digital rights
To avoid incidents with non-payment of royalties, companies design copyright management solutions. For example, the Mediachain startup integrates blockchain and automatic content identification technology. Blockchain developers want to create a “universal media library,” where the system determines the author and title by content item. Blockchain in media and entertainment will help detect fraudsters, as participants exchange information online and view transactions.
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Fight advertising spam
In 2019, advertisers lost $23 billion due to spam bots that simulated invalid traffic to ads. After all, merchants pay mainly for the number of impressions, and not the conversion from sales.
Blockchain in the media advertising and entertainment market provides parameters that allow marketers to track ads and see how the budget is spent and where the content is accessed by real users. A publisher creates a unique impression ID on their page and reports it during each transaction until the advertiser receives it. Advertisers check impressions and only pay for genuine ones.
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Blockchain Game Development
Experts suggest that blockchain will make gaming more exciting and safer. It solves two major problems in the gaming industry:
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Improves the liquidity of games.
Blockchain sets the rules, organizes fair trading of in-game currency and assets, and rationally connects them to the real world. This is useful for a free-to-play model where the majority of in-game revenue comes from in-app purchases funded by digital currency.
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Improves the structure of games.
Blockchain games are decentralized and hybrid in their structure. In the first case, a programmer cannot change a game without the approval of the participants. The others are launched from a central server in an old-fashioned way, but the assets are sold decentralized.
Infographic 3: https://digiday.com/wp-content/uploads/sites/3/2017/04/Why-digital-advertising-is-experimenting-with-blockchain.jpg
Source: digiday.com
Blockchain also removes other obstacles:
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combats fraud;
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makes it possible to transfer items between games;
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connects assets to players, not games;
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records sales, strengthens trust between a blockchain developer and a manufacturing company;
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reduces cloud costs by deploying the server over the blockchain network, and so on.
Conclusion
Secure payments, fair distribution of rewards and the fight against spam and fraud are just some of the blockchain capabilities. The potential applications of technology in media and entertainment are enormous. As soon as this technology reaches the necessary level of maturity, standards of use will appear and the innovation will manifest itself to the fullest extent. It is important to start thinking about the benefits of blockchain implementation in media and entertainment now.
