How Will Blockchain Disrupt the Cultural Industry?
The widespread use of Internet has thrust us into the age of information civilization, which is very different from the agricultural civilization and the industrial civilization. In the information age, new technologies represented by cloud computing, big data, blockchain, and AI are re-making the traditional cultural industry and pushing its digitization and transformation. Among these new technologies, blockchain, as an underlying technology, is having the widest and deepest impact. The disruptiveness of blockchain is very significant for the future development of the information age, and is expected to push humanity from the era of information internet into that of value internet.
As a brand new and decentralized infrastructure and distributed computing paradigm, blockchain’s application value is not just limited to finance. Instead, it is a foundational technology for the Internet. Blockchain is highly compatible with the open, situational and connective nature of the cultural industry, and in the new economy, the strategic choice will be to closely follow the evolution and progress of blockchain technology and achieve synergetic innovations with the cultural industry.
What is blockchain in the cultural industry?
In 2008, in an article named Bitcoin: Point to Point Electronic Cash System, a Japanese-American named Satosh Nakamoto came up with the blockchain technical framework for Bitcoin. The idea was considered like a tale out of the Arabian Nights back then. However, in over ten years, blockchain has not only triggered a revolution in the banking and financial industries, it has also become one of the most advanced technologies in data computing and storage.
According to its international definition, blockchain is a shared and decentralized ledger that organizes data blocks in the form of chains into specific data structures according to time order, and that is ensured through cryptography to be immutable and unforgeable. Blockchain can securely store simple, chronologically ordered data that can be verified in the system.
In essence, blockchain is a ledger that enables people who do not trust one another to conduct information and value exchanges with trust and confidence, and without the involvement of authority in the middle. Blockchain is the innovative application of computer technologies such as distributed data storage, point-to-point transmission, consensus mechanism and encrypted algorithm.
The reason that blockchain, as an underlying technology, will have a profound impact on the digitalization of industries lies in the technology’s 6 major features, i.e., its being decentralized, open, autonomous, anonymous, programmable and traceable. These 6 features give blocktrain its nature as a revolutionary and disruptive technology.
De-centralized: the use of distributed accounting and storage technology means that there is no central hardware or management authority. Any one node has equal rights and obligations as the other nodes. Nodes with maintenance function jointly maintain the data blocks in the system. If any one node stops working, it won’t affect the system’s overall operation.
Open: the system is open. Other than the private information of the parties in a transaction, which is encrypted, blockchain data are open to everyone. Anybody can query blockchain data and develop related applications through its open interface.
Autonomous: Blockchain adopts standards and protocols based on negotiated consensus, so that all nodes in the entire system can go to a trusted environment to exchange data freely and securely. This changes trust of “people” to trust of machines and technologies.
Anonymous: Because the exchanges among nodes follow fixed algorithms, their data exchanges do not need to be backed by trust. As a result, the parties in a transaction do not have to reveal their identities.
Programmable: the digital nature of the distributed ledger means that blockchain transactions can be linked with computing logics, and are by nature programmable. As a result, users may set algorithms and rules to automatically trigger node-to-node transactions.
Traceable: through the block data structure, blockchain stores all historical data that come after the genesis block, and any pieces of data on a blockchain can be traced to its origin through the chain structure.
Information, once goes through consensus and added to the blockchain, is jointly recorded by all nodes and guaranteed to be chronologically connected through cryptography, which makes it extremely costly to alter. In fact, blockchain may look like a force of production, but as a decentralized self organization, it has more features of a new relationship of production. The evolution of blockchain technology is bringing changes in system and program design ideas, pushing the restructuring of the distribution relationship and trust relationship among consumers, businesses and capital, and disrupting the current modes of business organization through community autonomy as the core organizational relationship.
On the one hand, the application of blockchain in the area of digital cultural copyrights has been exploding like wild fire. People may utilize blockchain’s trustworthy and traceable features to perform the storage and tracing of multiple types of transaction information, such as digital cultural copyright registration, change, and licensing as well as derivativeworks; on the other hand, blockchain technology can be used to authenticate digital cultural businesses’ contracts or properties such as equities and intangible assets, to transfer them and to achieve intelligent contract management, therefore increase the efficacy in consensus formation and value transmission.
In addition, blockchain will also have important application value in cultural related financial products as well as in digital cultural trades, and is expected to play a role in point-to-point transaction of digital cultural products and services, such as cross border payment, trade settlements and the purchase and sale of contracts of derivative works. In other words, the external pull of blockchain technology, together with the internal development need of the digital cultural industry, are synergistically pushing blockchain to shine in this very industry.
Cultural and creative industry full life cycle management
The 6 major features of blockchain technology also mean that when blockchain gets into the digital cultural industry, it will simultaneously endow the later with the decentralized, open, autonomous, anonymous, programmable and traceable characters. These characters will be throughout the entire industry chain, and provide new opportunities and platforms for the creative development of the entire industry.
Specifically, the application of blockchain in the cultural and creative industry will move from upstream to downstream, and will primarily be centered around 3 areas: blockchain + content production, blockchain + content circulation, and blockchain + content rights protection.
From the perspective of blockchain + content production, blockchain can build a brand new digital culture value sharing platform. Blockchain technology places the creators and producers of digital culture at the center of the industry chain, and provides a platform for the source producer to share copyright value fairly. It forms a development model with digital culture content at its core.
On the one hand, with blockchain technology, direct linkage between source content producers and users can be achieved, therefore eliminating the need to cover the operation costs of agents and platforms and to separate accounts, reducing the costs of copyright registration and protection as well as royalty management, and ensuring the value maximization of the original creators of digital culture: a content creator’s work has encrypted digital signature so its value is stored, the creator may track and decide, at any time, what to do with the copyright (sell or license it) as well as its price, and obtain income due to him/her when the content is flowing and transmitting on the blockchain platform.
On the other hand, the open and transparent transaction program enabled by blockchain is very difficult to alter, therefore increasing openness and transparency; while the automated authentication of intelligent contracts and the quick revision of parameters can greatly reduce the complexity of traditional contracts, simplify the process and increase efficiency. All these are conducive to protecting the interests of the creators in the mid- and tail sections of the digital culture industry chain, therefore forming a brand new digital culture production ecosystem that is centered around content creation at the source of industry chain, and based on rule consensus and value sharing.
From the perspective of blockchain + content circulation, blockchain will change digital culture’s operation and transaction system, including re-building the cultural circulation segment in the age of Internet. The characters of blockchain and the virtual market‘s protocols enable consumers to participate in the entire process of content creation, production, transmission, cloud sourcing and consumption, and push the direct interactions between the producers and consumers of digital culture content to the core. There is no longer the need to rely on the credibility of a third party platform.
The new circulation platform built by blockchain technology re-structures the trust mechanism by shifting trust from individuals to data, therefore increasing transaction efficiency in the digital culture market. The distributed market with multiple transaction parties and the decentralized cooperation order ensure to a greater extent the maximization of the interests of the producers and the consumer on the two sides of the platform.
As an illustration, the blockchain based music sharing platform Audius is dedicated to eliminating operational links in the middle. Through blockchain enabled intelligent contract system, it allows music producers to obtain fair and transparent income in a global market. Users pay to listen to music on the platform through purchasing Audius tokens or earning tokens by watching commercials. 85% of the platform’s income is paid, through encrypted currency, to the musicians, while 15% is distributed between the party song providers and software developers.
In addition, based on blockchain’s value transmission feature, content industry can issue and trade digital assets (similar to tokens) on the copyright and game prop transaction platforms. Because blockchain is immutable and distributed, copyright and game prop transactions built upon blockchain technology can not only promote their security and transparency, blur the boundary between the real and the virtual, they can also bring disruptive impact on the game and copyright markets.
From the perspective of blockchain + content rights protection, putting transaction data on blockchain through signature consensus by using distributed data storage and encrypted algorithms allows not only general file storage, but also the forming of evidence chain through real time and secure data and intelligent contracts, therefore meeting the requirements that evidences are true, legal and connected and promoting the standardization of evidence and trials.
In fact, the cultural and creative industry is presented with new development opportunities in the 5G age. However, it is also due to the network effect, fast transmission rate and low costs of the Internet, all sorts of pirating technologies have kept popping up and causing the industry to suffer huge economic loss from rampant piracy.
First, online piracy causes direct negative impacts such as job loss, copyright value shrinkage, and the loss of many great works; secondly, the shoddy quality of online pirated content, combined with fake ads and Trojan horses, have left users with very bad experiences, which consequently affect users‘ feelings towards and experience of the real works, and resulting in the vicious cycle in the copyright market.
With the rise of the knowledge economy, intellectual properties should have become the key competitiveness factor in the cultural and creative industry. However, intellectual property infringement is still a very serious issue in the current Internet industry ecosphere, with frequent copyright disputes. Rampant pirating of original works, difficulty in presenting evidence and high cost in right protection have become the sharp pain points of the cultural and creative industry.
Regulation and technology are the two paths to solving legal problems, and when ex post regulation is costly, blockchain technology provides a cheaper and more efficient way in. Block chain technology, through timestamps and Hash Algorithm, can authenticate a work’s right and prove the existence, authenticity and uniqueness of a paragraph of text, a piece of video or audio. Once its right is authenticated on blockchain, a work’s subsequent transactions will be recorded in real time, and the full life cycle of the cultural and creative industry can be traced and tracked. This provides a powerful technological safeguard and highly credible evidences for discovery and proof of intellectual property rights.
Lastly, the borderless transmission of digital culture has led to a network resonance system that is globally connected, open and dynamic, and given digital culture its global character since its birth. Although the rapid development of the Internet has increased the speed and efficiency of global communication, it has been difficult to make value transfer a reality. Blockchain can help lower the threshold and costs, induce the birth of new industries and new organizational forms, and achieve value transfer in global digital culture communication channels.
In the age of intelligence, using blockchain technology to accelerate Chinese digital culture’s outward journey will not only help defend against the negative impact of foreign digital cultures and achieve more effective growth, it will also promote the structural transformation and upgrading of the digital culture industry, and increase our national culture’s influence and competitiveness.
In the age of intelligence, blockchain, as an underlying technology, can help achieve full life cycle management of the cultural and creative industry, and effectively shorten the cycle of value creation. Its groundbreaking character will undoubtedly bring great disruptions to the industry. At the same time, however, the public may not necessarily accept the changes block chain technology is bringing.
For example, although blockchain can solve digital copyright issues, it also will bring to an end some free-of-charge business models, which might be difficult for some audience to accept. This shows that even though blockchain does indeed have the potential to change the cultural industry, the changes must be built upon the proper understanding, channeling and regulation of the technology itself.
For the above reasons, it is essential to accelerate industry and public understanding of blockchain technology, to push the establishment of appropriate security safeguard system, and to actively guide and regulate blockchain developers and platform operators. Moreover, it should be noticed that blockchain technology still has the issue of usability and maturity, its application in the cultural industry is still at an early, exploratory stage, and there is still the need to further explore the appropriate paths and scenarios for its use and to expand the space in which the technology is practiced.
About the Author
CHEN, Gen, renowned FinTech scholar, popular technology author and successful financier in China and Hong Kong SAR.
Chen is an invited professor of Beijing University, postgraduate student advisor of Beijing Forestry University, Visiting Professor of Nanjing University of Aeronautics and Astronautics. He is a media commentator of China Daily,
China First Financial Magazine.
Chen has undertaken a number of projects entrusted by China’s National Ministries and Commissions, involving financial technology, financial services, real estate and other fields. He was commissioned to conduct research and lectures by General Electric of U.S., the United States Wall Street Stock Exchange, NASIDAQ, Samsung, Hyundai, LG, Volvo, Siemens, Mercedes-Benz, China Securities Regulatory Commission, Hong Kong Stock Exchange, Hong Kong Securities Regulatory Commission, Apple, Google, IBM, Agricultural Bank of China, China Life Insurance, Bank of Communications, Citibank, Xinhua News and CCTV.
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