LOOKING INTO THE FUTURE OF PUBLISHING
by Tom Cox Development Director at IPR license
Blockchain is being touted as the next internet, a technology with the power to radically transform every aspect of our lives but as yet its real world applications have been limited to a few areas, Bitcoin and cryptocurrencies are currently the most well known application of block chain. This technology is now starting to get serious investment into both start-ups and within large organizations. Blockchain offers the promise of decentralized self-regulating data that can be applied to many aspects of business. IPR believes that blockchain has the potential to revolutionise the way IP is traded. IPR license has been thinking about some of the potential applications of blockchain technology within the rights community.
SO WHAT IS BLOCKCHAIN?
Let’s start with the hard stuff, so what is this new disruptive technology called Blockchain?
All transactions are based on trust; this could be in a central bank or a large company such as a publishing house. In a traditional transaction, trust is generally provided by an established institution and that trust is based largely on reputation. Blockchain changes this dynamic and introduces trust in the consensus of a network of peers that all agree to the same set of rules. This decentralized model relies on the agreement of the peer network in order to process the next set of transactions so no individual or organization can subvert the rules that have been established. Bitcoin is, without doubt, the most widely known blockchain implementation and, without going into detail, it makes sense to provide a very high-level overview of its architecture to describe the concept of a blockchain.
Bitcoin is a cryptocurrency which is not owned by any individual, government or organization it allows for transactions to occur outside of the traditional financial frameworks and fiat currencies. Each user of Bitcoin has a wallet; this allows them to store and spend bitcoins. Each wallet is identified by a pair of keys, one private and one public. These keys are used to send and receive transactions across the network. The public and private keys are linked, and the private key is only known by the wallet and its user so this guarantees that a transaction originates from the verified source.
When a user wants to transfer Bitcoins, their wallet publishes a message to the peer network.
The peer network is a collection of ‘nodes’. A node is generally a computer that is running the core Bitcoin client. Each node within the network has the complete ledger of all the previous transactions that have been agreed within the network. This shared ledger is the blockchain; new transactions are recorded on each node, and periodically a new block of transactions is written to the chain.
In the Bitcoin network, the job of writing new blocks is given to special nodes called miners. These miners are trying to solve a complex hashing algorithm based on the current state of the blockchain. Periodically one of these special nodes solves the problem and a new version of the current transactions known to that node is written permanently to the ledger in a block.
The first part of this new block links it back to the previous one and as such a continuous ledger(blockchain) is progressed.
After the new block is created, the other nodes within the system are designed to update their local blockchain with the longest variant and the process repeats. The time between new blocks being added varies, but on average it happens every 10 minutes.
So how does the process above replace the trust you would associate with traditional financial systems? The Bitcoin blockchain is a proof of work system this means that in order to write the next block to the ledger, the node in the network that is doing so must first solve a complex hashing algorithm. The network of nodes has a distributed set of miners trying to solve this. Each new block that is written rewards the miner that has written it with Bitcoin. So across the planet, there are people and organizations that are competing to write the next block to the ledger. No single individual or organization can guarantee that they will write the next block to the chain. If you were trying to subvert this process the expenditure in processing power you would need to guarantee writing the next block would massively outweigh any gains you could make by doing so.
SO THIS IS VERY INTERESTING, BUT HOW IS THIS USED OUTSIDE OF A FINANCIAL TRANSACTION?
While it’s true that at present most blockchain implementations are in the FinTech area, the information that can be stored on blockchains is not limited to financial transactions. The information posted to the chain could represent almost anything: a vote in an election, a bill payment, contract details, property deeds, consumption of perishable goods.
This concept has the potential to impact many aspects of our lives. Any data that would traditionally need to come from or be checked by a trusted authority can be published and agreed by a blockchain network in almost real time. This data must comply with the rules of the network and the built-in security of the network design means that the authenticity and accuracy of the data can be trusted.
There are now platforms such as http://www.hyperledger.org and ethereum that allow developers to build on top of a distributed blockchain infrastructure, which should greatly reduce the time to market needed to develop blockchain based systems. The amount of investment being made in this area makes the move beyond fintech a certainty although at this point it is hard to predict which implementation will take off.
Rights management is, in many ways, similar to financial processing in that trust is the core component. At present, that trust is provided by large institutions and the complex contracts that describe the ownership, use, re-use, translation, permissions and royalties associated with a product. These rights often cross company and country boundaries.
Whilst there are efforts such as the https://www.ardito-project.eu and the Copyright Hub to harmonize and share data. The technology and process landscape around rights remains fragmented. Organizations have their own siloed data, contracts, and proprietary systems. Data interchange between systems is almost nonexistent and changes to the state of the system are handled by offline contract negotiation which are still normally paper-based.
Below we aim to provide some examples of blockchain implementations that could be used to improve these issues.
Using blockchain as the definitive ledger of publishing rights If we imagine that the industry remains much as it is today, one possible path would be to establish a blockchain network that the industry publish rights details too.
Over time this ledger of rights would become the definitive source for searching and establish the authoritative rights holder. This shared ledger means that there is no one single company that is holding the data and that the ledger itself is always an accurate reference. Publishers would have an incentive to take part in the initiative as it should reduce the discovery and coordination time associated with searching for and establishing new contracts.
The network would be able to provide real-time details about rights holdings across the industry without the need for a central authority to police this. The blockchain ledger would not be a replacement for existing ERP systems instead the current systems could publish key lifecycle events to the blockchain.
New software clients that can analyses search and report on the blockchain would need to be established. It is not too difficult to see how such a system could be developed and it could possibly leverage much of the work that has already been created by initiatives such as the copyright hub.
SMART CONTRACTS ENABLE SELF-ENFORCING TERMS
If we were to take this a step further and look at a more disruptive implementation of blockchain, it would be possible to store not just the record of products and rights but to implement smart contracts that are enforced by the design of the network.
Smart contracts don’t just contain the terms of the contract but can act programmatically delivering aspects of the agreement once specific terms are fulfilled. If connected to additional sources, such as distribution networks, online and physical stores the contract could automatically deal with recouping costs and paying royalties.
When a new contract or a change to a contract is published to the network, the time for this information to be available to all nodes is likely to be minutes. If the contracts were sophisticated enough the complex area of royalties could be handled in almost real time by the system. Once established these smart contracts could drastically reduce the time and effort that is currently spent creating and enforcing the terms of contracts. However given the complexity and variation that is found within current publishing contracts the initial implementations of smart contracts may focus on specific subsets of content that lend themselves to this approach.
DECENTRALIZED AUTONOMOUS ORGANIZATION
Some advocates of Blockchain suggest that eventually, the technology may be sophisticated enough that instead of our current corporate model we will operate with decentralized autonomous organizations(DOA). DOA is a distributed corporate model enforced by the setup of the smart contracts that capture the organization’s goals and processes. This is a model that could replace the siloed functions of publishing companies into distributed services and could allow content creators much greater visibility and flexibility about how their work is published and disseminated. However, such a model is yet to be proven in any industry, and until the necessary building blocks and technologies are in place, this is only a pipe dream and one which may never come to pass.
WHAT IS THE IMPACT OF BLOCKCHAIN AND WHEN?
It is easy to see the upside that blockchain technology could have on the publishing industry, and we believe it is likely that some of this change is going to happen in the medium to long-term. However, there are a number of obstacles that stand in its way. It’s hard to see how such a network could be built without the support of publishers and while the benefits can be clearly laid out there is likely going to be resistance to this level of change. The scenarios given above are just some of many possible implementations that blockchain enables which may affect the publishing industry. While much of the current hype around blockchain is certainly unfounded, there is definitely great potential in this model. We believe that the publishing industry should be investing in and understand this new and disruptive technology in the same way that financial institutions have been. It is certainly an area that IPR license is going to continue to research and develop.
Tom Cox is Development Director of IPR License the worlds first fully transactional rights and licensing platform. http://www.iprlicense.com