How Blockchains Will Break into the Movie Business
How Blockchains Will Break into the Movie Business
 05 December 2017

In between a movie script and the audience that eventually views a film sit a gaggle of stakeholders, all taking their cut. Producers, studios, distribution networks, product placement agencies, agents, TV networks and talent agencies must all be paid. And don't forget the lawyers.

David Lofts is one of many blockchain technology advocates who wants to change all that. The executive producer and creative director of U.K.-based production venture " 21 Million " hopes to turn the entire process on its head, starting with funding.

"They don't like outsiders to know how it's run, what goes on and where the money goes," he said of the Hollywood structure. "That was the thing for me. It was the unfair nature of film and television."

Lofts cited "Return of the Jedi," one of the most successful movies of all time - which, despite its popularity, didn't make any "official" profit . Plenty of other films provide similar examples, including "This is Spinal Tap," now the subject of a $400 million lawsuit .

Fundraising

What if the blockchain could eliminate the film industry's intermediaries? Instead of waiting for a handful of movie executives to green light a film (earning money for nothing in the meantime), some movies are using blockchain-based crowdfunding instead.
Piracy

After the distribution comes the piracy: this has always been a problem for the film and TV industry. Each year, hacking groups like Hive-CM8 leak new movies online before the awards season. Audiences welcome illicit content, racking up 77.7 billion visits to piracy-streaming websites in 2016.

"21 Million" is a TV thriller, a series set in the world of cryptocurrency and espionage. But the innovativeness of the series goes beyond its subject matter: it's using the Ethereum blockchain to fund its production. Half of the tokens used to fund the production were sold to investors in the show's June initial coin offering. The other half is being distributed to those participating in production.

As the TV series begins to make a profit, the revenue will be allocated to token holders based on their holdings, said Lofts, meaning that the more tokens you hold, the more you will get paid. This effectively turns the tokens into royalty points. The beauty of the royalty-based token system used by "21 Million" is that token holders are compensated based on their input (the producer will probably have more tokens than the first grip, for instance).

Innovative, yes; but "21 Million" isn't the only film/TV industry project raising funds via the blockchain. Pursuing a slightly different model, the team behind the thriller movie " Braid " raised $1.7 million through an Ethereum-based crowdsale, in partnership with the WeiFund crowdfunding portal and Joseph Lubin's ConsenSys venture production studio.

Thanks to these - and other - developments, platforms are emerging to support not only crowdfunding activities, but other aspects of the movie lifecycle, such as rights management, distribution and monetization. SingularDTV , another Lubin-related project, is designed to handle all these processes.

Piracy

After the distribution comes the piracy: this has always been a problem for the film and TV industry. Each year, hacking groups like Hive-CM8 leak new movies online before the awards season. Audiences welcome illicit content, racking up 77.7 billion visits to piracy-streaming websites in 2016.

Some believe that the blockchain could provide solutions to even this complex problem. Australian firm Veredictum takes a two-pronged approach, watermarking video to identify illegitimate copies and creating a distribution network that makes the film or show available at an affordable price, reducing the motivation for piracy.

Custos uses Bitcoin to motivate online anti-piracy vigilantes. The firm digitally watermarks legitimate copies of a movie, linking each individually to its recipient. It also embeds Bitcoin rewards directly in the file's metadata. If an antipiracy "bounty hunter" finds the file online, they can claim that reward. The watermark tells Custos and its clients who the leak came from.

What's next for "21 Million"? It is in preproduction at the time of writing and its token is trading lower than the opening price. Lofts isn't worried, though.

"We designed the token specifically to be held rather than traded," he said. "It is a Royalty token, meaning you would lose your piece of the action if you sold it, so its current price isn't so much of a worry."

Lofts added that he didn't want just another "pump and dump" token on the market.

"This one is for film fans," he said.

It isn't just for fans, though. Lofts hopes that a more egalitarian approach to film and TV production might redress the power imbalance in Hollywood, stamping out the types of abuse that have attracted so much recent press attention. That would be a good outcome for everyone.

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