Blockchain and Copyright: How can this new Technology serve Creators?

As we roll into 2020, I thought it would be topical to look at a new technology that is very much in the news these days, and see how it could be harnessed to benefit copyright and creators.

We’ve all heard of blockchain, and its financial spin-off Bitcoin, but my guess is that very few of us really understand how blockchain works. That, at least, is where I stand and I am going to make the assumption that my lack of knowledge of the intricacies of blockchain is shared by at least some of my readers. And then there is its intersection with copyright, a growing topic and one well worth exploring.

First, what is blockchain? There are many, many explanations available out there in cyberspace, but one that I thought describes it very succinctly is provided by Klaus Schwab, Founder and Executive Chairman of the World Economic Forum (WEF) in this book on the Fourth Industrial Revolution;

“In essence, the blockchain is a shared, programmable, cryptographically secure and therefore trusted ledger which no single user controls and which can be inspected by anyone.”   

Here is another explanation from the paper “What is Blockchain—Why and How Should the Content Industry Care”.

“The blockchain is a decentralized ledger of online transactions of value exchange. All transactions are being written in blocks that are being added to the chain. By permanently linking the blocks and distributing the chain of blocks to a large number of independent and distributed nodes, a blockchain network creates an immutable record of transactions”.

“Blockchain allows for the direct and immediate exchange of value without a centralized and trusted third party or intermediaries”. Value can be money, property, a licence, time, labour, etc.

Got it? Blocks are unique numbers designating a single use or work, chained together and verifiable by anyone in the chain. Its characteristics are decentralization, borderless, censorship-resistant, tamper-proof, universal. So how does this relate to copyright?

One copyright application that has been suggested for blockchain is setting up a global registry of authors to serve as a medium for licensing. Other potential uses suggested in the “What is Blockchain” paper by Sebastian Posth, include cost efficient micropayments and settlement of transactions, optimization of distribution and other processes like production and peer-review and solutions for pre-sales, crowdfunding and other fund-raising activities.

A particularly interesting and useful article on how blockchain could benefit the copyright industries comes from WEF. It identifies five new functions in an “artist-centric” model for blockchain; (1) enabling smart contracts, which will help provide fairer terms for artists; (2) establishing transparent P2P transactions that would reveal who accessed the work and how much revenue it is generating at any given time; (3) promoting efficient, dynamic pricing by recording who has been granted access to a work so pricing can be adjusted; (4) allowing micro-monetizing, for example by charging for song snippets, and; (5) establishing a reputation system that would promote cooperation and record and reveal bad behaviour.

The Alliance of Independent Authors, a global non-profit for self-publishing authors has also published a helpful research paper “Authors and the Blockchain” (which can be downloaded from their site). The paper discusses how blockchain could help self-published authors by acting as a disintermediary, putting them in direct contact with consumers and thus bypassing publishers (as is already done with self-publishing) and online distributors (which is not);

“As a technology, blockchain looks set to allow income from sales to be effortlessly split at the point of transaction between the author and anyone else involved in the making of the book, including services and booksellers, and to seamlessly allow direct payment”.

The paper points out that Blockchain allows one person to transfer a unique piece of digital property to another in a way that is safe, open and transparent and cannot be modified. It also enables settlement of transactions without reference to a clearing house, such as PayPal, a credit card company or bank (thus increasing the net return to the author). However, this disintermediation could also be a boon to distributors of pirated content who could thus avoid and frustrate attempts by rights-holders to combat piracy by blocking the means used by pirates to collect payment from consumers of pirated content.

To address the challenge of harnessing blockchain for creators, the Canadian publishing collective rights management society, Access Copyright, has established a spin-off enterprise, Prescient Innovations, to work on blockchain issues.  Roanie Levy, CEO of Access Copyright and concurrently CEO of Prescient, recognizes the need for rights-holders to get ahead of blockchain technology and to employ it for the benefit of the creative community. In this regard, the need for an “attribution ledger” has become evident. In a podcast she did for the Copyright Clearance Center (Beyond the Book), she talked about the need to address the attribution or ownership issue;

“In a blockchain environment, the incentives for bad actors are really high. Now, monetary exchanges are possible with blockchain. It’s not just about more eyeballs to a site that generates ad revenues. This is when we really came to appreciate that the real problem to solve was the attribution problem…(and) when we started looking at what solving attribution might look like. And we define attribution as the ability to connect a creative work to its lawful creator and rights owner in a reliable and authoritative manner. The ledger would provide a reliable and authoritative connection between three things – the work itself, the creator and rightsholders, and data related to the works.

So, imagine if before a digital platform allows a creative work to be uploaded and circulated on their service, the creator and rightsholders are verified so that the correct person is compensated when the work is used. Once you have reliable and authoritative attribution as the underpinning of these other services …blockchain…can…come to fruition for the benefit of creators and publishers and rights owners…”

An early version of the ledger is being developed along with CARFAC, Copyright Visual Arts, and RAAV.  (All rights management organizations for Canadian visual artists). It will provide a service that uses the ledger to ascertain provenance for visual arts, offering Canadian visual artists a place to register their work, and linking content to its creators so that artists receive appropriate credit and financial compensation. The initial work is being funded in part from a $495,000 grant from the Canada Council for the Arts.

Levy is taking the message to the copyright community, as well as the book trade and visual artist groups, and plans to have a beta version of the attribution ledger and the Visual Art Passport, called Imprimo, ready early this year.

While blockchain has potential to empower creators, it’s not all smooth sailing. The music service Audius, based on blockchain, has been called a “copyright nightmare” because of the amount of pirated material on the service and the difficulty in removing it once it’s there. If anything, this underscores the conclusion that Levy and Access Copyright have reached; the key to successful use of blockchain technology for copyright industries lies in solving the attribution problem.

Blockchain has been given a bit of a bad name because of its use in financial transactions through the Bitcoin phenomenon, which is controversial and has had its ups and downs. However, leaving Bitcoin aside, blockchain as a technology has many potential useful applications. Its ability to uniquely label–and transparently and unalterably verify–a “block”, which can then be attached to a creative work, opens up all sorts of opportunities in the field of copyright for marketing, distribution and payment.

Access Copyright, through Prescient, is one of the leaders in the field. We will no doubt be hearing more from them as the beta rolls out and Prescient’s work is given wider application. Stay tuned.

© Hugh Stephens 2020. All Rights Reserved.