Why Blockchain Needs To Disrupt The Entertainment Industry
Since blockchain blipped onto the public’s radar in 2008, it’s been met with equal parts skepticism and fanaticism. For some, it’s that shadowy thing that has to do with cryptocurrency. For others, it’s a possible game changer for how business can (and maybe should) operate.
The possibilities of what blockchain can do–and what it’s already done–in the entertainment industry kicked off a panel discussion at the Tribeca Film Festival earlier this week.
As Daniel Hyman, VP of entertainment finance and development at SingularDTV, defined it during the panel, blockchain is a method of decentralized information sharing. In other words, there’s no one gatekeeper to a particular blockchain and whatever transactions occur within it are immutable. What happens in a blockchain stays in a blockchain for all participants to see. That can play into the entertainment industry in numerous ways, mainly crowdfunding, ledgers for record keeping, and smart contracts (agreements implemented through blockchain that cut out intermediaries and their fees).
Back in 2017, Mitzi Peirone became the first director to successfully finance a film through cryptocurrency, which is based on blockchain technology. But it wasn’t like normal crowdfunding that’s donation-based. Peirone did an equity crowd sale through the blockchain production company ConsenSys, essentially allowing people to invest, and not just donate, to her movie Braid, a psychological thriller where two young women decide to rob their childhood friend but get tangled in a deadly, reality-bending game.
“I was either going to beg friends and family for $10K, $20K at most and still feel guilty about it because I can’t really pay them back or go to a bigger production studio,” Peirone said at the panel. “Production studios did tell me to simplify the script, dumb it down. So I was facing either seeing my creative freedom taken away and having to compromise the story or not having enough money to make it.”
Peirone met with ConsenSys CEO Joseph Lubin in 2015 and built out an equity crowdfunding strategy to fund Braid. The result was an online campaign where people could buy digital tokens as a representation of their investment. Whatever revenue Braid generates will be paid out to token holders plus 15% interest. Peirone launched her campaign in early June 2017 and met her goal of $1.7 million by the end of the month.
“We had to fight off a lot of skepticism because people didn’t know what we were doing. Anything that goes against regular business models is always a risky thing,” Peirone said. “We were able to create the movie we wanted but also the movie that our audience wanted to see. I personally fell for the cause of creative freedom and decentralizing economy and hence democratizing the arts. Because if we can enable independent artists to truly follow their heart, to follow what they think is worth portraying, we can establish an entertainment industry that we want to see.”
The skepticism Peirone faced from investors in the beginning will be a hurdle for anyone looking to incorporate blockchain into a public-facing venture. Whether it’s the stigma of being a fad or being associated with drug money (e.g., Silk Road), or even just people who are simply confounded by it all, blockchain certainly has a ways to go before it’s widely adopted. Hyman likens its uphill climb to email when it first started.
“There was no public forum. There were no panels about the protocol behind email. A bunch of guys were in their offices figuring, ‘I’m going to code this and it’s going to get a message from one place to another,’” Hyman says. “We live in an age where every technological advancement is so transparent and people try to grasp the understanding of every piece of code. So until blockchain is so widespread and so understandable, most of the production could be traditional until every one of the systems in the production process has back operations connected to blockchain.”
Ultimately, people like Peirone, Hyman, and Peter Guglielmino, IBM’s media and entertainment CTO, see blockchain as an ideal solution for creatives looking to retain control of their visions—and maybe even put more money in their pockets.
“The whole point of what blockchain is doing is it’s saying, ‘I’m going to make the supply chain visible to all the participants so that everybody can get compensated for what they contributed,’”Guglielmino says. “I’m sure you’ve heard this notion over and over: Where there’s mystery, there’s margin. So if I have a supply chain, and I can’t have visibility, all of a suddenly money starts disappearing and the wrong people are getting money and the people who should be getting it aren’t getting it. And that’s really how blockchain is going to help the creative industries.”