We’re digital entertainment junkies. Films, TV shows, video games, and music now fill up most of our lives. Unfortunately, the process of making all this entertainment is yet another highly centralized industry that funnels the funding, opportunities, and public attention towards only a privileged few well-known celebrities. That means less money and creative control for independent creators, and lower-quality content for a public that craves original premium entertainment.
Luckily, some creative thinkers are experimenting with new decentralized business models that aim to disrupt this industry. They are forging new tools so that media creators can work more closely with their audiences, and retain ownership of their work in the process.
We would like to thank the team at Qravity for their contributions to the design and implementation of the research and to the analysis of the result.
The Difficulties of Creating and Distributing Digital Media
Technology has made creating and distributing entertainment media faster and cheaper than 20 years ago. Anyone with a smartphone and an Internet connection can, for instance, make a film and distribute it globally. But many creators still face numerous challenges when developing and distributing their work. Some of these obstacles harm profits, and others stop creative projects in their tracks. Some of these problems include:
Raising money for creative pursuits is a difficult and expensive process. Films and music albums, for instance, can cost anywhere from thousands to millions of dollars; it’s also risky, as there are no guarantees of success, and big projects fail all the time.
The most common way to get funding is to go through the big studios like Disney, Comcast, and Warner Bros for a film, or Sony, Universal Music and EMI for music. Netflix is also spending more money to build their own library of original films and television series.
Crowdfunding has been a major breakthrough for independent creators in the last decade. Sites like Kickstarter and IndieGoGo have funded thousands of projects and brought the idea of peer-to-peer fundraising into the public consciousness.
2. Team management
Once funding is secured, the first step towards turning a creative idea into a reality is assembling the skills and personnel to make it happen. For example, film production requires writers, actors, and a director, along with all the other crew members who are needed for shooting, set building, and editing. For independent artists and startup projects, this is not so easy. At the moment, the best option is by using freelance platforms like Upwork and Fiverr to find talent and outsource work.
Tools like Adobe Creative Cloud, GitHub, and Google Drive are some of the options for finding people willing to collaborate with you.
3. Payment and royalties
The next challenge is figuring out how to run project finances both fairly and transparently. Tracking who should get paid what causes all sorts of headaches in the entertainment industry. This is especially true in the emerging streaming industry where a big chunk of the revenue comes from high-volume, low-value transactions.
Most creatives are well acquainted with the struggle of getting paid for their work, and they want to work on projects that guarantee equitable payment right from the start. Currently, there aren’t any good mechanisms for guaranteeing payment for independent creative projects.
Once you’ve finished your project, you’ll need to distribute it effectively in order to be successful. This means actually getting your film in front of people’s eyes. You need to get your song playing in people’s headphones, or your game under people’s thumbs. The most popular distribution channels to do just this include:
- Film – Disney, Comcast, Warner Bros, Comcast, Youtube, Netflix, Avid
- Music – Sony, Universal Music and EMI, Spotify
- Apps and games – The App Store, Google Play, Valve, Steam
- Books – Amazon, Audible
- More – Facebook, MediaCentral, Ooyala
Despite the new possibilities with the Internet, self-distribution and marketing isn’t as easy as you might think. Posting a video on Facebook or YouTube is free, but getting people to notice it is whole other problem all together.
The platforms themselves have complete control over the distribution network, and you’ll have to pay to promote your product. Facebook Ads cost on average $0.27 per click or $7.19 per 1000 views, and it costs $0.10-0.30 for a YouTube view. As we discussed in another article, these platforms are making a killing. The costs rack up quickly for smaller and independent creators.
The effectiveness of these Internet distribution platforms for creators is questionable. Only a few YouTube stars earn a large income, and it’s still a relatively small amount considering the fact that they are reaching tens of millions of viewers. Spotify pays out a dismal $0.007 per stream to the “rights holders,” which gets shared between publishers, labels, and the artists. This might work for the few artists who have billions of streams, but for the rest, it’s not great. In the App Store, less than 1% of apps are a financial success.
5. Piracy Prevention
The biggest cost to the digital media industry in the last 25 years has been piracy. It costs both the music and film industry tens of billions of dollars annually. The Internet has made it cheap for publishers to distribute music, but those same technologies make it just as easy to copy and distribute that content illegally. This is especially damaging for emerging artists.
We’ve created an infographic to better explain this idea to you:
Creators face an uphill battle in an industry dominated by a powerful gatekeeper between them and their consumers.
What Decentralized Platforms Can Offer
Decentralized platforms are testing out an entirely new business model; one where the creators of digital media can work much more directly with their consumers.
Imagine that instead of just waiting to pay for a movie ticket when it’s released in the theaters, you could be involved right from the start. You hear an exciting idea for a film and actually pitch in to start funding it with your cryptocurrency. Or to go even further, you could actually help collaborate on the film remotely with some particular skill you have. Now extend that idea to games, books, apps, and music; this is what could be possible with blockchain technology.
Luckily, this isn’t just a fantasy. There are some awesome projects well underway to bring these ideas to life. Let’s take a look at some of the best ones.
Qravity is a blockchain project looking to challenge the centralized entertainment production and distribution industry, tackling all of the problems for creators discussed above. The core idea is to provide a place where creators can own and profit from their work. In doing so, they plan to help creatives at every stage of the media production journey.
Qravity is building a decentralized platform to become a one-stop-shop that connects creators, founders, producers, users, and consumers. Also included in the platform are the technical tools for crowdsourcing, crowdfunding, project management, cloud collaboration, stake sharing instruments, and social network features. All of this while allowing anyone making movies, music, games, ebooks, and software applications to fully own their work.
The tools to do all of this include:
- An online platform to meet other creators with similar creative interests and complementary skill sets.
- The mechanisms to share ownership, cost, and payouts in a fair and transparent way (i.e. cryptocurrency and smart contracts).
- Collaboration tools for distributed teams such as file sharing, task tracking, asset production and approval, and messaging.
- Making entertainment media, such as films and music, consumable through the Qravity platform.
- Distributing and selling the media directly through other online marketplaces. For example, streaming services and the app stores.
Blockchain technology will underpin all of these features, and the most interesting part of which is using smart contracts to share ownership and payment. In this model, co-founders and creators can agree on how to distribute the ownership and profits from a project before that project has even been made. As it’s being developed, those that complete their required tasks will automatically receive their share of ownership and profits. This happens automatically when it is released via a smart contract and Qravity’s own token, QCO.
Cloud collaboration on the blockchain means that the files and data being worked on are immutable, secure, and tamper-proof. They cannot get lost on a blockchain and are also resistant to hacking.
Like many blockchain projects right now, Qravity is based on Ethereum. But due to scalability concerns, they are also openly looking for suitable alternatives.
Obstacles to overcome
The reason that centralized solutions like YouTube and Spotify are so powerful is because they have the most valuable resource in the industry: direct access to the biggest audiences. Network effects suggest that overcoming these powerful companies will be very difficult.
A platform like Qravity will need to build a strong community and customer base, and doing so won’t be easy when going against the established players.
Then there are the technical obstacles with ambitious projects like this one. Creative collaboration tools are already widely available and amazingly efficient. It’s hard to tell if the benefit of decentralization will be enough to lure creators to them, especially as decentralized blockchain software is much harder to keep updated as opposed to the centralized alternatives.
Decent is a similar, but slightly less ambitious, platform that attempts to bring decentralization to creators and consumers. It focuses on content distribution, development, and collaborative crowdsourcing. It’s a decentralized platform to buy and sell all kinds of content without the man in the middle influencing the market and taking the profits.
The idea is to have a platform that is:
- Owned by the users and independent from any company or political group
- Distributed and immutable
- Profitable for creators
- Secure and anonymous
- Recommendation-enabled for consumers
Decent uses its own blockchain that’s a modified version of the Bittorrent protocol, allowing creators to share directly with the content producers on the network.
Obstacles to overcome
As with Qravity, growing the network to critical mass and building the infrastructure is the largest hurdle that they must face.
Wemark is an example of a more niche platform designed specifically for photographers. Its purpose is to allow consumers to license and buy photos directly from the photographers themselves.
Photographers like to license their photos directly to their customers. They get to keep control of their intellectual property while keeping more of the revenue. The problem is that getting in touch with those individual customers is hard without using the centralized options, especially in the photography market.
Wemark’s mission is to give the power back to the creators with an open and transparent blockchain marketplace where photographers can directly connect to their customers.
Obstacles to overcome
Just as the Wemark team says, people like getting their content from centralized sources because it’s easy. They can search through a huge database of photos and find exactly what they want. Wemark needs to make their product as good as, if not better than, the alternatives that are available right now.
Will Creatives Finally Get What They Deserve?
Creative industries like films, music, and games are about bringing exciting ideas to life. That process should be fun and profitable for those who are good at it.
New decentralized platforms are bringing about an exciting new way of doing things in a slow industry. Creatives are gaining new ways to find each other, crowdsource funding from their fans, collaborate remotely, guarantee royalty payments, directly distribute to their audiences, and protect their work. With these powerful tools, we’re in for some exciting entertainment in the coming years.