Piracy On The Blockchain: Inevitable Cops And Robbers

It's risky business, but someone will eventually just say "Why not?"

If it can be, it will be. It’s inevitable that when a new technology emerges, it will be used to pirate music, movies, and other intellectual property. While the internet made sharing work easier, that ease also invited unparalleled levels of digital piracy.

The music industry has been at war with technology since before Napster, and Hollywood has hated consumer pirates since the advent of the VHS tape and VCR. Now blockchain technology, which (in some ways) resembles the torrent and other p2p services used to pirate protected content, is slowly finding its way into both industries.

Media and entertainment is a $735 billion industry in the U.S., and when mediums like radio and television are slow to adapt, startups like Netflix and Spotify can grab a huge share of the market. But the blockchain makes for an interesting loophole in digital copyright law that could cause content marketplaces leveraging the technology to revolutionize music and visual content… again.

Piracy Avoids Paying the Proper Dues

The biggest problem the RIAA and MPAA have with Silicon Valley is ensuring streams are tracked and companies receive proper compensation for the rights to their work. Contract negotiations around this key issue are what keep Netflix, Amazon Prime, Pandora, and Spotify from accessing the full range of available music and video on the market.

Blockchain technology’s decentralized tokenization fixes this problem tenfold.

What got Kim Dotcom’s Megaupload website and others like it in trouble was failure to regulate copyrighted content and compensate parties appropriately. Even major sites like YouTube and Spotify have to do this. Google does it for Internet sites too.

Blockchains like Choon, Livepeer, and YouNow apply blockchain-based tracking and models to compensate creators automatically with a public ledger. The technology is solid so far, but none of the blockchain startups have yet been willing to do one key thing.

By becoming more of a MegaUpload than a YouTube, a blockchain-based streaming site can offer a library nobody else legally can because of their contracts.

In our current system, a streaming service like Spotify or YouTube must track plays and payout content creators based on its information. How much Spotify pays the artists, versus retaining as profit, is a divisive issue that causes high-profile musicians like Taylor Swift to deny services (and fans) the ability to use their music.

Megaupload’s sin was subverting copyright law and making movies and TV shows available to stream or download online. So long as the artist is being compensated for the use of his or her work, it’s no longer piracy.

It’s a leap of faith, but a company can issue its tokens to the content creators, similar to what Steem does on its platforms. The blockchain tracks file plays (and can even be used to distribute them), while cryptocurrency is issued to content creators.

This method of distributing coins puts them in the hands of major businesses who would need to trade them for useful tokens for their business, like GNT, which can be used to purchase CGI processing power.

It would certainly draw attention soon enough, but by hosting these files and compensating artists fairly, a blockchain-based content startup can succeed.

Unfortunately, as music streaming upstart services like Choon and Musicoin are discovering, building a content catalog isn’t easy.

The People Will Pirate Anyway

Whether you agree or not, people pirate, and the U.S. economy loses about $12.5 billion annually to digital content piracy. The RIAA blames piracy for lost revenue, but artists like Eminem, Rihanna, Taylor Swift, Bruno Mars, and Justin Bieber broke Billboard and Soundscan sales records in a digital age.

Imagine how much more they would earn if we could find a way to divert that extra $12.5 billion into their revenue streams. A two-token blockchain could easily reward both creative team and business team with tokens for views. Ads, whether in sidebars or within the content could monetize everything.

Viewers/listeners would act as miners in this business model, and it’s not as far-fetched as it seems.

Video games already use a freemium business model with in-game purchases and ads to monetize them. Proof-of-Skill on the blockchain is the next evolution. The television, movie, and music industries would simply be following the lead of video games.

When computers and the internet came out, it wasn’t long before their marriage to radio, TV, and movie content become solidified. Now Spotify and YouTube plays are as important to Soundscan as physical CD sales.

Centralization became an issue for early piracy pioneers like Napster, but Gnutella and torrents decentralized everything. Nowadays, Kodi preinstalled on unlocked FireTV devices rule the piracy roost.

The blockchain will inevitably be used to both commit and combat piracy. Who is going to be the Kim Dotcom of the blockchain?

Kim Dotcom is making this exact play, hoping to hit the same magical formula he did with Megaupload in a blockchain 2.0 sequel. As we all know, Hollywood sequels don’t always retain the same audiences though.

It’s a new world, and someone new may take the reigns in the new age of piracy. What if that new pirate chooses to simply pay his victims?

Risks vs Rewards

The difference between this stunt and a typical airdrop is the people responsible will either become the next YouTube or the next MegaUpload. Kim Dotcom is still in New Zealand fighting extradition to the U.S. for that site’s “crimes” of illegally hosting fines.

Ultimately, people want access to entertainment content, and the music and movie industries are ripe for disruption. Anyone who can successfully merge a stellar content library to the blockchain and tokenize plays will have a hit on their hands that can forever change the music and movie industries more than Apple.

We cover a lot of legitimate use cases for blockchain technology, but one can only wonder how it will be used to combat… and contribute to… piracy.

 

The author is not currently invested in any digital assets mentioned in this article.