Rights Management and the Blockchain
The Current State of Rights Management
Usage rights are complex things to manage under the best of circumstances. The proliferation of content types (podcasts, web series, VR environments) and new types of deployment scenarios (streaming, new devices, new gaming platforms) keeps stepping up that complexity in a logarithmic fashion. The self-destruction of the music industry and the gutted incomes of music creators as a result of the failure of rights management to keep up with both the technology and the business model of streaming is well documented. If the same endgame is to be avoided with other types of rights (and indeed, if fair compensation for music creation is to be restored) the industry as a whole needs to take responsibility for merging two complex and highly specialised knowledge domains: the practice of rights management and the new technologies around exchange of value, especially as they pertain to media.
Firstly, let’s draw a distinction between “simple” and “complex” rights management. “Simple” rights management is what we used to call DRM – Digital Rights Management. That’s the technology that used to be embedded in iTunes and other music platforms that stopped you from copying music you’d bought to someone else’s computer or device and playing it back. Really, it was just another name for encryption. It only managed one “right” – your right to play back the music. All of the rights owners with an interest in the music – the record label, the artist, the artist’s agent and so on – were managed by other, opaque, often manual systems which you almost certainly didn’t know or care about. The DRM on your music file did not control or in any way represent their interest in the content. As far as you were concerned, your contracted right to play that track was between you and Apple. That’s it.
Looking beyond music, the rights situation becomes even more complex. In a TV advertisement, for example, there may be artists’ rights relating to the actors and voiceover artists, composers’ rights and so-called “mechanical copyright” in using a particular music recording, and even location rights associated with using a famous landmark. All of these rights will most likely be managed through intermediaries – agents – all of whom will take a cut. And there are complex edge-cases: To take one example, the rules around how artists are to be paid when an ad is rebroadcast after the initial campaign is over (for example, a brand might choose to re-use last year’s Mothers’ Day ad) are incredibly complex. So complex that entire departments inside advertising agencies, and even entire companies are devoted to managing them. These departments go by the nicely non-specific name of “business affairs”.
Today, all of these types of rights, however complex, share three common characteristics: they are managed manually; they are non-digital, often involving lots of paperwork and form-filling; and they are disconnected from the digital asset – the file that is actually broadcast or played out.
Blockchain to the Rescue
You’ve probably heard of Bitcoin. It’s been various described as a crypto-currency, digital currency or “virtual money”, but really it’s just a distributed way of managing entries in a ledger. When you use your internet banking to transfer money to someone else, your bank updates your account ledger to deduct the money, and the receiver’s bank updates their account ledger to add the money. That’s all that’s happening - two systems agree to modify certain ledgers in an agreed fashion. The only difference with Bitcoin is that instead of the ledger system being managed by the two banks, you manage it yourself. In fact, everyone in the Bitcoin “network” has a copy of the ledger, and the transactions in that ledger are constantly being validated by participants in the network. Public-key cryptography – the same technology that keeps your internet banking website secure – keeps everything safe.
So far, so kind of cool, but not that relevant to rights management, right? Well actually, the technology that enables this distributed ledger – the blockchain – has some pretty interesting features. One of the cool things about a blockchain transaction is that it can be much more sophisticated than just increasing a balance in one account while decreasing a balance in another. In fact, the blockchain supports a special type of distributed programming language called “smart contracts”. These are just like paper contracts in the real world, except that they are written in computer code, and hence are executable. That means that if a transaction using the blockchain – say, buying a piece of music – has a smart contract attached, the provisions of that contract – which might involve paying the artist, the label, the agent and the distributor their cut – can be executed in real time. At the very moment that you buy the music, all those other participants in the smart contract receive their contractually agreed percentage automatically, immediately and with a tamper-proof audit trail.
In fact, there are already many companies exploring and experimenting with using the blockchain in exactly this manner:
"Unlike other attempts creating a database that keeps track of worldwide copyrights, the MUSE Blockchain is not proprietary. It is an ownerless, automated, globally distributed, Peer-to-Peer network that is both transparent and open to all. The maintenance of its content does not depend on trust of a central authority."
‘Tiny Human’ remains the most high-profile example of a song released using blockchain-based distribution. Fans could buy licences to download, stream, remix and sync the song, with their payments automatically split between Heap and her collaborators on the track.
Pro vs. Consumer
As with so many technologies, the consumer use case tends to lead the professional use case. It’s one thing to create a smart contract that automatically pays artists when someone buys a song, but what about more complex cases, such as advertising and editorial usage rights? Well, as usual, it comes down to vendors buying into standards.
Let’s consider the case of a pre-roll ad on YouTube. In the simplest case, the usage rights for the actors, voiceover artists, locations, composers, and everyone who had rights of some sort to the content in the ad could be embedded in a smart contract, which would then be embedded in the video file uploaded to YouTube. YouTube would, in an ideal world, have software that could read this smart contract and execute it every time the ad was streamed. This seems relatively achievable. Standards already exist for how to embed metadata into video files, and the embedding of the smart contract could be a final step in the mastering process before uploading to YouTube. The improvement of such a system over current practice would be in the automated distribution of royalties and a distributed audit trail. There is no doubt much onerous labour that goes into these activities at present, and so this level of automation would be beneficial. However, I think we can go a step better.
In an earlier article, I described the benefits that would arise from an improvement in interoperability between DAM (Digital Asset Management) systems. Here, I was referring mostly to the way that important metadata (including rights metadata) is lost when assets are transferred across organisation boundaries. A stock photo library, for example, may have a great system for managing the rights in the images they sell, but once that photo has been bought by a customer and merged as a layer into a large Photoshop document, that rights metadata is lost. If the final Photoshop file were to be used, perhaps months later, in a context which was not compliant with the purchased rights for the stock photo (for example, in a political campaign), there would be no easy way to detect this. Adobe is prominent in supporting mechanisms for embedding metadata into its documents; the issue is not that the technology doesn’t exist, but that the stock photo library and the customer haven’t agreed on a standard.
We could readily replace, “rights metadata” with “smart contract” in the above paragraph. The main difference would be that the rights metadata would be executable, using the blockchain. Providing that a standard can be agreed that is resilient to transferring the asset from one organisation to another, and to its being used in another larger composite asset, then it’s feasible that the very act of serving the final image from a web server could trigger the cascade of smart contracts for all subsidiary assets, including the stock photography, ensuring that all participants’ rights are automatically cleared and any requisite payments made. In the earlier example of the pre-roll ad, the composer’s music could be delivered to the production house already embedded with a smart contract relating to the agreed usage rights.
It may seem that getting all the vendors in the chain – from the web server to the music audio workstation software – to agree on a standard is a Herculean task, however there are two things going for it. Firstly, the standards for embedding metadata into a wide variety of files have increased markedly in adoption over the last several years. Secondly, there’s money involved. Whereas the benefits of generic metadata might be considered a bit soft when it comes to digital asset management, a smart contract would have hard dollars attached.
The business models of first music and now TV production are being dismantled and rebuilt before our eyes. Blockchain offers the possibility of preserving the rights of content creators in the era of Netflix and Spotify, but also in the management of complex rights in the already complex advertising supply chain. Many brands are opting for large buy-out style contracts in hopes of avoiding this complexity, but this is often expensive for brands in the short term and a net loss for artists in the long term. Smart contracts offer the ability to streamline the error-prone manual processes that make up “business affairs” whilst at the same time providing a new level of transparency and accountability for everyone involved.