Peter Smith, chief executive officer of Blockchain Ltd., speaks during the Lisbon Web Summit in Lisbon, Portugal, on Tuesday, Nov. 8, 2016.  Photographer: Paulo Duarte/Bloomberg
Peter Smith, chief executive officer of Blockchain Ltd., speaks during the Lisbon Web Summit in Lisbon, Portugal, on Tuesday, Nov. 8, 2016. Photographer: Paulo Duarte/Bloomberg

Are Blockchains the Second Coming of Napster? (Perspective)

Editor’s Note: The author is a lawyer specializing in IP litigation.

By Lance Koonce, Partner, Davis Wright Tremaine LLP.

Imagine you are a musician. You hear a song playing in a club one night, and think: That’s terrific, but it could be even better if tweaked a bit. You use a mobile app like Shazam to “listen” and identify it. Right from your phone, you enter a search and are able to find out key information about the piece, including who to contact about rights information.

You see that the music and lyrics are both available to be adapted in exchange for a small royalty if you sell or license your adaptation. Later, you create your own adaptation, and upload that version to a popular music platform. Each time it is streamed or downloaded, you get a royalty — instantly. So does the creator of the original song, also instantly. Then your version goes viral, and other people begin creating their own versions, and every time streams those, you and the creator get a royalty too.

Blockchains and other related technologies may help make this possible. And in a roundabout way, we will have Napster to thank for it.

 

A Rough Start for P2P Content Platforms

Nearly two decades ago, an audacious new service was launched that allowed users to share digital files in a novel way: By means of a distributed, “peer-to-peer” (P2P) network of computers. Users could download software to their computers and became a node in a decentralized distribution system. The name of that service was Napster.

The original promise of P2P networks as an efficient method of content delivery and management was long obscured by a history of piracy and legal battles. While quickly adopted by users who wanted to share music files for free, Napster and similar services such as Groketer were shut down as result of legal battles over copyright infringement. The problem was a complete lack of security and control, meaning that content owners had no power to manage the distribution, or profit from it.

 

Blockchains Enter the Picture

In 2009, a new virtual currency called Bitcoin was introduced to the world that allowed users to share these digital tokens by means of a P2P network, but with a twist: All nodes validated each transaction, and all transactions were secured by cryptography. The result was a “blockchain”: an incredibly secure, persistently auditable log of transactions.

Bitcoin experienced growing pangs similar to those experienced by P2P services. As a borderless virtual currency, early adopters included participants in black markets, most notably those using the notorious Silk Road dark web platform.

But a surprising thing happened on the way from 2009 to 2017 — people began to realize that the blockchain concept could be applied to all manner of transactions. The key benefits of blockchains, or “distributed ledgers,” is that they are very secure, but also provide a measure of transparency and redundancy because the ledger is kept on all of the nodes. Blockchains act as very good registries of data. They also facilitate transactions between parties without the need of middlemen to mediate trust (that is, they allow transactions between arms-length parties such as competitors). Blockchains have a potential role to play in accelerating the development of the Internet of Things, managing personal data and identity online, and making food supply chains more transparent, just to name a few possible use cases.

 

What’s Next

Because blockchains can create an indelible ledger entry showing when a piece of data was first recorded, it soon became clear that blockchains can serve as a registry for content such as music and video files, allowing the creation of universal identifiers for those files.

However, that is just the beginning. The real power of the technology in this space is to facilitate the management of such content. Blockchains permit the persistent association of metadata about content files with the unique identifiers for those files, which in turn allows for better tracking of ownership, licensing, and usage. Combined with cryptocurrencies, we may see nearly instantaneous payments to all parties who have a financial interest in the content, eliminating complex royalty accounting.

However, there is a catch. While blockchains are great for recording and managing transaction data, for various technical reasons they are not effective as content storage databases, or content delivery networks. To create truly effective blockchain-based content delivery systems, other technologies must be employed.

That’s where those “other” distributed networks may come in. P2P distribution may match up well with blockchain-based systems, and allow fast, efficient discovery of important information about content. Projects like the Open Music Initiative are focused on developing standardized metadata in order to facilitate development of such systems.

More radically, the content files themselves could be stored across a distributed network, not a single server, enabling more efficient streaming and downloading of content. Platforms such as Mediachain and the Interplanetary File System (IPFS) are already exploring these ideas.

The idea of media files living in the wild, outside of the owner’s immediate immediate control, might initially fill industry veterans with fear. However, the aspects of blockchain technology that provide transaction transparency and security also offer the possibility of more robust access control, and better tracking of infringement when it does occur.

In this second act for P2P, there is reason to be cautiously optimistic that the technology will help create new forms of revenue, while at the same time provide new tools to fight piracy. The content industries will be well served to explore these new possibilities.

 

Want to contribute to Big Law Business? Write us a pitch at BigLawBusiness@bna.com.

blb newsletter

Related posts

Top