The phrase “If all you have is a hammer, everything looks like a nail” originated with Abraham Kaplan in his seminal 1964 work on behavioral science. He applied it — as many parents have done ever since — to young kids. These days, blockchain technology is a hammer. An excellent illustration of how this applies in the copyright field is a draft whitepaper, How Blockchains Can Support, Complement, or Supplement Intellectual Property, from the Coalition of Automated Legal Applications (COALA), a think tank with roots at the Berkman Center for Internet and Society at Harvard. The whitepaper was mentioned at last week’s Open Music Initiative (OMI) meeting in London.
The good news about this whitepaper is that it catalogs most (if not all) of the applications to copyright issues that have been claimed for blockchain technology over the past couple of years, and adds a few new ones. It’s a worthwhile reference for anyone who wants to understand the range of solutions that various startups and standards initiatives (inlcuding the OMI) have been working on. It should serve as a roadmap for how these various initiatives fare over time in solving the problems that the whitepaper enumerates.
The bad news about the whitepaper — which is only a working draft at this point — is that some of the problems for which it describes blockchain-based solutions are problems that have already been solved (to some extent) without blockchains, that blockchain technology is unlikely to solve, or that the market has decided are not worth solving.
The biggest area of misunderstanding (or perhaps wishful thinking) in this whitepaper is about how blockchain technology can apply to consumer digital media distribution. These authors aren’t the only ones who are currently overestimating this, as opposed to B-to-B media applications. But their discussion of it in the whitepaper is representative of other thinking I’ve heard along these lines, so it’s worth examining. (In fact, I’ve been meaning to write something expressing doubts about blockchain’s applicability to consumer media distribution, and this well-organized whitepaper serves as a convenient foil for doing so.)
The whitepaper claims that blockchain technology makes it possible for content creators to track and monetize retail content sales, and enforce copyrights, without either using DRM or acting like “copyright trolls.” The theory goes like this: if content creators register their works on blockchains and provide “tokens” for transfer of usage rights, then consumers can have easy ways to pay for content, and creators can track usage in order to measure popularity of their works, monetize them, and enforce copyrights. Tokens are like DRM license files without the enforcement mechanisms of traditional DRM.
Let’s take these assertions on one by one. First is the use of tokens as passive means of denoting ownership or rights licenses. The big question here is: what types of services would this enable that would actually interest users? I could find two answers to this question in the whitepaper: enabling users to easily pay small sums of money (micropayments) for rights to the content they want, and to be assured that the content they are getting is authentic. Neither of these are of much interest to users.
Consumers might once have been interested in paying tiny amounts of money for individual content items if it were easy and efficient enough to do so. Micropayments were going to be used for newspaper and magazine articles as well as for single music streams and other small units of content. But micropayments were too expensive to process and the user experience was too inconvenient. Payment schemes might have emerged that solved these problems — one example mentioned occasionally was phone companies handling the transactions and including them in monthly bills, just like long distance calls — but none did.
Those discussions took place well over a decade ago, and as the saying goes, the ship has sailed. In fact, the momentum has gone in opposite directions: payment models have moved from individual content items (iTunes) towards a dichotomy of fixed-rate subscriptions (Apple Music, Netflix) and free with ads (Pandora, YouTube). (And much the same thing has happened with phone calls.) The reason for that isn’t so much a function of efficiency in processing low-value transactions as it is of users’ desire and convenience, and service providers’ preference for annuity revenue streams. The few micropayments-based content services that exist nowadays are mostly unloved anachronisms, like the U.S. government’s PACER system for court documents.
The second assertion, though more implicit than explicit in the whitepaper, is that users want to “own” the content they pay for. Although this idea is au courant among copyleft academics and advocates, the market is moving away from it. The above services that are gaining in popularity offer access, not ownership, while those that purport to offer “ownership” (which is a legal gray area anyway) are on the wane. To cite the most prominent example, digital music track download sales are down 22% from last year.
Book publishing is the one major area of the media industry where permanent paid downloads still prevail. But e-books generally are also in decline: despite the optimistic predictions a few ago, they have fallen below 20% market penetration in the United States. Consumer prices for e-books — even short ones like Amazon’s Kindle Singles — are too high to make micropayments relevant anyway. Micropayments might apply in models like “payment every time an ebook page is turned,” which the whitepaper disparages as “the worst of DRM,” but the more basic problem with this model is that it simply doesn’t interest anyone.
The third problematic assertion in the whitepaper’s theory about consumer media distribution is that users ascribe value to the authenticity of copyrighted works. This is another one that was discredited a long time ago. For example, vendors of early DRM systems in the early 2000s tried to justify their value to users on the basis that they guaranteed authenticity of content (such as for scholarly research). Nobody cared, so DRM vendors stopped talking about it.
The whitepaper proposes establishing authenticity by taking hash values of content and storing them in records in a blockchain. It suggests using standard cryptographic hash values such as SHA-256 hashes, which serve as unique identifiers: any slight change in the content results in a different hash value, and the likelihood of two files having the same hash value is infinitesimal.
The whitepaper states that “In theory, sales could be made off-blockchain, but such sales would break the chain of provenance established by the registry and reduce the value of the work significantly as it could no longer be demonstrated to be authentic.” Users don’t care about “provenance” or “authenticity.” Not only that, but they will want to do things to files (such as transcode them) that would, under this scheme, render them “inauthentic.” And as the whitepaper points out, one of the most common objections to DRM is that it often restricts just this type of activity — which may also be a legal right if done for personal use.
Standard hash values won’t work to identify different files that embody the same work; for that and other reasons, copyright owners have eschewed them. Some blockchain startups have proposed using fingerprints, which are identifiers that are “educated guesses” about whether multiple files embody the same creative work and which are mostly but not 100% accurate. Indeed, fingerprints are widely used, as we’ll see below. (A better solution to this problem is watermarks — which is another story for another day.)
(Now having said all that, the world of visual artworks may well be an exception. People buy them, derive value from provenance and authenticity, and expect ownership rights. And, as the whitepaper mentions, such works get special treatment under copyright law in many countries. There isn’t a significant market for digital visual artworks yet, but this is an area worth watching if and as it develops. Sure enough, blockchain startups such as Verisart are working in this area.)
More generally, the whitepaper proposes tokens deposited on blockchains as alternatives to DRM in consumer media distribution. But that’s just not realistic. First, tokens can’t support many of the popular access models mentioned above (plus others like library lending); for those, you still need some form of DRM. Second, a significant amount of content made available by permanent download — music, images, and a growing number of e-books — is now available DRM-free. Any technology imposed on such files that purports to handle rights and licensing issues risks being lumped in with DRM, even though it isn’t actually DRM, and shunned for that reason.
Even then, without enough value to users and/or a real enforcement mechanism to prevent abuse, users are likely to ignore token-based systems and resort to unauthorized copying. That will happen for the usual reason: it’s always easier just to make copies of files than to make copies plus do something else.
That leads to the final assertion in the whitepaper that I’ll discuss here, which is about copyright enforcement. The whitepaper discusses the need for creators to enforce their copyrights even though the Internet makes it difficult to control or even measure the proliferation of copies of files. But at the end of the day, the suggestions about enforcement don’t carry much conviction, as if the authors aren’t really serious about it.
The whitepaper denounces “copyright trolling,” which it defines as “abus[ing] the copyright system by developing automated systems to find infringing uses and generate demand letters that skirt the edges of the law.” Yet the “reverse search” method that it advocates for usage tracking and royalty payments is really the same thing as fingerprinting, which is already in wide use today for that purpose and as “automated systems to find infringing uses.” Google’s Content ID system for YouTube is one example. Many other services exist today that use this technique particularly for copyright enforcement. And despite what the whitepaper says, only a couple of them have gained notoriety through their use of “demand letters,” while all the others don’t use them and remain unknown outside of media company legal departments.
The reality is that the most successful content services are those that have figured out the right balance of value, ease of use, and sufficiently high “speed bumps” (DRM or otherwise) for enforcing rights. The whitepaper fails to make the case that blockchain technology can change that balance. Therefore, all else being equal, it’s hard to imagine blockchain-based content services being attractive to users.
On the other hand, there are plenty of B-to-B applications where blockchain technology can make a difference by introducing standards, efficiency, transparency, precision, and accountability to processes that are currently lacking in these attributes. The enforceability of such processes derives from the fact that — in most cases — you know who the other party is, you have an agreement with them either explicitly or through statutory obligation, and you have legal recourse against that other party through that agreement.
The whitepaper describes many such cases; go read it for concise descriptions of them. Those use cases represent the value of the OMI and of several of the startups building blockchain solutions today. The time will eventually come when the media technology world will stop looking at blockchains as hammers, but the sooner it does so, the more valuable the solutions will be.