PUBLISHED NOVEMBER/DECEMBER 2018
by Deb Vanasse, Reporter, IBPA Independent magazine —
Blockchain technology is new, and many are predicting that it will bring genuine disruption to the publishing industry in the coming years.
Proponents liken the emergence of blockchain to the advent of the public internet, creating a new paradigm for doing business. No longer would we rely on humans to manage assets and people; computer code would do the work. Operations would be streamlined. Content creators could connect directly with consumers.
Then again, blockchain could be like the advent of e-books, bringing change but not outright revolution.
Before publishers weigh in, they’d do well to learn more about blockchain’s potential benefits and shortcomings—and the odds that it will be more than a blip in the news cycle.
The traditional marketplace relies on intermediaries to facilitate the exchange of assets. Blockchain facilitates such transfers without an intermediary, relying instead on a date-stamped series of digital records secured by peer-to-peer efforts. Blockchain transactions are open, visible, verifiable, and unalterable.
Bill Rosenblatt, founder of GiantSteps Media Technology Strategies, identifies several potential blockchain applications in publishing: print supply management, royalties, licensing, piracy tracking, and e-book ownership transfers.
“I’d say if any of those application areas takes off, it would be supply chain first,” Rosenblatt says. “Probably the biggest advantage is that multiple companies that participate in a supply chain can deposit data on an ownerless blockchain, which would replace monolithic databases that are owned and operated by single entities. This would save some participants on operating costs and make it so that a single company no longer controls all that information.”
Despite scalability challenges, large industries such as transportation logistics are already looking seriously at blockchain technology for supply chain management, Rosenblatt says. As was the case with previous iterations of supply chain management systems, such as Electronic Data Interchange (EDI), he expects book publishing will eventually follow suit.
Publishers could also use blockchain to process transactions that involve multiple royalty streams. At the point of purchase, a transaction record deposited on a blockchain would trigger payments to every rights holder. “I could especially see this being relevant in higher ed, where each title purchase could potentially have thousands of rights transactions that need to be initiated,” Rosenblatt explains.
For management of rights, IPR License is discussing ways to leverage blockchain as a means of alleviating what development director Thomas Cox calls “a very fragmented approach to storing and sharing” licensing information. “If there existed a trusted distributed ledger for publishing rights, we believe it would lower the bar to work with this data, and a new ecosystem of applications would be created to expand this market and increase the global trade of book rights,” he says.
By creating permanent records of ownership, blockchain could also deter e-book piracy. In the traditional model, purchasers don’t acquire actual ownership of e-books, Rosenblatt explains. Instead, they acquire a license to use the digital property in certain ways. The rights granted don’t include sharing the file indiscriminately, but that hasn’t stopped e-pirates. Within blockchain, an e-book transaction more closely approximates ownership. The blockchain ledger records every transfer, precluding anonymous uploads and downloads of a purchased book.
As Cox points out, it remains to be seen who’d build these publishing-specific blockchain solutions. Publishers might create their own models, or they might rely on startups or big-tech companies such as Amazon and Google to lead the way.
Aside from its potential for streamlining and safeguarding industry functions, blockchain also offers new ways to publish and market intellectual property. “We call it Books Without Borders and Publish Your Way,” says Josef Marc, CEO of Publica, a blockchain-powered publishing platform.
Launched with crowdfunding in November 2017, Publica offers author-publishers a means of gathering fans and crowdfunding expenses through a Book ICO. Like an initial public offering (IPO), an ICO facilitates investment in a new currency, or token, that can be traded via blockchain.
Publica’s first Book ICO, for The Backpacker’s Guide to Europe by Matthew Kepnes, was completed in June 2018, with 1,000 book tokens sold. Purchased for $10 USD each, a token serves as a cryptographic access key to the book’s file, which is ownable and readable on blockchain via the Publica app.
Publica doesn’t vet manuscripts. “Where shelf space is infinite and global, Publica lets the larger online public decide for themselves,” Marc says. Nor does Publica demand exclusive rights to a project. Creators keep 90 percent of their Book ICO proceeds; Publica keeps 10 percent. Using a “smart contract” created on blockchain, revenues are shared instantly with all parties entitled to royalties.
Transparency distinguishes a Publica Book ICO from the typical crowdfunded project. “Emails gathered in your Book ICO are given to you because they’re your customers, not Publica’s,” Marc explains. “If you’re not ready to put up your own online store and website for your book, the [Publica] links are your store.”
Transparency is also among the reasons Little Pickle Press publisher Rana DiOrio cites for her new venture in blockchain technology. “Blockchain is a vehicle to ensure the accuracy and fairness of transactions through triple ledger accounting that is blind, meaning transacting parties don’t know the race, creed, color, or gender of the other parties,” she explains.
DiOrio recently co-founded Creative Mint, a blockchain infrastructure company that will partner with publishers. “We are building a platform to accelerate the growth of socially conscious brand ecosystems using our proprietary online marketplace to democratize and decentralize creative intellectual property rights transactions,” she explains.
Like Publica, Creative Mint will issue tokens through ICOs, but with a focus on the children’s media market. With these revenues, DiOrio intends to facilitate partnerships between content creators and publishers, producers, merchandisers, and app developers. “Token holders will share in the royalties and revenue derived from the entire brand ecosystem we build with and for the creatives,” she says.
As these projects illustrate, blockchain has the potential to change but not eliminate a publisher’s function. Rosenblatt likens this to what happened with the internet. “Back in the late 1990s, during the first internet bubble, they were all saying that the web would demolish all the intermediaries,” he explains. “It would connect creators directly with their audiences, and we wouldn’t need publishers anymore. That just didn’t happen.”
As is often the case with new technologies, blockchain naysayers will find ample reason to take a cautious stance. “It is likely that there will start to be more bad press around [blockchain] technology as investors are burned, startups go out of business, or new hacks are exposed,” says Cox. “I believe there are enough real-world applications for this not to stop progress, but it could certainly slow down adoption and decrease the possibility of new and exciting ideas getting funded.”
With any technology, security is a concern. A few infamous blockchain hacks have already occurred. But as vulnerabilities are exposed, the blockchain community responds with improvements. “Security is at the core of blockchain network design,” Cox says. “I certainly don’t see it as any less secure than the current systems.”
Another problem: blockchain isn’t yet as scalable as it needs to be. “Cryptocurrency blockchains like Bitcoin can only handle a few transactions per second,” Rosenblatt says. “More processing power and network bandwidth will increase efficiency, but then at the same time, blockchains will become bigger, requiring more processing power and bandwidth. So we aren’t sure how quickly scalability will improve. It really depends on the application, the number of adopters, and the amount of data.”
Then, too, there’s the question of whether investment in blockchain will yield meaningful returns. “This is normal for a new, raw technology,” Rosenblatt says. “The business cases and applications have to be identified and built before the technology can go mainstream, and we’re not there yet.”
In the meantime, Rosenblatt advises publishers to stay informed and engaged. “Learn about the technology, and don’t localize that knowledge to one or two people in the IT department,” he says. “Spread it around the organization. Get people thinking about how it could impact your business. Join industry forums like the Book Industry Study Group (BISG) where we talk about these things. Contribute to the dialogue and ask lots of questions. It takes extra effort to learn enough about the field to be able to tell the reality apart from the nonsense, but it’s worth it in the long run.”
The Future Awaits
Will blockchain go the way of the eight-track tape, an innovation that’s set aside before it ever really takes hold? Unlikely, experts say.
“I’ve heard many publishing people simply dismiss blockchain as the shiny new thing in the corner, the latest techno fad that will just blow away if we wait long enough, a solution in search of a problem,” Rosenblatt says. “This is an unfortunately typical attitude in book publishing toward new technologies. Sometimes it’s justified, but here I think it’s not. I think the ignore-until-it-goes-away attitude is extremely unwise.”
Marc concurs. “I have been involved in information technology and the publishing industry since before the internet, and I’ve not seen this level of interest, energy, talent, money, and, yes, hype go into any technology since the advent of the commercial internet itself in the late 1990s. This is not a techno buzzword that will fade away by next year. Blockchain technology is here to stay.”
Cox predicts blockchain will bring genuine disruption to publishing within four to eight years. “Blockchain will be used to establish content ownership from the author all the way through to the end consumer,” he says. “When combined with smart contracts, this has the potential to revolutionize many of the traditional functions provided by publishers. We would be moving from a reasonably closed system into one that provides transparency.”
Poised to engage, publishers will reap the benefits. The future may be closer than we think.
Co-founder of 49 Writers and founder of the author co-op Running Fox Books, Deb Vanasse is the author of 17 books. Among her most recent are the novel Cold Spell and a biography, Wealth Woman: Kate Carmack and the Klondike Race for Gold. She also works as a freelance editor.
To learn about the future of publishing, check out this IBPA Independent article, “5 Digital Publishing Trends You Should Be Watching.“