Media’s future on the Ethereum blockchain

The road ahead (hopefully you encounter cute puppies along the way, too)

Those of us in the media space know that independent publishers are in financial trouble. I understand their plight well; I was formerly the Chief Operating Officer at Mashable.

I recently joined ConsenSys as the Media Circle Global Lead. I’ll be working with technologists and entrepreneurs as they develop the infrastructure, applications, and processes of the Ethereum blockchain. I’ll be building financial business plans, securing strategic partnerships, and raising capital for the handful of media “spokes” (aka start-ups) in the ConsenSys “mesh.”

So, about those independent media company financial woes…

Most new media companies of the past decade gained their onsite audiences through referrals from social media platforms. On top of these platforms, exclusive, premium, video-based content emerged, including Facebook Watch, Snapchat Discover, and YouTube. Platforms sold ads against that bespoke content in their walled gardens of data, growing to become powerful intermediaries standing in between creators and consumers. Moreover, publishers received only a small percentage of that revenue and additionally lost control of a significant portion of their distribution. Today, audiences divide their content-consuming time between publisher websites and social media platforms. What has that led to? A world with more content and more expensive content — and less revenue for it.

For the onsite traffic over which publishers maintained control, the overall advertising and licensing ecosystem grew complex and inefficient. The number of third parties in the ad tech stack currently needed to place, price, verify, reconcile, and pay for an ad is mind-blowing. And those ad-stack companies all get their cut by being in the middle, just like the social platforms. Same for licensing: publishers still rely on agents to manage and police the use of their content. And it hasn’t just been rough for publishers; advertisers are losing out too. Bots and scammers with empty content pages have been loading up programmatic ads that no human ever sees. Juniper Research estimates that advertisers will lose $19 billion to ad fraud in 2018.

So how does blockchain solve any of this?

Blockchain technology will revolutionize the media industry by facilitating a peer-to-peer exchange of value. Instead of going through platform intermediaries, “transactions” (of data, time, attention, etc.) can now occur directly between content creators and those consumers who support or sponsor them. Critically, this interaction can maintain the data richness, network reach, and discovery potential of today’s networks and exchanges. But why the Ethereum blockchain in particular? This P2P interaction will be facilitated by smart contracts, a core component and functionality of Ethereum. The unique smart contract programmability of Ethereum, combined with the fundamentals of blockchain technology (decentralized, immutable, trustless, and secure transactions) empowers a scalable P2P network as has never previously been possible. Third party platforms, exchanges, and agents will no longer take revenue or control the distribution of content created by others.

On a blockchain-based system, advertisers will place and pay for ads directly with publishers with the same reach and targeting of platforms, networks, and exchanges. Likewise, articles or images can be directly licensed from journalists using smart contracts, not agents. Collaborators who create Intellectual Property directly benefit from their work by not handing it over to a corporation.

Media platforms and exchanges built on blockchain will make money by providing SaaS enterprise solutions to publishers — not through revenue shares. They also gain value by participating in the new economies they help create through the minting of tokens. Tokens act as an exchange of value in the economy run on a particular blockchain platform. By holding tokens themselves, these blockchain platforms have a vested self-interest in seeing those economies thrive. Distribution and discovery rise up from users curating and “voting” through the use of tokens as well. (More on token economies and their utility below).

Meet the media spokes at ConsenSys working on peer-to-peer exchanges of value:

Civil is a platform that provides journalists and content creators the tools to publish on blockchain. Their mission is to make quality journalism sustainable through those tools. They are a remarkably dynamic team of innovators and media industry experts that have built the blockchain infrastructure to:

1) License content between creator and buyer (along with the just-announced Associated Press (the AP) partnership).

2) Establish the provenance and immutability of an article. Right of ownership can never be erased or censored.

3) Allow readers to self-govern newsrooms, uphold reporting standards, and financially support journalists through a token curated registry and the utility token CVL launching on September 18th.

There’s a lot to take in about how utility tokens work, including discovery and distribution, mentioned above. Check out Why Join The Civil Economy by Matthew Iles, Civil co-founder and CEO for a great introduction. Civil has already established its first wave of newsrooms, including the former Denver Post team, to be sustained on this platform.

Ad Chain uses token curated registries to eliminate fraud, reconciliation discrepancies, and human hours by whitelisting publishers and quality, verified advertisers. Advertisers pay publishers directly to run their campaigns with the same targeted, real-time bidding process, but without the risk of fraud, waste of reconciliation time, or syphoning of value to 3rd parties. This will take some time, but significant ad-tech players (including agencies) are working on similar blockchain solutions with funding by venture and strategic capital.

Cellarius is an original franchise that leverages user-generated assets to create a collaborative, fan-curated story. Direct exchange of value exists between fans who create and support IP into a storyline and the entertainment studios who produce and distribute those stories. Think of it like this: everyone who collaborated in making Star Wars over the past +40 years got the profits for the movies, TV shows, and merchandise versus an owner or smaller group of shareholders.

Ujo provides artists — initially musicians — with a platform for licensing rights, royalty payment, and purchasing of music directly. The Creator’s Portal is live: you can buy or stream music, badges, and tip — 100% of the value goes to the artist. Artists can upload their music and set a price for which they feel it’s fair.

Without a doubt, it’s only Monday morning when it comes to how blockchain will help solve the media’s business model challenges. Actually, it’s probably not even Monday morning; more like we just got our coffee and are walking into work. But I couldn’t have been more excited walking into the ConsenSys office in Brooklyn last week to start my new job knowing what we are creating and what we are changing.

Me, heading up to that road ahead, from Grand Central Station in NYC.

We are building media’s future. The process, infrastructure, and tools are forming now. Ping me at michael.kriak@consensys.net to chat. I want to hear and learn from you.

And if you haven’t checked in on what ConsenSys is up to, you should; it’s now more than 1,000 people working on +50 start-ups in 30 countries developing decentralized applications (dapps) on Ethereum for a range of industries such as supply chain, energy, healthcare, financial markets, law, accounting and, of course, media.