The Potential of Smart Contracts in the Entertainment Industry
The entertainment business is poised to be turned upside down by a tech revolution, and smart contracts will lead the charge by eliminating unnecessary go-betweens and allowing transactions to be sealed more quickly and fairly. In this article, we will examine how smart contracts can transform the way industry does business, from the creation of music and movies, to intellectual property and contracts.
Revolutionizing Rights Management and Royalty Distribution
Smart contracts offer a precise solution to the monumental task of rights management and royalty distribution in entertainment, which is currently reliant on old-style paper contracts with multiple intermediaries recording each step (and the consequent delays and confusion over where payments are due). With smart contracts, royalties can be automatically paid to artists and creators as the contract specifies – in a timely and correct way. What’s more, by logging rights into a blockchain, whenever someone plays a song or downloads a movie, the relevant parties are automatically paid the royalty owed them – reducing the scope for arguments and greatly increasing transparency.
Facilitating Transparent Collaboration
Highly collaborative work is a fact of life in the film and music production industries, and deals are complex: sometimes all parties have equity, sometimes a salary, sometimes profits are shared one way or another. Smart contracts might reduce the friction of these deals, because the terms would be clear and unalterable from the start. When a project reaches a certain revenue threshold or hits a certain milestone, the contract automatically sends payments out to all participants according to the terms agreed upon in advance. Not only would this speed up payments, but it would also help build trust: artists and producers who work together regardless of the final outcome of a project are likely to let each other take more risks, and so increase the potential for a richer, fuller collaboration.
Enhancing Fan Engagement and Merchandising
smart contracts offer opportunities to create new forms of fan interaction and merchandising strategies When it comes to fan interaction and merchandising, smart contracts offer opportunities to create new forms of fan interaction and merchandising strategies. For instance, artists could issue blockchain-based tickets and merchandise, which can be ‘programmed’ to give buyers specific perks, such as backstage passes or exclusive content. This helps to prevent counterfeit merchandise, but it also establishes a direct relationship between the artist and the fan. Through a decentralised voting process, fans could potentially even affect some decisions concerning the creation of content on artists’ behalf, thus incentivising interaction and loyalty.
Streamlining Production and Financing
Producing an entertainment project – be it a movie, a video game, a music album – entails a multilayered process of financing and administration. Contracts that automate the funding release after project milestones could greatly facilitate the process and mitigate financial risks and administrative burdens. Finally, the transparency of the blockchain will allow the investors to monitor in real time the use of their contributions and to thereby enhance the accountability and trust.
Challenges and Considerations
The move presents obstacles – from tackling issues around data privacy to digital exclusion, and a comingling of cultures that don’t fit together perfectly, and even in the most ideal circumstances, a need for standardisation. There’s also the need to ensure, in a scenario where smart contracts are immutable once deployed, that the terms of agreement are correct and equitable before execution.
But to wrap up, it’s clear that smart contracts have the potential to transform the entertainment industry, solving rights-management inefficiencies, collaborative problems with decentralised data and computation, providing new means of fan interaction, and reducing inefficiencies across the entire production pipeline. There are signs that, as the industry evolves, it is beginning to embrace these technologies that could well provide the answer to many of its long-standing problems, creating an environment that’s more efficient and equitable for content creators and consumers alike.
