The Blockchain Ecosystem: How to Decipher the “Innovations”
Though blockchain technology began as a digital-currency tool in the financial sector, companies are now trying to use its capability as a decentralized and secure ledger to manage digital assets. Startups are attempting to innovate blockchain-based business models in various sectors, such as health care, telecommunications, retail, aviation, real estate, energy, and supply-chain management. There hasn’t been any significant impact on the respective markets yet in terms of revenue and market share. However, managers and investors expect future returns to be high, considering the flow of money into blockchain startups.
In particular, several new business models are coming up in the media and entertainment sector, where monetizing value is a huge challenge. Newspapers and magazines still struggle to monetize value due to free content and insufficient mechanisms for protecting intellectual property. Advertising revenue has shifted to social media platforms, and media organizations must figure out how to compensate. Some experts think blockchain may increase the revenue of content creators as well as producers through new mechanisms for monetization.
Blockchain-Enabled Business Models
By leveraging blockchain applications such as smart property, micropayments, and smart contracts, companies are building innovative business models that offer new monetization strategies for their digital assets. They can also streamline critical business activities such as revenue distribution across the value chain and relationships with business partners. The five major business model innovations currently are:
Monetizing content for both creators and curators
The first new business model involves creating a social network in which users can earn financial rewards (in the form of micropayments or payments of digital currency) by posting their content or promoting others’ posts. This model compensates independent content creators and consumers for their contributions rather than allowing the platform owners to reap all the monetary benefits. For example, Steemit, a blockchain-based social network, rewards content creators with a digital currency, Steem, based on the popularity of their posts.
Building a one-stop content shop
The second new business model aims at simplifying the value chain by decreasing or eliminating intermediaries between users who create content and the ones who consume it. It relies heavily on cryptocurrency and blockchain-based applications such as smart contracts and smart property to facilitate direct transactions between creators and consumers. One company that uses this model is SingularDTV, which allows video and film producers to launch, distribute, and monetize content without the usual intervention from studios or production houses and without exclusivity agreements with distribution channels.
Protecting intellectual property
This business model uses blockchain smart property and time-stamping applications and helps artists to protect, manage, and share the rights of their digital works. For example, a startup called Binded allows photographers to list unique images in a blockchain as proof of copyright ownership. Artists receive a copyright certificate that can prevent unauthorized use of the images on the web.
Digitizing the music value chain
The primary goal of this business model is to optimize the process of distributing music revenue across the parties in the value chain so that companies can become more agile and reduce their costs. For example, Dot Blockchain Media works with artists, distributors, record labels, aggregators, and performing rights organizations to build a standardized blockchain-driven database for music rights to be used industrywide. Distributors, aggregators, and performing rights organizations could use the database to optimize their processes and reduce internal costs, and rights owners could receive payments faster.
Playing and trading
This business model allows assets registered in a blockchain to be sold or traded in other environments. EverdreamSoft, a Swiss game developer, offers a game in which people buy cards that are used to play. What distinguishes it from other games is that the cards are registered in a public blockchain and can be sold or traded outside the game through digital currency.