Bloomen Newsletter #1: Updates from the Intersection of Blockchain Technology and Media

Feb. 22, 2019 • Issue #1
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Why this newsletter? The use of blockchain technology might be something you see in your the future.

  • We believe that this technology can be utilized in the sense of “transaction databases”, which could then lead to new models for content. Trackable, but private. Information-rich, but decentralized.
  • There is considerable innovation potential, although it is early and not clear which technology and model will win.
  • We focus on music, photos and videos with our research, asking questions how to handle, process, mana creative work better.

This newsletter reaches out to everyone who wants to stay informed in how this area develops, without too much of a time investment. What you get: Short updates, quick to read, relevant links.

Let’s stick to the promise of being short and jump right into the topics of this first edition of the newsletter.

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Word of the week: Techlash

“Techlash”, a wordplay based on”backslash”, used to describe the many activities, initiatives, regulations etc. to somehow grapple with the power of big digital platforms. Good description via Axios: “In the U.S. and Europe, Big Tech is under fire — hit with big fines and the threat of stiff regulation — for failing to thwart the profound consequences of its inventions, including distorted elections, divided societies, invaded privacy, and sometimes deadly violence.”

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Big Topic

What is the most important this week?

EU Copyright Update: A boost for blockchain technology?

Ok, why start with easy news. Here is one of the most complex debates these weeks: Copyright for digital assets.

  • Background: Digital usage of copyrighted material is a battleground. The rules and the laws which govern this field need an update.
  • EU Digital Single Market Copyright: Since February 13, 2019, there is now a proposed and agreed new copyright which only has to be passed by the EU Parliament to become effective.
  • The suggested new rules caused an uproar, across all kinds of groups affected. At the core there is disagreement and disbelief that the proposed changes will ultimately achieve what they are designed for: Better, more fair regulation of how content is used and how the owners of content are compensated.

Two articles of the new copyright are at the center of a partially desperate, partially bitter and angry debate.

  • Article 13 which is thought to initiate “upload filters” on big digital platforms.
    • The future rule is that platforms need to ensure that no copyrighted material is uploaded. This targets specifically the market leaders, mostly from the US.
    • So far, owners of content would have to actively contact those platforms and demand a take down. In the future it will be the obligation of the platforms to check before anybody uploads anything. Now many fear that the upload filters will heavily affect the exchange of ideas, block content by using algorithms which are expected to be error-prone and resulting in unwanted blocking of relevant content.
  • Article 11, commonly called the “link tax”.
    • In the future, even tiny bits of an article published by someone else will have to be licensed, which might even apply to a “talking URL” where words from the headline/article are used.
As said, it is a far ranging and highly complex debate. And as of now it looks like the plans will become official very soon. The only option for last second changes might be protests and a re-consideration in the EU Parliament, which is not very likely.
  • Boost for blockchain? The need to document the source, the rights, the usage of creative content might result in rising interest of blockchain technologies. It’s a bit early and risky to claim that blockchain might be of help here, but think of blockchain hashes as something equivalent to RFID tags in the internet of things.

The challenge, of course is, that here is currently not one blockchain application tested and prepared to track every piece of content. But, that is the main suggestion, with the new EU copyright rules that might change.

Links:
Directive on Copyright in the Digital Single Market (Wikipedia), EU Commission, Julia Reda (Shadow Rapporteur)

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Blockchain, etc.

Brief pointers to platforms, ideas & issues

Facebook working on Facecoin?

  • The idea that blockchain could become mainstream in the near future because of the challenges created by tech platforms becoming so big is not so far fetched.
  • But: It could be the tech giants who use blockchain, for identification, for interactions, etc. This could equally solve a lot of problems as well as creating new problems, such as an even tighter tracking of every digital move.
  • Facebook founder and CEO Mark Zuckerberg fueled such speculation by publishing an interview of himself with a Harvard Professor. The interview got mixed reactions, some users fearing even more data being collected about them. Links: Daily HODL  Zuckerberg Interview on Facebook 

Not unhackable

Exchanges experience hacks of blockchains, which were designed to be well protected against such manipulation. With more and more value stored in cryptocurrencies there are incentives to find the security holes.

  • In early 2019 security teams at Coinbase observed that an outside attacker had gained control of a blockchain underlying Ethereum classic who now re-wrote the transaction history. This in turn made it possible to spend the cryptocurrency recorded, again, which is known as a “double spend”.
  • Quote: “In total, hackers have stolen nearly $2 billion worth of cryptocurrency since the beginning of 2017, mostly from exchanges, and that’s just what has been revealed publicly. These are not just opportunistic lone attackers, either. Sophisticated cybercrime organizations are now doing it too: analytics firm Chainalysis recently said that just two groups, both of which are apparently still active, may have stolen a combined $1 billion from exchanges.” Link: TechnologyReview 

Video, blockchained

Linius Technologies reports that it successfully tested a virtualized video blockchain. In an explainer video Linius CEO Chris Richardson says: “The issue with audio, video and even pictures – all these large digital assets – is that they can not be stored inside the blockchain, they are just really to big”.

Specifically, the company claims to have found a solution for “video virtualization” where each video file is analyzed, in order to store specific information about that video in a blockchain and then be able to enable a complete user-and-file interaction history. The approach could help to fight piracy of TV and film assets.
Link: Linius

National blockchains in Germany, Spain

Logo of Spanish national blockchain project, Alastria

Reaching out to blockchain experts: The German government has started a consultation process with start-ups and a “raft of industries” such as car manufacturing, pharmaceuticals, energy and others about blockchain. The hope is to find a common concept introduce blockchain technologies for use in the mass market. In Spain a pan-industry group called Alastria, presented as a “national blockchain ecosystem”  is already active. Links: Reuters Alastria

Analytics for Cryptocurrencies

Coinbase, one of the leading exchanges for cryptocurrencies, has achqired a start-up called Neutrino. The company has developed a platform to track and analyze the flow of cryptocurrencies, of which there are currently quite a few. The idea is to provide “actionable insights on the whole cryptocurrency ecosystem”. Coinbase wants to gain better market overview and hopes to use the platform to identity malicious activities, such as theft, etc. No financial terms were made public.
Neutrino Coinbase 

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Media etc.

Updates from the world of communication, media and creativity.

  • Some market bits, all from the US. It is always a bit risky to think that a development in one market might affect another. In this particular area though the dominance of US platforms in digital communication justifies to look at the US market for guidance: Trends there are usually visible a bit earlier than elsewhere. And of course we always need to analyze whether they have an effect on Europe and to what extent.
  • Summary of current outlook: Rainy, with rays of sunshine for some. The US media media market has two sides: Very negative for traditional media companies, quite good for very few, market leading “winners”.

US: More than 2000 lost media jobs 

The year 2019 has started with major  layoffs for journalism and media workers in the US. The surprise here: That not only traditional newspapers but relatively new, digital companies would let people go after recent years of optimistic investment. Many had thought (or: hoped) the latter would find sustainable business models for digital news.

  • BuzzFeed let go of 200 people in early February
  • Vice Media laid off 250 employees
  • Verizon, owner of Huffington Post, Yahoo and AOL, announced a reduction of 7% of its staff earlier this year
  • Newspaper group McClatchy negotiated buyouts with 450 employees
  • Gannett, an other big newspaper company shed 400 jobs

One billion to save local newsrooms

As more and more towns and rural regions in the US face a situation where no daily newspaper reports about local news, around one billion dollar of donations from various sources have been pledged. This sizeable amount will be used to find a solution or help the existing offerings. Quote from Axios: “Despite valiant efforts, there’s still no real business model for local news to continue to operate in the way it has been for decades”.

  • Google and Facebook have pledged 300 Million US-Dollars each.
  • The Knight Foundation said that it wants to commit 300 Million US-Dollars, more than double the amount available so far.
  • Other funds come from a number of smaller groups or organisations.

Digital advertising spending reaches milestone

eMarketer predicts that in 2019, for the first time, the amount of advertising dollars for digital will surpass the budgets for traditional advertising.  And, in four years they expect the 75 percent of all ad spending.

  • Key numbers: Total digital ad spending is set to increase to 129 billion US-Dollars, that would be 54,2% of all ad spending. Most of digital goes to mobile (87 Billion US-Dollars).
  • Then, why are the newsrooms in trouble? Simple: Almost 70% of that money goes to just three big companies: Google (38,2% of all digital ad revenue), Facebook (21.8%) and fast growing Amazon with an estimated 8.8% in 2019.Link: eMarketer

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Next issue coming in two weeks. See you then!