Goodbye intermediary!
The blockchain architecture will be to business what the Internet has been to information. A revolution that could make everything unrecognizable within a few years. The blockchain thing is quite complicated, but it means one simple thing: the elimination of any intermediation in commercial relationships. The blockchain has the potential to put producers in direct contact with consumers in a secure and unalterable transaction of value.
Eliminating the middleman in the world of content is the dream of Jeff Bezos and other libertarian innovators who have made Silicon Valley their home. Blockchain architecture does just that and does it well. This is why it is in the top list of the hottest and most disruptive innovations, even if, as the "Financial Times" writes:
Blockchain technology is in its infancy and the stock market infatuation with it is far removed from reality. Alex Feinberg, a technologist who left Google to pursue blockchain, wrote:
Consumers and retailers will begin to see a proliferation of services delivered without the curse (or blessing) of an intermediary. This is what's cooking.
The blockchain is a database of transactions where every new deal is added to the chain, recorded and protected with a mathematical equation. The database is distributed and then shared on a vast network of computers, called nodes, so as to make any modification of the recorded data virtually impossible for an external agent. These nodes use their computing power to intercept, verify and decrypt the latest transaction that is added as a block to the chain. This property of building a verifiable and non-modifiable public archive is the reason why this architecture has catalysed the attention of operators and the public.
Is Kodak's bet extensible?
Let's leave aside the relationship between blockchain architecture and speculation on cryptocurrencies for a moment, about which there is much to say, to focus on a possible role of this architecture in the trade of content, rights and intangible assets. Something very important for the future of the entertainment and media industry.
Something that seems to have understood one of the iconic companies of the XNUMXth century, Kodak. Kodak had become the emblem of what can happen to an incumbent when he fails to meet the challenges of innovation and technological evolution. For over a century Kodak has been the point
of reference for an entire community of creatives and artists, photographers. Today Kodak, with a surprise and in some ways amazing move, aims to appropriate them.
Kodak has in fact announced that it will open a platform - the KodakOne - based on the blockchain architecture within which photographers and agencies will be able to regulate, through a specific cryptocurrency, the KodakCoin, guaranteed by Kodak, the rights and licenses of use of their works. On KodakOne photographers will be able to register and credit their works and then offer them under license by operating, through the KodakCoin, the transaction between the artist and the buyer.
One wonders if this model, based on the architecture of the blockchain, can be extended to other media sectors such as music, books, radio where artists consider themselves beyond measure damaged by the current digital content distribution system. It certainly will be as explained in Melanie Swan's book, Blockchain, blueprint for a new economy, published by O'Reilly
Kevin Roose, the business columnist of the New York Times magazine, in his column "shift" which examines the intersection between technology, business and culture, dedicated a long article to Kodak's bet on the blockchain. We are pleased to offer our readers extensive excerpts from this interesting paper which can be read in its entirety here.
Kodak's Lazarus Effect
An eternity or two ago, Kodak was a cutting-edge technology company. He had employed the best technologists on the planet, accumulated patents, pioneered new chemical processes and finally built a huge business that in its prime employed over 145 people.
Then came digital photography to destroy everything and today Kodak is generally spoken of in the past tense. She weakened to such an extent that in 2012 she took the books to court.
Today, 130 years after its birth, it is making a sensational comeback based on the bet of cryptocurrencies. It is a courageous bet that has pleased some investors but has left others very perplexed above all for the partners that Kodak has chosen for this adventure: a paparazzi agency, a promoter of low-value shares and finally a company that offers a “magic money making machine”,
In January 2018 Kodak lent its name to a digital currency called KodakCoin which is defined as “a photocentric cryptocurrency” that offers the possibility to photographers and agencies to exercise decisive control over the management of image rights. The basic idea behind KodakCoin is to use the architecture of the blockchain to help photographers manage their portfolios by creating a digital property register that is permanent and cannot be modified from the outside. Kodak also closed a deal for a bitcoin-mining business called Kodak KashMiner, which allows users to generate their own cryptocurrency.
A blockchain for photographers
Kodak, until now, is the most important and well-known company to embark on the cryptocurrency adventure. An extremely controversial step: many observers point out that this new
Kodak's characterization is a clumsy attempt to grab money and attention by leveraging the multiplier effect of the stock value just by saying the word "blockchain".
In an interview, Jeff Clarke, chief executive of Kodak, declared with some conviction that Kodak's ambitions on the blockchain are genuine. By examining the architecture of the blockchain in depth, Clarke said he was convinced that it is able to definitively solve an endemic problem in the world of photography, that of registering the ownership of a work, tracing copyright infringements and getting paid for the its use.
We are not a dog food company that creates its own currency – said Clarke -, we offer a solution to the digital rights management that Kodak has worked around for many years.
In theory, photographers will be able to upload their work to the KodakOne platform, create a blockchain-based licensing system for each work, and use web scanning software to catch copyright infringements. Instead of dollars, customers will be able to pay in KodakCoin, a cryptocurrency specially created and guaranteed by Kodak.
One immediately wonders if photographers will be willing to be paid with a cryptocurrency rather than dollars. It is known that the conversion of cryptocurrencies into current currency is not exactly a walk in the park. When asked about this point, KodakCoin technologists were rather vague and the 40-page white paper released by Kodak to describe the details of the operation is rather vague on the matter.
The unlikely partners of the Kodak project
Let's not be wrong. Digital rights management is a real problem for photographers, and blockchain can theoretically offer an important solution. But KodakCoin specific attributes have some red flags. Which primarily concern his partners.
First: despite its name, KodakOne is not actually a Kodak project. The firm behind the project is Wenn Digital, a California firm affiliated with a UK photo agency that specializes in licensing paparazzi shots.
Second flag: Kodak's chief adviser, Cameron Chell, Canadian entrepreneur and motivational speaker, had some problems with Canadian justice in 1998 which Chell attributes to his inexperience and young age. Chell later repositioned himself as a cryptocurrency expert. Today he is president of Appcoin Innovations, registered as a literary agency — Redstone Literary Agents — until last year when it transformed into a consulting firm for companies that want to develop and integrate blockchain architectures and cryptocurrencies into their business. Appcoin is now traded on the penny stock market (remember Wolf of Wall Street?). Appcoin Innovations will receive 20% of all KodakCoins issued and a share of the proceeds of the $20 million public offering which, if successful, will bring several million into its coffers.
KodakCoins, a currency not for everyone
Let's turn to KodakCoins now. One would think that a currency that proposes "to democratize the photography environment" is easily accessible. But is not so. Due to regulatory requirements under US law, KodakCoins will only be available to so-called accredited investors. An accredited investor is defined as having a net worth of $200 million or more or annual income in excess of $XNUMX. How many millionaire cryptocurrency shot photographers do you know?
Even if the category of photographers managed to fall within these parameters, creatives would have a lot of problems spending KodakCoins or converting them into cash. The SEC issued a notice advising that securities sold in private offerings, such as KodakCoins, are difficult to resell and investors may be required to hold them "indefinitely." A Kodak representative assured me that its tokens will eventually be freely distributable and that in the future Kodak will be able to issue other types of tokens that are not subject to any convertibility restrictions.
The White Paper says that bearers of KodakCoin tokens will be able to receive additional benefits such as access to a market place to purchase equipment. They will also be able to hire studios for photo shoots or pay for travel. These perks may have trouble materializing though.
A magical slot machine?
Cryptocurrency experts aren't even very impressed with the Kodak KashMiner, a bitcoin mining device unveiled at the CES electronics trade show in Las Vegas. According to the KashMiner ad, users will have to pay $3400 to rent the device that solves complex mathematical equations for two years to activate new bitcoins. Half of the bitcoins obtained from mining, carried out with the Kodak KashMiner, will go to Spotlite, the company that has licensed the Kodak name. The other half will remain with the "miner".
Kodak hasn't divulged many details about its KashMiner, other than calling it a "magic money-making machine." The device, however, will not be easy to sell. In its CES advertisement, Kodak estimates that each miner who leases the engine for two years can earn up to $9 in revenue. However, experts consider this forecast highly inflated. Bitcoin mining is getting more and more complex and the Kodak KashMiner is a recycled version of the popular bitcoin mining engine that can be purchased for half the rental cost from Kodak.
Is Kodak really a magical money-making machine?
