In the 1980s, well before Tim Berners-Lee created the World Wide Web (the dominant “Internet” of today), a visionary tech guru named Ted Nelson came close to developing a computer network that was in many ways superior to the Web. This computer network was called Project Xanadu.
In Nelson’s eyes, Berners-Lee’s Web was the antithesis of what they were trying to avoid at Xanadu. He famously said the Web “is precisely what we were trying to prevent – ever-breaking links, links going outward only, quotes you can’t follow to their origins, no version management, no rights management.”
If Xanadu had won, then the Web would have no failed links (“404” errors), no malware or phishing, and a working and smooth micro-payment system. But Xanadu didn’t win, and instead we have a Web with failed links, phishing, and no micro-payments.
Hold that thought. We will come back to micro-payments later.
The splintering of the Web
Meanwhile, like Xanadu, alternate online experiences to the Web are emerging; there is the deep Web accessible via TOR and the mobile Internet of apps such as Uber or Whatsapp, which cannot be experienced on the PC. What we are seeing is a splintering of the Internet, which was synonymous with the Web, into many Internets, each with its own protocols and advantages.
Each splinter from the deep Web to the mobile Web (i.e. apps) brings with it a distinct set of opportunities for media companies. Playing successfully, or even just participating, will demand a deep understanding of the medium and adapting your brand to play in that sphere.
From a meta perspective, we can look at the Web as a consumption Web, aided through the HTML layer enabling easy linking to content, as contrasted with a transaction Internet. Allow me to clarify this: The Web as originally intended was not built for transactions, as you can see in the security elements tacked on (128-bit, SSL, HTTPS, etc.).
When we look at the mobile Web (apps) and, more importantly, the blockchain, we see an internet built for transactions. In that sense, we can look at the newer Web as transaction Webs – built primarily for transactions and exchange than for consumption of media.
Naturally, the dominant brands that have emerged for the transaction Web are transaction platforms of the likes of Uber and Airbnb. Even if we take the deep Web, the most storied brand was the online marketplace Silk Road.
And, even with the blockchain, excitement really revolves around the possibility of lower-cost transactions via disintermediation, smart contracts, etc., and not around new ways of presenting or consuming content.
For media brands, this isn’t very good news. The Web is terrific for sharing and consuming content. But it wasn’t built for transactions, hence the struggle media companies have had in monetising content. Devices such as the paywall are inefficient mechanisms super-imposed on a protocol layer built to enhance sharing and not drive transactions.
Let us take one of these Internets or splinters – the blockchain – and understand what opportunities they present for media companies.
The blockchain is best understood as “a giant continually expanding, public ledger, that for now keeps track of who owns bitcoin. In addition the blockchain also tracks all the transactions that have occurred since inception.” Bitcoins are thus nothing but slots on the blockchain ledger.
If you recall, initially excitement revolved around the bitcoin, the crypto-currency that was all set to become an alternate currency independent of any central bank’s control. Today computer scientists and thinkers are beginning to get excited instead about the bitcoin’s underlying account book, the blockchain.
The brilliance of the blockchain lies in the fact that it obviates the need for a central arbiter, such as a bank to verify a transaction. Instead, many computers can participate in verifying the transaction. This has several benefits, not the least of which is the potential for reducing transaction costs considerably.
Naturally the sector that is most excited about blockchains is the financial sector. It sees the high fees charged by intermediaries like banks, credit cards, and brokerage houses — essentially for verification — as an unnecessary leech on businesses worldwide. It sees the potential for disruption, and it wouldn’t be wrong.
But what about the media sector? What could the blockchain hold for it?
The blockchain and the media sector
Broadly, we can see three possibilities:
1. Micro-payments: This is perhaps the most obvious one. One hurdle blocking the payment for content – say, for example, paying two cents for a story – is, as Marc Andreessen says, “not cost effective to run small payments (think US$1 and below, down to pennies or fractions of a penny) through the existing credit/debit and banking systems. The fee structure of those systems makes that nonviable.”
Apple got away with charging US$.099 for a song because, as a mega-volume player, it struck sweetheart deals with the payment networks. Now, thanks to bitcoin, with “its ability to go to as many as eight decimal points after the dot” you can charge customers prices below US$1.
Marc Andreessen elaborates: “One reason media businesses such as newspapers struggle to charge for content is because they need to charge either all (pay the entire subscription fee for all the content) or nothing (which then results in all those terrible banner ads everywhere on the Web).
“All of the sudden, with bitcoin, there is an economically viable way to charge arbitrarily small amounts of money per article, or per section, or per hour, or per video play, or per archive access, or per news alert.” (All quotations are from Marc Andreessen’s essay in The New York Times, titled Why Bitcoin Matters.)
If micro-payments take off, then we can begin to see interesting possibilities. Media companies may start paying commenters for their input. Imagine a comment post that passes a certain number of up-votes receiving a tiny fee. Powerful celebrities retweeting a brand’s promotion tweets may receive a fee linked to the number of people reached. Early users of a network helping the network become attractive to new users could be rewarded, thereby encouraging newer users to join in.
Some of the companies playing in this space include BitWall (which has helped Chicago Sun-Times offer a bitcoin-linked paywall), Coinbase, and Ripple Labs.
2. Programming content: The Design Agency IDEO raises the possibility of “digital-first editions” (an oxymoron in the traditional Web) in its take on the bitcoin and the new experiences that could emerge.
IDEO says: “The digital world makes it dead simple to copy and spread assets (e.g., music, videos, documents). Blockchains create a secure way for creators to register origin of work, set sharing permissions, and structure the means of exchange that they’re willing to accept (payments, trade, or otherwise).”
What if a writer programmes the ability for only 1,000 people to read a story, with the price for reading it increasing by one cent with each additional reader? Alternately, what if the writer of a story was willing to share a certain amount of royalty with fans who were willing to annotate and enrich the story with context, background, and trivia?
Today the mechanisms to enable the above all involve significant programming effort and friction. But in the future, a content blockchain can remove friction and make consumption, paying, and revenue-sharing all happen in the background – just the way the phone co-charges us for minutes spent in conversation.
There is an awful amount of complexity in how the networks settle with each other, but thankfully we don’t have to know all that. This is exactly how the content blockchain could work.
3. Re-thinking the advertisement: Historically, marketers have paid media companies to deliver audiences. What if the blockchain allowed them to bypass media companies and pay consumers to generate trials?
Akin to a Kickstarter campaign but in reverse, companies or brands would pay early adopters or give them shares in the company. The brands that would do this would not be start-ups as much as large companies launching new brands or testing variants of their popular brands.
If a sufficient number of companies did this, then consumers would start flocking to the companies’ Web sites, bypassing media companies entirely. For media companies dependent upon advertising revenue, the blockchain and the transaction web in general aren’t likely to bring much good news.
In many ways, what we are doing here is looking at the Internet as if it was the mid-1990s and trying to predict the emergence of Google or Facebook. In the same vein, to sit here in the early days of the blockchain and visualise the dominant companies that are likely to emerge is, in fact, next to impossible.
Here, I am reminded of a wonderful quote from scientist JBS Haldane: “The universe is not only stranger than we imagine, it is stranger than we can imagine.” On that note, I sign off.
- Bitcoin and blockchains are extremely complex topics, but there are some wonderfully well-written and illuminating explanations on the Web. Coindesk, a Web site that covers bitcoin news and prices, has a page that lists the best resources to explain bitcoin (and thereby the blockchain). See its page on the best bitcoin videos, infographics, and podcasts.
- Dug Campbell, a Scotland-based expert on bitcoin has a bitcoin 101 section on his Web site that lists and links to a number of bitcoin and blockchain explanations. He has also written the most lucid explanation of the Byzantine General’s Problem, an old computer science problem that was considered unsolvable before bitcoin and the blockchain emerged.
- For a list of bitcoin/blockchain ideas and applications, see these articles by Chris Dixon, Marc Andreessen, and IDEO.
- For a look at micro-payments and how newspapers could leverage the (the Chicago Sun-Times has experimented with using bitcoins for annual subscriptions, though not for micro-payments), see this article from New Scientist.