Getting media companies to think about the future and technology is especially challenging.
But Gary Liu, CEO of South China Morning Post, believes understanding blockchain technology will be much different than everything else media companies have done to evolve up until now:
“When we talk about blockchain and the metaverse, what we’re really trying to understand is next generation behaviours and expectations. We’ve already had to adapt with varying degrees to digital advertising, to social media, the mobile internet, Artificial Intelligence, all in the hopes of better serving our readers. Businesses have a new opportunity to shape the future of Internet economics in a way that’s beneficial and responsible to journalism.”
Talking to INMA members on the final session of the INMA World Congress of News Media, sponsored by Ring Publishing, Liu said it starts with understanding blockchain, which Liu admits is a divisive topic. SCMP has been studying blockchain applications for more than four years, and Liu believes Web3 technology is to a point where it can produce and sustain revenues for news publishers and allow further investment in journalism and audiences.
Liu offers five pieces of advice:
1. Ignore the hype
Liu knows there’s a lot of noise in the blockchain space and a lot of opportunists looking to separate you from your money. But, he says to pay attention when the noise fades.
“What ought to be left is a new technology that fundamentally changes the value of digital assets, which of course includes media,” he said.
2. Understand these 5 terms
Blockchain: the underlying technology that allows the recording of digital information via consensus. “The more parties involved in consensus, the more decentralised, and therefore secure the mechanisms and information storage,” Liu said. And there isn’t just one blockchain, but many, such as Ethereum, Solana, and Avalanche, in which applications can be built.
Cryptocurrency: generally fungible tokens used to power consensus and transactions on blockchains. “The value is mostly determined by the open marketplace and enormous volumes are being traded on both centralised and decentralised exchanges every single day,” Liu said. Some cryptocurrencies are backed by real world assets or valued for their utility, but many of them are still speculative.
NFTs: non-fungible tokens that represent unique and distinct assets on blockchains. “NFTs themselves are individual smart contracts that serve as a certificate that authenticates digital assets and their ownership,” Liu said. This forms the basis of the value of digital media in Web3 technology.
Web3: refers to a new version of the Internet that is powered by blockchain, which decentralises the authority and control of information exchange
Metaverse: any digital world in which people can have authentic, unique digital identities and real ownership of their digital assets.
3. Understand the power shift
Fundamentally, blockchain shifts the power dynamic from corporations and systems to individuals and networks.
“Users are no longer beholden to centralised digital authorities like Google, Facebook, and Twitter, who own all the data generated in our digital lives today and have near complete control of its use,” Liu said.
4. Engage now
He encourages media companies to choose to engage now before the choice is made for them and has two reasons he wants organisations to consider this:
• Immutable preservation of information.
Liu knows the price of preservation and archiving on a regular basis is an ongoing cost for the news industry.
“As our archives swell, either physically or digitally, the cost of fighting degradation and risk increases. And regardless of how hard we try, the points of failure which could lead to catastrophic loss are heavily centralised,” Liu said. “Blockchain can mitigate some of these risks and costs because it enables us to record and publish via an immutable ledger providing far greater transparency, accountability, and long-term security to news media.”
He does want to make sure companies know they must still be diligent when choosing the right tools since blockchain is still immature.
“Physical archives we all have can be digitised and tokenized onto the blockchain, which means it’s stored across decentralised server networks that are not controlled by and therefore not reliant on single points of failure,” Liu said.
• Historical archives are one of the most valuable assets for publishers and yet they remain largely hidden.
Liu says when archives are used, they’re either sold at a price that undervalues the content or are preserved in libraries at the mercy of philanthropy.
“This is where I believe NFTs can change the shape of our business models and in turn make information far more readily available to the world,” Liu said.
On the Internet today, Liu believes digital media has near zero intrinsic value since it can be infinitely replicated, and the only montesation that can be extracted are from metrics like audience attention or subscriptions that rely on brand loyalty.
“What if digital media can have intrinsic value?” Liu asked. “What if there is verifiable scarcity which thereby creates enough value in our assets: articles, photos, videos, infographics, podcasts — to be owned and traded.”
When NFTs are used as smart contracts, they can protect how a company’s assets are used, stored, and traded.
“Even if the open market doesn’t value everything you produce, those who focus on high-quality journalism will find communities willing to fund their pursuit through ownership,” Liu said.
As stories become more historically significant in time, they will become more valuable. The smart contract means the publisher can benefit from the appreciation of the asset with every future NFT trade. NFTs can also be used for membership.
“Once we are able to understand how blockchain applications can deliver the ownership, the trust, the identity, and the access expected by our next generation of readers, we will be able to build on Web3 in a myriad of ways to secure future revenue opportunities,” Liu said.
SCMP began its NFT journey by experimenting with some of the most valuable assets from its archives.
In March of this year, SCMP dropped its first NFT collection called the 1997 premium series. It included every A1 story they published in 1997, which included iconic front pages and stories from one of the most consequential years in Asia’s history.
They minted 13,000 NFTs and sold them in mystery boxes of five collectable cards for US$97 per box. Twenty-four hours after the public sale, everyone could open the box and reveal their front pages. Some people received super rare, legendary cards of some of the most regarded front pages from 1997.
ARTI-FACTS, as the project is known, sold out during March and April drops, and SCMP generated HK$2 million in less than five hours of sales.
“Far more important than the revenue is it affirmed our thesis that there’s a community eager to collect historical NFTs, helping to preserve them on the blockchain,” Liu said.
Weekly AMAs (ask me anythings) with the ARTI-FACTS team assured the community their input will help shape future road map: “A blockchain-empowered generation will expect very different things from Internet platforms and from information technologies,” Liu said.
“This leaves little choice for media companies but to experiment in Web3 and understand this new paradigm to engage with this new community and find a foothold for future revenues.”