Bitcoin Goes One Way, The FCC Another – Will Creators Get New Tools Or New Troubles?

[Len]

Bitcoin went wild this week, briefly shooting past $11,000 per coin. And FCC Chairman Ajit Pai went wilder, proposing to kill off net neutrality. What with all the turkey, dressing, and turkeys getting undressed in front of women, however, many folks could be forgiven for missing these bits of news.

But these bits of news will affect your bits, in varying and potentially conflicting ways, so consumers, creators and publishers need to pay attention. Both could have huge impacts on the ways video bits get delivered to homes.

To review, this was the week, as the Wall Street Journal put it, when even Grandma wanted a piece of the Bitcoin action. BTC’s rise in value from less than $1,000 at the start of the year to more than $11,000 on Tuesday (before dropping 18% that same day) finally shoved Bitcoin and cryptocurrencies in general into the public mind.

But tulip mania-like investor fever notwithstanding, Bitcoin is far less interesting than its underlying technology, the blockchain. Blockchain is, essentially, a highly decentralized, fast and relatively secure way to track and transfer any valuable digital thing while preventing it from being duplicated without permission. That latter part is important, because it reasserts the concept of scarcity into the digital chain. To boot, you can attach all kinds of information to the valuable thing and track what happens with that information. Basically, digital money and goods become smart. It also makes possible online commerce for the several billion people who have mobile phones but no bank account.

For entertainment and media, blockchain could help fight piracy, build better customer relationships, create better content, transform marketing and simplify distribution and payments, all while cutting costs.

For example, Mo the Publisher could create cool videos, then sell them directly to customers without needing to pay a credit-card company several percent of his business. Because he would know more about how much and how long his customers are watching his videos, Mo could make more content that they enjoy.

Blockchain could encrypt the videos so they aren’t endlessly copied and pirated. At the same time, a customer could resell a video, if Mo let them, and Mo could also get a piece of the sale. And Mo could cut out middlemen in his ad sales operations, and handle transactions directly with brands, which in turn could better track what’s being seen, and by whom. Already, companies such as Madhive’s MAD Network are popping up to decentralize programmatic advertising and connect brands and publishers.

Also of interest: Initial Coin Offerings, essentially the cryptocurrency equivalent of an initial public offering of stock. Startups are starting to bypass venture capital and public stock markets, selling equity through sales of blockchain-backed “tokens” to a broader class of investors.

ICOs could shift how publishers operate, giving them new ways to fund operations by selling small pieces of their companies to actual customers instead of just moneymen. That could create a very different, much more invested relationship between reader and publisher.

Of course, there’s still plenty of traditional money out there chasing opportunities in online news and entertainment, despite layoffs at Buzzfeed (and ESPN) and Mashable’s sale at a deep discount. Just this week, for instance, Tubefilter reported Group Nine had raised another $40 million to finance still more video.

I talked recently with Mychal Simka, a co-founder of SuperdopeTV.net, an online-video startup using the SEC’s relatively new equity-crowdfunding rules to raise money. The company is selling the equity shares through Microventures, a joint venture of First Democracy VC and crowdfunding site Indiegogo.

“Everything is becoming more accessible. It’s becoming decentralized,” said Simka. His company has already raised about $175,000 on Microventures, more than triple its minimum goal. “Entertainment in general is becoming decentralized but it’s (affecting) every business, every sector. Investing, fundraising, is one field that happens to have a need for it.”

The opportunities are bracing for smart entrepreneurs and creators trying to finance and run digital media companies. But all of this is happening just as Pai’s FCC is trying to repeal net neutrality rules that have kept the Internet largely accessible to even the smallest media companies. Critics rightly worry that repeal would hand control of the Internet to a handful of largely unregulated companies, which then could decide what content and companies will flow through their Internet pipes, and at what price. Those giant Internet players even could use blockchain technologies, including their own cryptocurrency tokens, to further exert control.

In a post-Net neutrality world, Comcast could offer its Internet subscribers a bundle of digital news and information along with all of its NBCUniversal cable, broadcast and digital holdings, and without any bandwidth charges, while turning on the meter for everyone else. Comcast could even discount the bundle’s price for subscribers using its (not-yet-created) “Comcoin” cryptocurrency, while blocking access to competitors.

For the record, Comcast issued a statement this week saying it doesn’t block or disadvantage anyone on the Net. While true now, Comcast (or any other Internet provider) could change its mind and do so with impunity as it seeks to maximize profits with relatively little competition.

We’ve been through fights over net neutrality before, in 2015 and earlier. And even with Net neutrality in place, Web publishing has increasingly been dominated by Facebook and Google, which vacuum up the majority of all ad dollars, and ad growth.

I won’t rehash the pro-neutrality arguments here, but it’s back to the breach for Internet activists. Blockchain could be a wonderful new tool for connecting publishers with audiences and advertisers, but we need to make sure the FCC doesn’t disconnect nearly everyone from a vital, diverse and growing Internet.