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Blockchains and smart contracts in the culture and entertainment business

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Contracts are omnipresent in the culture and entertainment business, in particular in the film, video and music industries. Nonetheless, whether passed with authors, producers, publishers or distributers, they are not always applicable or executed. The minimum sums guaranteed under a contract might transfer an “excessive” share of the value toward producers and editors; and the absence of legal metadata might reduce the amount paid to the rightful owners (e.g., performing artists). Is it utopian to imagine a contract that is programmed and executed automatically so as distribute a “fair” share of the value to the creators, producers, editors, distributors and consumers of digital contents and to provide a remuneration to the rightful owners that reflects consumption (via down-loading or audience ratings)? Blockchain technology is part of the answer...
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Réalités Industrielles August 2017 - 1
Blockchains and smart contracts
in the culture and entertainment business
Jérôme Pons,
consultant on digital technology and strategies in the culture and entertainment business, and
delegate on blockchain standardization at Music Won’t Stop
In J.P. Dardayrol, editor of the special issue Blockchains and smart contracts: The technology of
trust? of Réalités industrielles, 2017
Abstract:
Contracts are omnipresent in the culture and entertainment business, in particular in the film,
video and music industries. Whether passed with authors, producers, publishers or
distributers, contracts are not always applicable or executed however. The minimum sums
guaranteed under a contract might transfer an “excessive” share of the value toward
producers and editors; and the absence of legal metadata might reduce the amount paid to
the rightful owners, such as performing artists. Is it utopian to imagine a contract that is coded
and executed automatically so as distribute a “fair” share of the value to the creators,
producers, editors, distributors and consumers of digital contents and to remunerate the
rightful owners as a function of consumption (via downloading or audience ratings)?
Blockchain technology is part of the answer…
Blockchain technology was first imagined by Satoshi Nakamoto (2008).1 This system of
electronic peer-to-peer (P2P) transactions introduced both the cryptocurrency bitcoins (BTC)
and the Bitcoin network. On 3 January 2009, the first block was placed on the Bitcoin
blockchain in the Bitcoin network. Other systems using distributed ledger technology (DLT)
have followed, such as Namecoin (with the cryptocurrency namecoin), Omni (with omnicoins)
and Ethereum (with ethers, ETH), and even asset services (similar to a local cryptocurrency but
dependent on an outside system) such as SingularDTV (with the asset SNGLS using Ethereum)
or MaidSafeCoin (maids using Omni). On 10 May 2017, 727 cryptocurrencies and 106 assets
were in circulation.2
1 This article has been translated from French by Noal Mellott (Omaha Beach, France). The translation into English has, with the
editor’s approval, completed a few bibliographical references.
2 For updated statistics, consult: https://coinmarketcap.com/all/views/all/
Réalités Industrielles August 2017 - 2
Figure 1: Blockchain technology: Examples of cryptocurrencies and of “assets” with the date of creation of the first (genesis) block
and the peer-to-peer network
In this system, each transaction is published on the P2P network. It is incorporated in a
block, which is validated from within the network and then added to the blockchain (PONS
2017). A transaction N is characterized by its hash (prefix 0x plus 60 characters), a timestamp,
the amount of the transaction, fees, the addresses of the sender A(N) and of the receiver B(N)
(prefix 0x plus 40 characters), a block number, and input and output scripts. Blockchain.info,
Bitcoin’s block explorer engine, serves to view transactions.
Réalités Industrielles August 2017 - 3
Figure 2: A transaction via Monegraph
Figure 2 presents a transaction that, started by Monegraph, incorporates smart
contracts linked to the deposit of a graphic.3 The ouput script’s third line is a field free for
entering information. It opens the possibility for new applications in the culture and
entertainment business, in particular for: creative and productive collaboration, the
elimination of intermediaries from the distribution of contents, the management of royalties,
contracts and electronic payments. This article takes a closer look at these applications in
cinema, video and music.
3 Respectively: https://www.blockchain.com/
& https://monegraph.com/
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The culture and entertainment business
Given the generalization of distribution via the Internet, most sectors in the
entertainment and cultural industry use the same system for transmitting digital contents. The
same steps are followed: creation, production, edition/publication, distribution,
diffusion/circulation/broadcasting and consumption (PONS 2014).
The film and video industry
In cinema and video, the timeline for a film’s distribution depends on the medium: the
film’s release in movie theaters, its physical and digital releases (from 4 to 48 months after
theaters) and broadcasts on television (from 10 to 30 months after theaters).4 Processes are
organized in a workflow thanks to the international DCI standard (Digital Cinema Initiatives).
Given the chaining of these processes, multimedia data and metadata are passed along from
one step to the next (PONS 2015a).
Acronyms & initialisms used in the graphics
AàD
audio on demand
AFNOR
Association Française de Normalisation (French Association of Standardization)
ASIN
Amazon Standard Identification Number
CGV
general sales conditions
CNC
Centre National du Cinéma, de l’Image et du Son (National Center of Cinema, Image and
Sound)
DAO
decentralized autonomous organization
DCI
Digital Cinema Initiatives
DCP
Digital Cinema Package
DDEX
Digital Data Exchange
DLT
distributed ledger technology
EVM
Ethereum Virtual Machine
GSA
big retail chain stores
GSS
specialized big retail chain stores
IPD
International Performers Database
IPI
interested parties information
IPN
International Performer Number
ISAN
International Standard Audiovisual Number
ISO
International Standards Organization
ISRC
International Standard Recording Code
ISWC
International Standard Musical Work Code
LLL
Lisp-like (programming) language
MBID
MusicBrainz IDentifier
MG
guaranteed minimum
P2P
peer-to-peer
PGHT
wholesale price before taxes
PPHT
public sales price before taxes
RCA
Registre du Cinéma et de l’Audiovisuel (the CNC’s Register of Cinema and Audiovisual)
RNPP
net receipts, producer’s share
SOFICA
Société pour le Financement de l’Industrie Cinématographique et de l’Audiovisuel (Company
for Financing the Cinema and Audiovisual Industry)
VàD (A)
video on demand (with subscription)
VPC
mail-order sales
4 For information on releases, see: http://www.csa.fr/.
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As Figure 3 shows, contracts are meticulously drawn up, in particular: the author’s
contract (“author” referring to various creators: filmmakers, script- and screen-writers, as well
as authors of a work of literature), the contract of coproduction, the contract with actors,
contracts with technical personnel (chief operators, film editors, script supervisors, etc.),
contracts for distribution (film runs in theaters and broadcasts on television), and proxies for
distribution (video on demand, by subscription, television).
Figure 3: Types of contracts in the film and video industry.
In France, the outcome of this process is a degree of transparency about financial flows
for making plans (for heavily subsidized films) and drawing up a production budget, which
ranges from one to ten million euros. In 2016, the average estimate for a French film was
€5.47 million (CNC 2016).
Another result of this process is that metadata are consolidated (completed,
standardized and made reliable), in particular the legally required data for copyright
management and the data about the contents used in postproduction or predistribution: the
poster, the digital cinema package (DCP), etc. Script supervisors, who work with the film
director, fill in these metadata through the various documents they file (daily editor log,
production reports, etc.) (PANNETIER 2010).
For information on a film prior to its release, several centralized databases can be
consulted. The CNC’s Register of Cinema and Audiovisual (RCA) records the contracts
associated with production (e.g., contracts with authors or coproducers) and delivers a
proprietary identification code (the CNC registration number).5 The CNC also has a database
for recording a film’s distributor and delivering the administrative release permit.6 Mention
5 http://www.cnc-rca.fr/Pages/PageAccueil.aspx
6 In French: visa d’exploitation. http://www.cnc.fr/web/fr/rechercher-une-oeuvre
Réalités Industrielles August 2017 - 6
should also be made of the the International Standard Audiovisual Number database, which
delivers a standardized identification number (ISAN) to audiovisual products.7
For information following a film’s release, other centralized databases can be consulted.
Amazon’s IMDb provides access to the names of the artists, authors, actors (the cast) and
technicians present during shooting. It also has information about technical specifications
(e.g., the model of the camera used for shooting), the genre (comedy, drama, etc.), the
denominations of the film’s distributor and coproducers and the estimated budget (Box
Office)8
The music industry
In music, an album is released at the same time for physical and digital distribution, for
broadcasting (over the radio or on television) and for concerts during tours. The publication of
a release is mainly based on the international standards for data exchanges set by DDEX,
assuming that all music producers and editors have, before each phase of distribution, filled in
the legal metadata and the metadata about the contents.
Contracts are also meticulously made in the music industry: publishing contracts
(songwriters, composers), order contracts (for original music), contracts for live performances
(singers, performers), recording contracts (technicians, sound engineers), licenses for
distribution or synchronization (See Figure 4).
Figure 4: Types of contracts and licenses in the recorded music industry.
7 http://www.isan.org/lookup/
8 http://www.imdb.com/
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The relative opacity of financial flows has, in part, been dissipated owing to the initial
public offering of Deezer. In effect, albums are subsidized very little; and the production
budget (from €10,000 to €100,000) is less than for a movie. Thanks to the aforementioned
procedure, we have learned that 80%-85% of royalties (including the guaranteed minimum)
are transferred to record producers and editors; and 10%-15% are transferred to royalty
collection organizations (PONS 2015b).
The metadata of works of music are displayed unconsolidated, in particular the legal
data for managing copyrights and related rights. An improvement would be for the sound
engineer during recording sessions to systematically enter this information (names of
composers, singers, the distribution of royalties, etc.). As much can be said about the
metadata about a recording’s contents, which are gathered for publication (liner notes, sheet
music, MP3 file via the ID3 tag) (PONS 2015c).
For information on an album prior to its release, there are the centralized proprietary
(unaccessible) databases. For instance, members of the SCPP (Society Civile des Producteurs
Phonographiques), SPPF (Society Civile des Producteurs de Phonogrammes en France), SACEM,
Adami (Society Civile pour l’Administration des Droits des Artistes et Musiciens-Interprètes) or
SPEDIDAM (Society de Perception et de Distribution des Droits des Artistes-Interprètes), may
register their works or recordings of music in the organization’s database. The IPI database of
CISAC (Confederation Internationale des Sociétés d’Auteurs et Compositeurs) and the IPD of
IPDA/SCAPR respectively deliver standardized identification codes to stakeholders (IPI code)
and performance artists (IPN code). Other databases, such as CISAC’s ISWC and IFPI’s ISRC,
provide access to standardized identification codes for works, respectively, of music (the ISWC
code) and recorded music (the ISRC code).
Following an album’s release, centralized proprietary databases. ,n particular BIPP (Base
de Données Interprofessionnelles des Producteurs Phonographiques of SNEP/UPFI/Kantar
Media) accesses the catalogs of record producers in the French market. Mention should also
be made of BOEM (Base d’Oeuvres de l’Édition Musicale of CSDEM/SEAM: Chambre Syndicale
de l’Édition Musicale/Société des Éditeurs et Auteurs de Musique) for song lyrics. Other
databases, though accessible, are not always consolidated such as: SACEM’s, which links ISWC
codes to IPI codes (but not to the ISRC codes); or MusicBrainz, which links a recording artist,
album or piece of music to external databases (such as Discogs, IMDb and Wikidata), to its own
or external identification codes (MusicBrainz’s MBID or bar codes, IPI, ISNI, Amazon’s ASIN,
Discogs’ ID code, AcoustID) and to distribution platforms (such as iTunes and Spotify).
The major types of contracts
In the culture and entertainment business, money questions funding, the
transparency of financial transfers and the distribution of receipts are normally analyzed in
relation to the contracts signed. Information also figures in reports and in protocols for
collective agreements. So, let us next look at the principal contracts made in this industry, at
their contents and forms.
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In the film and video industry
The Chevalier report (2008) discussed the issues related to the “contract of association
with production” (via SOFICA). The Bonnell report (2008) focused on the author’s (artist’s)
contract, while a 2010 protocol for a multiparty agreement in the movie industry concerned
contracts with authors and for video editions.9 The Gomez report (2011) analyzed contracts for
video editions, distribution and exportation, while the Lescure (2013) report examined cultural
policies in all fields: cinema, video and recorded music. Another report (COUR DES COMPTES
2014) has gone into the details of contracts (of association with production, of purchase and
prepurchase, of distribution, with performing artists) and too, of licenses for distribution. It
even proposed a “contract of objectives and means”.
In the music industry
The Zelnik (2010) report described contracts for singer-songwriters and of distribution,
as well as various licenses, while the Hoog Engagements10 concentrated on general sales
conditions, the duration and stability of contracts, the justification for advance payments,
transparency with regard to the guaranteed minimum, and the deadlines for distributing
payments to recording artists. The Selles (2011) report extended this analysis to music
publishing contracts and licenses for synchronization. It also proposed adopting a “contract of
association with production in the music industry and a “contract of objectives and means”.
The Phéline (2013) report focused on “sharing value” while describing licenses and contracts
with recording artists. The protocol of the Schwartz Agreement in 2015 advocated a code of
good contractual practices and a fair remuneration of singer-songwriters.11
A model of contracts
After analyzing the usual contracts in the music industry, the following points (mostly
drawn from the Gomez report) were retained for drafting a model: the header, recurrent
clauses, financial conditions, general conditions, ender and appendices (See Figure 5). In the
contract with recording artists, notice that the producer makes the engagement to obtain only
the legal metadata needed for his payment (for instance, the ISRC code) but not for the
payment of music composers or publishers (the ISWC code).
9 “Protocole d’accord relatif à la transparence dans la filière cinématographique”, 21p., the protocol for a multiparty agreement in
the movie industry, 16 December 2010. Available at:
http://guildedesscenaristes.org/uploads/ressbao/accords/protocole_accord_transparence_filiere.pdf
10 The Hoog Engagements, an agreement, “13 engagements pour la musique en ligne”, worked out on 17 January 2011 by the
mediator, E. Hoog, with: Adami, Apple/ITunes, Beezik, Deezer, Geste, MMFF, NRJ, Orange/France Télécom, SACEM, SCPP, SDLC,
SFA, SNAM, SNEP, SPEDIDAM, SPPF, Starzik.Com, Syrol, upfi, VirginMega. Available at:
http://blogs.lesechos.fr/IMG/pdf/13_engagements_pour_la_musique_en_ligne-2.pdf
11 An agreement, “Pour un développement équitable de la musique en ligne”, 2 October 2015, by the mediator M. Schwartz, with:
CFDT-F3C, ESML, FELIN, GAM, IDOL, MMFF, PRODISS, Qobuz, SACEM, SCPP, SFA, SMA, SNACOPVA CFE-CGC, SNAM-CGT, SNAPS-
CFE-CGC, SNEP, SPPF & UPFI. See the press release at:
www.culturecommunication.gouv.fr/Presse/Communiques-de-presse/Accord-historique-pour-la-filiere-de-la-musique
Réalités Industrielles August 2017 - 9
Figure 5: Model of “traditional” contracts in the cinema/video and music industries.
How to turn this traditional contract into a smart contract?
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The application of smart contracts in culture and
entertainment
A decentralized autonomous organization (DAO) would be capable of following up on
creators and producers (PONS 2017). A smart contract for doing this could describe a task
artistic (e.g., writing a script or a verse in a song, being an actor on stage) or technical (e.g.,
shooting a scene, recording a piece of music, or entering metadata) and even the amount of
payment or royalties.
For the sake of brevity, I shall leave aside herein the concepts of digital identification,
electronic signatures, oracles and decentralized or distributed applications.
A smart contract’s principles
According to the American cryptographer Nick Szabo (1994), “A smart contract is a
computerized transaction protocol that executes the terms of a contract. The general
objectives of smart contract design are to satisfy common contractual conditions (such as
payment terms, liens, confidentiality and even enforcement), minimize exceptions both
malicious and accidental, and minimize the need for trusted intermediaries. Related economic
goals include lowering fraud loss, arbitration and enforcement costs, and other transaction
costs.” From a legal viewpoint, smart contracts are “autonomous programs, encoded in a
blockchain, that automatically execute a contract in full or in part without human intervention.
When one of the preprogrammed conditions in the smart contract is realized, the clause
corresponding to it is automatically executed” (VERBIEST 2016).
There are three steps to making a smart contract:
The first step is to program the smart contract so that it transposes one or more
clauses (e.g., on payments) from the traditional contract into the programming (script)
language used by the blockchain.
The second is to register in the blockchain the software associated with the smart
contract.
The third step is to execute the software. Execution might be immediate (e.g.
electronic payment) or delayed until it is triggered internally (by an event foreseen in the
contract, e.g., a date of payment set for the transaction) or externally (by an event
independent of the contract or by an oracle, as defined by the English mathematician and
cryptologist Alan Turing) (THOMPSON et al. 2017).
Smart contracts in the Bitcoin network
The Bitcoin network’s script language (called Script) is said to lack Turing completeness,
since it does not allow for creating loops with recursive functions.12 This language is presented
in stacks, each line of which has a string of binary elements or characters. The instructions are
processed sequentially till the end of the script, without any looping. Approximately a hundred
script operators are used (See Figure 6).
12 See “Script” on http://en.bitcoin.it/wiki/Script
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Figure 6: Examples of script operators and functions used by, respectively, the Bitcoin and Ethereum networks.
A transaction is associated with either an electronic payment service (which uses basic
script operators mainly for exchanging bitcoins between a sender and a receiver), or a service
that, based on scripts, uses basic and more advanced operators but does not have the single
purpose of transferring bitcoins. In particular, the advanced script command OP_RETURN
signals a free field containing a smart contract’s data.
Smart contracts in Ethereum
EVM, the script language of the Ethereum network, is said to be Turing-complete, since
it allows for looping and calls. To keep a transaction from looping indefinitely and blocking the
network, its execution is limited by what is called “gas”. When the order for a transaction is
entered, the gas is paid in advance to cover the cost of executing the transaction. A transaction
that runs out of gas is canceled, thus putting an end to the risks of infinite looping. This
language, executed by the Ethereum Virtual Machine, is presented in stacks in the form of
strings of characters. The instructions are processed sequentially but allow for loops; they are
based on more than a hundred script operators (WOOD undated).
From the start, a transaction is associated with a script-based service called a “smart
contract” that uses basic and advanced operators, and exchanges ethers. Electronic payment is
but one use case of a smart contract.
The smart contract is seen as a virtual entity with its own script code capable of sending
and receiving messages and ethers, creating other contracts or destroying itself. It cannot
initiate a transaction, but it can be activated by another transaction that it receives (BUTERIN
2014).
Réalités Industrielles August 2017 - 12
Besides the EVM language, high-level script languages can be used, such as Solidity,
Serpent or LLL. In practice, EtherScripter can transpose certain clauses from a traditional
contract (e.g., a sales contract) and translate them into a high-level script language such as
Serpent or LLL (See Figure 7).13
Figure 7: Transposition by EtherScripter of certain clauses of a traditional contract into a high-level script language
A use case experiment, Ujo Music
When the alpha version of Ujo Music was launched on 2 October 2015, only Imogen
Heap’s single “Tiny human” was available. Neither this work nor its recordings were registered
in the ISWC or ISRC databases. However this English singer was identified by an ISNI code
(0000000078404022) with credits as author, singer-songwriter, arranger and producer of the
recording.
13 http://www.etherscripter.com/0-5-1/
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Five distribution options were proposed for the piece, including downloading at a sales
price of $0.60 and streaming at $0.006 per listening experience. General sales conditions
indicated that receipts would be distributed as follows: 91.25% to Imogen Heap and 1.25% to
each of the six musicians and the sound engineer. The purchase and downloading of the single
involved a smart contract on the Ethereum network. Ujo Music hooked up to Kraken, a
cryptocurrency exchange platform, to indicate the conversion rate of the sales price (e.g. $0.60
= 0,48 ETH) so that the buyer could create an electronic wallet, obtain an account address,
fund the account and enter the order at the address indicated by Ujo Music.14
Figure 8: List of transactions involving Imogen Heap’s “Tiny human”.
Ujo Music provides a fully transparent list of transactions involving the piece (Figure 8).
Etherscan, Ethereum’s token tracker, can be used to find the block number (857458) at the top
of the list and view the foregoing transaction at 0,48 ETH, which incorporates a smart contract
for downloading the song (Figure 9).
14 For a fuller description see: “Part 1: How we tried to buy Imogen Heap’s song on Ethereum”, Hatching Amazing, 24 January
2016. Available at:
http://medium.com/hatching-amazing/part-1-how-my-ssn-prevented-me-from-buying-music-on-the-blockchain-and-why-
blockchain-for-music-a85eaeaca7ad
Réalités Industrielles August 2017 - 14
Figure 9: View of a transaction on Ujo Music.
Identified by its hash, the transaction bears a timestamp (16 January 2016 02:18:41 PM),
and indicates the gas price, transaction fees and smart contract. The immediate execution of
this smart contract distributes the amount of the transaction (0.48 ETH) to the receivers’
addresses: 0.438 ETH for Imogen Heap and 0.006 ETH for each of the seven associates.
Receipts are distributed according to the clause set in the contract’s general sales conditions.
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The prospects for smart contracts in culture and entertainment
Using blockchain technology for smart contracts in the culture and entertainment
business entails a dialog between computer scientists, legal experts and the parties in the
chain of transmission of digital contents. This means adopting a cryptocurrency (e.g., Bitcoin,
Ethereum, Omni) or an asset, a choice that will orient the decision made in favor of a specific
blockchain network. These parties must then transpose one or more clauses from a traditional
contract into the network’s script language and, using the network’s token tracker, verify
whether the smart contract has effectively been executed.
A blockchain helps solve familiar problems in recorded music, such as matching the ISRC
and ISWC codes. For this purpose, three copyright collection organizations (ASCAP in the
United States, PRS for Music in the United Kingdom and SACEM in France) formed a
partnership with IBM in April 2017, a partnership based on Hyperledger Fabric. Out of this
project might emerge smart contracts for automatically assigning a pair of ISRC/ISWC codes
and simplifying the management of royalties.15
The identification codes (ISAN, ISRC, ISWC…) were adopted as standards by the
International Organization for Standardization (ISO). In 2016, the ISO set up a technical
committee (ISO/TC 307 with 19 participating countries, France being represented by AFNOR)
on blockchain and distributed ledger technology (DLT). This committee met for the first time in
April 2017. It voted to set up a study group on smart contracts (ISO/TC 307/SG5) for examining
the application of programming methods and script languages that would enable persons
other than computer scientists to formulate clauses.16
The upsurge of blockchain technology is placing the music industry, once again, in the
forefront of the digital transition. The movie and video industry will probably soon follow suit.
The work on international standards for smart contracts will help clarify matters.
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... In particular, smart contracts can apply automatically service-level agreement (SLA) and multi-territorial contractual clauses (e.g. international licensing contract in the cinema, music or video industries, international roaming contract in telecommunications) [21]. ...
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