In the digital age, small and medium-sized enterprises (SMEs) face increasing challenges in managing copyrights1 for creative outputs such as articles, images, music, and software. These enterprises increasingly rely on creative assets to drive growth and competitive differentiation, making effective copyright management essential. However, traditional copyright management mechanisms are often cumbersome, costly, and prone to disputes, making them ill-suited for the rapidly changing demands of the digital market[1].
The emergence of blockchain technology offers a promising solution to these challenges. With its inherent immutability, decentralization, and transparency, blockchain provides an innovative framework for copyright management. This technology enables SMEs to register, track, and manage copyrights with unprecedented security and efficiency. According to a Deloitte insight report, over 40% of executives in the media and entertainment industries report that blockchain will be a key part of their business strategy in the next five years[2].
I. Introduction to Blockchain Technology
Blockchain technology is a decentralized distributed ledger technology originally used in the creation of Bitcoin but has since been widely applied across various sectors. The basic working principle of blockchain, as shown in Figure 1, centers on its core characteristics: decentralization, immutability, transparency, and security:
(1) Decentralization
Unlike traditional centralized databases, blockchain records data across multiple nodes. The decentralized nature means that no single entity can control the entire network, thereby enhancing the system’s transparency and security.
(2) Immutability
Each transaction in a blockchain is recorded in “blocks,” and each new block is linked to the previous one, forming a “chain.” Once a block is added to the blockchain, it becomes nearly impossible to alter, ensuring the permanence and tamper-resistance of the records.
(3) Transparency and Security
In blockchain, when a new transaction is added to the ledger, it is encrypted before being added to the blockchain. Only users with the corresponding private keys can decrypt and manipulate the data. Blockchain uses advanced encryption technologies to ensure the security of all transactions and protect the privacy and authenticity of the data.
II. Application of Blockchain Technology in Copyright Management: The KODAKOne Blockchain Platform[3]
KODAKOne is a platform that leverages blockchain technology to provide copyright management and monetization for photographers and visual artists. Developed in collaboration between Kodak and WENN Digital, it introduces a novel copyright management system specifically designed for photographers and image rights holders. The main goal of this system is to streamline the processes of copyright registration, tracking, and enforcement through digital and automated procedures. Influenced by KODAKOne, Kodak’s stock once surged by 77% and maintained an increase of over 40% after settling down. The core functionalities of the KODAKOne platform include:
(1) Copyright Registration
KODAKOne allows artists to upload their works to the platform and register them on the blockchain. This process involves collecting metadata (such as the creation time, location, and author information) and a digital fingerprint (a unique identifier based on the content). This information is permanently recorded on the blockchain, whose immutable nature ensures that once registered, the data cannot be altered or deleted.
(2) Real-Time Copyright Monitoring
The KODAKOne platform utilizes advanced image recognition technology to monitor the use of registered works on the internet. This system can identify unauthorized copying or display actions and automatically record the infringement. Since all monitoring data is stored on the blockchain, it also enjoys immutable protection, enhancing the effectiveness and credibility of handling copyright disputes.
(3) Smart Contracts
One of the innovative applications of blockchain technology is smart contracts. KODAKOne uses smart contracts to automate the calculation and transfer of copyright fees. When a third party is interested in a work and meets the usage conditions, the smart contract automatically executes, handling licensing and payment without human intervention. This process enhances efficiency and reduces the potential for errors and fraud.
(4) Revenue Distribution
Through blockchain technology, the KODAKOne platform ensures that artists are compensated fairly for each use of their work. The platform primarily uses KODAKCoin, a digital currency for transactions within the platform, intended to offer photographers and other content creators a faster and more secure payment method. The payment and revenue distribution processes are automated and transparent, allowing artists to track the financial transactions of their works in real-time and ensure fair distribution of earnings.
III. Application of Blockchain Technology in Business Management
As blockchain technology matures and becomes more widespread, its applications in business management have significantly expanded beyond the realm of copyright management. Coupled with the growth trends in the number of blockchain enterprises globally and in China, as depicted in Figure 3, the adoption of blockchain technology by businesses is rapidly increasing. This trend is not only evident in copyright management platforms like KODAKOne but also manifests in several key areas demonstrating the advantages of blockchain in managing enterprises:
1. Supply Chain Management: Blockchain provides a transparent and immutable way to record every transaction within the supply chain. It enables businesses to track the entire process from production to delivery in real time, enhancing traceability and efficiency.
2. Financial Auditing: With blockchain technology, businesses can automate the verification of financial records, reducing the need for manual auditing and increasing the accuracy and reliability of financial reporting.
3. Smart Contracts: In contract execution, blockchain can automate the enforcement of contract terms, ensuring that contracts are fulfilled when predetermined conditions are met, thus reducing the risk of breach.
4. Identity Verification and Data Security: Blockchain can securely store sensitive information, such as the identity data of employees and customers, while ensuring that this data is not accessed or altered without authorization.
5. Voting and Consensus Decision-Making: In corporate governance, blockchain can be used to create a secure and transparent voting system, allowing shareholders or members to cast tamper-proof decisions.
6. Immutable Records: Businesses can use blockchain to create permanent records, such as contracts, intellectual property documents, and compliance documents, to ensure the long-term preservation of data. This capability helps to maintain the integrity and accessibility of critical business information over time.
IV. Challenges and Prospects of Blockchain Technology
Despite the enormous potential of blockchain technology in copyright management for SMEs, it faces several challenges. Firstly, the complexity of the technology means that SMEs may incur a significant learning curve to adapt to this new management approach. Research by IBM indicates that many enterprises encounter challenges in integrating blockchain technology due to a lack of expertise. Secondly, the lag in legal and regulatory frameworks presents a significant barrier to the widespread adoption of blockchain technology. For example, in Europe, strict data protection regulations, such as the GDPR, conflict with the principles of transparency and immutability inherent in blockchain, posing problems for the legality and compliance of copyright management.
However, as blockchain technology continues to mature, these challenges are gradually being overcome. For instance, smart contracts are expected to become the standard tool for copyright transactions. This would automate the authorization and transaction processes of copyrights, reducing human errors. As music industry analyst Mark Mulligan points out, smart contracts can greatly simplify the management and payment processes of music copyrights while ensuring the rights of creators. Additionally, the cross-sectoral application of blockchain technology represents an important future development direction. For example, combined with artificial intelligence and the Internet of Things, blockchain is poised to address numerous issues in digital content creation and distribution beyond copyright management.
In conclusion, blockchain technology has brought revolutionary changes to copyright management for SMEs. Through its immutable and decentralized features, it provides an efficient, secure, and trustworthy copyright protection solution, thereby promoting the prosperity of the creative industries. Despite facing certain challenges, the prospects for the application of blockchain technology in copyright management for SMEs are undoubtedly bright, as technology continues to evolve and the legal environment gradually improves.
Reference
[1] World Economic Forum. “How blockchain accelerates small business growth and development.”
[2] Deloitte. “2021 Global Blockchain Survey.”
[3] Blockchain Research Institute. “KODAKOne: Changing the Still Image Marketplace on the Blockchain.”
[4] China Academy of Information and Communications Technology. “2022 Blockchain White Paper.”
The work described in this article was supported by InnoHK initiative, The Government of the HKSAR, and Laboratory for AI-Powered Financial Technologies (AIFT).
(AIFT strives but cannot guarantee the accuracy and reliability of the content, and will not be responsible for any loss or damage caused by any inaccuracy or omission.)
- Copyright Management refers to the process of protecting and managing intellectual property rights holders’ entitlements to their creative content (such as literature, music, and artwork) through legal tools. This includes rights to use, copy, distribute, and other related rights. The aim of this management is to ensure that creators or copyright holders can derive economic benefits from their creations while preventing unauthorized copying and distribution. ↩︎
