Collins | Blockchain Can Promote Efficiency, Security
Last year, I offered some initial thoughts on blockchain in my TVNewsCheck column entitled Blockchain’s ‘Transformative’ Impact Potential. While more information is still needed to understand the technology and its potential for media businesses, we are beginning to see an upside for companies looking to improve their efficiencies, especially as they relate to the ad sales sector.
In my earlier column, I suggested that smart media companies are testing the technology and looking at the potential paths forward. That is being borne out by current news.
Variety reports that Comcast Ventures, the venture arm of the media giant, has recently started to invest in blockchain businesses. The article explains that Comcast Ventures’ primary purpose is to generate financial return, but it’s also taking cues from its parent company on how the new technology can help the entertainment industry.
The Variety article goes on to say that on the creative front, “No Postage Necessary,” a romantic indie comedy coming this June, will be the first film to be released with the help of blockchain technology. Viewers will be able to buy the film through the blockchain-based video app Vevue, and pay for it with the app’s digital currency.
Blockchain As A Media Advertising Solution
For MFM members in the media advertising space, there is clear indication that an effectively installed blockchain network can be helpful to users as they review and reconcile data. The January/February issue of MFM’s member magazine, The Financial Manager (TFM) includes an article from Fintech Global Consulting’s Dwight Delapenha and Nagendra Bangalore.
The piece is a deep dive into ways blockchain can improve the efficiencies of the existing process flows of media companies, specifically as they relate to the selling, buying, fulfillment and paying for advertising. In their article, “More Bang with Blockchain,” they assert that the technology can help companies avoid situations where fraud arises from a “lack of timely information.”
They go on to say: “blockchain is a valuable tool for processes where efficiency gains and other benefits can be achieved if all participants have visibility across and entire supply or value chain.” They specifically cite advertising revenue transaction processing as an example ripe for improvement.
Blockchain technology includes a number of characteristics that can determine whether financial data is accurate, secure and simple to analyze. Delapenha and Bangalore offer a scenario in which, “operationally, the advertiser, intermediaries and publishers form a blockchain consortium network. Each member of the consortium has at least one node in the blockchain network. Each transaction connected to the advertiser’s digital asset is verified at each of the nodes through smart contracts.
Smart contracts often have logic built into code that is stored, verified and executed on a blockchain, providing a platform for self-enforcing, self-executing agreements. The relevant transaction is then stored on the blockchain and replicated on all the nodes — but only if members form a consensus on the validity of the transaction across all the nodes.
The approved blockchain of transactions are then added to the blockchain in a direct, sequential manner, and it is written as a cryptographically ensured block.”
Additionally, the entire chain is continuously synchronized as new data is entered and transactions are solidified, giving every member the ability to prove who owns what type of transaction.
One of the ongoing challenges in the collection of advertising revenue is that once ads have run there is an inability to repossess the time if the account is in arrears. This, the authors argue, can be improved immeasurably with a blockchain solution. When a customer is established on a network, the credit-worthiness and ability to pay can be vetted, and the banking details coded into the smart contract that governs the interaction of parties as the contract is executed.
They go on to offer that when an ad airs, it will trigger performance obligations embedded in the contract and payments flowing through the banking system can be executed.
This may be a somewhat idealized view of how the system will work. Just last week, while attending MFM’s Entertainment Finance Conference co-programmed with DEG, the Digital Entertainment Group, I heard a speaker comment that advertising agencies have a vested interest in mudding the waters when it comes to programmatic advertising sales data. Why else, he argued, would a supposedly automated solution require so many customer service representatives?
Despite this, blockchain experts Delapenha and Bangalore foresee significant process improvements when programmatic advertising solutions incorporate blockchain technology. I encourage you to read their complete article, which includes diagrams of both a current programmatic network and a programmatic network incorporating blockchain technology, to better understand the future they have in mind.
A digital copy of the current issue of TFM will be available from the front page of MFM’s website for a few more weeks. After that, it will be available to MFM members only.
Blockchain’s Potential To Affect The Finance Department And The Entire Company
An article authored by Tony Klimas, EY’s global performance improvement finance leader, offers that blockchain technology has the potential to affect the role of the CFO along with that of the entire finance department. He further argues that the effects of the technology may become apparent much sooner than might be expected.
While he acknowledges that “blockchain still faces a ’network effect‘ challenge, just as the telephone, personal computer and internet faced at their onset,” he believes that, “as more users implement them, blockchain systems will become increasingly valuable.”
Klimas foresees “an inflection point as blockchain moves from the early adopters to the majority, and legacy systems and data migrate to blockchain.” Likewise, Delapenha and Bangalore offer that transaction processing volumes will continue to increase dramatically in the coming years and with that a need for better systems recording, using and safeguarding sensitive data. When used effectively, they believe blockchain technology can accomplish these goals.
High-Speed Networks’ Potential To Speed Blockchain Adoption
It is important to consider that the effects of blockchain technology may occur sooner than expected now that high-speed broadband networks can support disruptive technologies more quickly than ever before.
Consider that during this year’s International CES in Las Vegas, the NCTA, CableLabs and Cable Europe introduced the cable industry’s vision for delivering 10 gigabit networks, dubbed 10G — a technology platform intended to ramp up from today’s 1 Gbps offerings to symmetrical speeds of 10 Gbps and beyond — to consumers in the United States and around the globe in the coming years.
Imagine if you will, dissolving the barriers that separate finance from other company functions. Blockchain could provide the foundation for transforming organizations from a siloed system to a networked system, increasing visibility and integration across the entire organization.
Executives will want to start thinking now about the implications to their organizations as the underlying technology of distributed shared ledger is maturing at a rapid pace.
MFM’s mission includes the responsibility to provide media industry education on timely topics such as blockchain. Our upcoming CFO Summit in Fort Lauderdale, Fla., includes several sessions that deal with the impact of technology and how CFOs are responding to these and other challenges.
Brad Daffy of KPMG will lead a session called the “Workforce of the Future – AI,” and Andrew Miller, of ACM Consulting, will tackle the topic, “Leading Change as a CFO.” It is certain that technology, including blockchain, will be a part of both discussions.
In addition, MFM’s AI and Blockchain Task Force is planning an entire track of sessions for Media Finance Focus 2019, the association’s annual conference, scheduled for May 20-22, at the Hilton Riverside in New Orleans. Blockchain’s potential contributions to programmatic advertising as well as to the finance function in general are already on that agenda.
Mary M. Collins is president and CEO of the Media Financial Management Association and its BCCA subsidiary, the media industry’s credit association. She can be reached at [email protected] and via the association’s LinkedIn, Twitter or Facebook sites.