Kodak Launch Crypto-Digital Asset Token And Blockchain For Photographers
Earlier this week, Kodak announced they were going to launch a crypto digital asset token called Kodakcoin:
“Utilizing blockchain technology, the KODAKOne platform will create an encrypted, digital ledger of rights ownership for photographers to register both new and archive work that they can then license within the platform. With KODAKCoin, participating photographers are invited to take part in a new economy for photography, receive payment for licensing their work immediately upon sale, and for both professional and amateur photographers, sell their work confidently on a secure blockchain platform. KODAKOne platform provides continual web crawling in order to monitor and protect the IP of the images registered in the KODAKOne system. Where unlicensed usage of images is detected, the KODAKOne platform can efficiently manage the post-licensing process in order to reward photographers.” [Read More]
In the recent past, we have been quite upbeat about blockchain technology and its potential uses for Content Digital Asset Management, however, this particular example smacks of opportunism on the part of Kodak and misses the point about where blockchains can be more usefully applied. There is a more detailed analysis of the shortcomings on David Gerard’s blog. There are also a range of opinions (both critical and more positive) in this benzinga.com article.
The biggest drawback is the coins. Photographers will get paid in ‘Kodakcoin’ a token that Kodak will issue whose value is likely to be highly volatile (and there is some questionable legality as to whether or not they can be issued to anyone who does not qualify as a ‘sophisticated investor’). Existing operators (like Getty, Shutterstock et al) already offer the service that Kodak will provide, but with them you can get paid in ‘fiat currency’ (or real money, to use another description). The business model is already well established, but that does not mean it is an especially lucrative one for photographers. The basic fundamental economic problems of the stock photo industry will still remain, i.e. massive over-supply means there’s no money in selling images any longer. Effectively stock photography has been turned into a de-facto hobby business for many and most (of the ones who I know, at least) earn a far greater proportion of their income from corporate assignments where they are usually required to hand over copyright to the client. Kodakcoin won’t change any of that.
One supposed benefit of Kodak’s blockchain is the DRM element where ownership of images can be registered and tracked. The fact the blockchain is owned entirely by them, however without interoperability or integration with anything else (e.g, PLUS or even a body like CEPIC) means that photographers would be tied into Kodak with this, or they are obliged to register their photos with the other photo blockchains that will probably appear. I believe they have missed the point over blockchains. A consortium model composed of many different parties is required for this model to be successful (which may also include other entities they might regard as direct competitors). I strongly suspect that they have been blinded by the whole ICO (Initial Coin Offering) aspect and the opportunity to cash in on the current speculative interest in crypto-digital assets.
In the last year (since the dramatic rise in value of Bitcoin) I have heard blockchain tech compared to tulip mania. I don’t think this is entirely accurate, a better example would be railway mania. The key problem blockchain technology can solve is tracking transactions and interoperability between different systems, i.e. being able to exchange data without having to re-invent the wheel for each independent counterparty. These sort of mass data-transport problems are ordinarily very expensive to solve and create all kinds of other logistical challenges, the emergence of blockchains has made it far easier (and cheaper) to solve. Once they are addressed, however, users rapidly assimilate the benefits and the providers disappear into the background, out of sight and out of mind (i.e. they get taken for granted). In other words, they become ‘maintenance features’ or utilities.
The primary use-case for blockchains is a distributed transaction ledger which can potentially be used without needing to know or trust multiple counterparties who you need to exchange data with. That is a very fundamental and low-level service which most people don’t fully grasp the benefits of, until/unless they find themselves in the unenviable position of managing scenarios where it is essential, like digital asset supply chain projects (or, more generically, building Electronic Data Interchange facilities). To make a further comparison, the only time most people care about electrical wiring issues, water not coming out of a tap, or lack of internet connectivity etc is when it has stopped working unexpectedly and it isn’t available any longer. As with railways, they need to become not very interesting for most people before they can become useful (and therefore valuable). Because of this inconvenient dichotomy, many of the proponents of blockchain tech (and opportunists like Kodak) have decided to add some speculative interest in the form of tokens you can trade – the distributed ledger equivalent of printing your own money. This serves a dual marketing and finance function, the former creates the buzz, the latter gives it a price and therefore an implied value (albeit a floating and highly volatile one) which they hope to be able to cash-in before serious questions get asked. This creates either a Faustian pact for those with a legitimate business idea which could undermine the whole reason for doing it in the first place and (conversely) an opportunity for the crooked to operate scams relatively easily: this is the phase we are currently in now.
Apparently Kodak’s stock rose rapidly after this announcement. With the obligatory disclaimer that this isn’t financial advice, I anticipate it falling fairly rapidly again in the not-too-distant future when the realisations sets in that this might be a ‘last throw of the dice’ move for a once preeminent brand whose star has now dimmed. Further, I believe it’s a template that might be repeated for a lot of other blockchain projects where tokens are used as unofficial securities to raise funds. A further concern for everyone else in the tech sector (which includes DAM software) is that all the funding for projects with some more tangible long-term potential will get sucked up by those who have over-promised and who subsequently failed to deliver. For different reasons, you can include many AI initiatives in this category also. When technology speculative bubbles pop, there are usually consequences for everyone else who was even remotely connected with them which can take years to recover from. I think that might unfortunately be the result here. Anyone who was active in the software market around 2001-2003 should understand what I mean by this. Indeed, others have noted that outside the fashionable side of the tech market, there are some signs of a wider tech slowdown emerging at present.
As is usually the case with technology (whether you invest in it with money or via your own personal time and effort) where real value can often be obtained is after there is a huge fall-out and collapse in prices which forces those who remain to start solving many of the problems with it and explaining the benefits in a more plausible (and provable) fashion. The Kodak news is the 180-degree opposite of that and it is not inconceivable that this is the kind of foolhardy corporate manoeuvre that they might never recover from. On the flip-side, the fact they have got involved with something more innovative at least demonstrates there is some willingness to investigate other opportunities outside their previous (and now broken) business model. Further, it does not necessarily mean that having established a foothold that they could not adapt and develop it to address a few of the shortcomings and be further ahead than the competition by having done so at an early stage. Which outcome will result remains to be seen, however, I think I am currently more inclined to back the former scenario.
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