Companies are using new applications to rethink their business models and — in some cases — disrupting their industries.
Though blockchain technology began as an innovative digital-currency1 tool in the financial sector, all kinds of companies are now experimenting with its core capability as a decentralized and secure ledger to manage digital assets more directly and to rethink how they compete in the marketplace.2 In a recent study, two of us found that more than 1,100 startups were attempting to develop blockchain-based business models in a range of settings, including health care, telecommunications, energy, retail, aviation, real estate, and supply-chain management.3 So far, there has been no significant impact on the respective markets in terms of revenue and market share, but managers’ and investors’ expectations for future returns are high, as indicated by the flow of money into blockchain startups.
In particular, several new business models are emerging in the media and entertainment industries, where monetizing value has been — and continues to be — a significant challenge. Newspapers and magazines, for instance, still struggle to monetize value in the face of plentiful free content and limited mechanisms for protecting intellectual property. Advertising revenue, long an important income source for publications, has shifted to social media and search platforms, and media companies must figure out how to compensate.4 In the music world, to cite another example, digital content distribution via streaming is beneficial to major record labels and top-tier artists. But it isn’t commercially viable for smaller labels or average musicians, who receive only a tiny fraction of the revenue generated from their music.5
Some experts think blockchain may increase the share of revenue captured by content creators and producers by introducing new mechanisms for monetization.6 However, the current hype about blockchain, the diversity of use cases being proposed, and their potential disruptive effects make it difficult for companies to judge what might be possible for them and what’s merely a pipe dream. That’s true across industries, but media and entertainment companies are wrestling with this challenge in a way that many businesses can identify with and learn from in an age of digital transformation, so we’ll focus on them in this article.