Blockchain, the hyped up technology behind bitcoin, is venturing into the news industry, promising more transparency, accountability, and a transfer of power to authors. But how can newsrooms leverage this technology if they can’t make any sense of it?
We talked to David Schlesinger, founder of Tripod Advisors (advising Hubii) and board member of the Global Editors Network; Daniel Sieberg, who recently left Google to cofound journalism marketplace Civil; and Mads Holmen, founder of London-based recommendation service Bibblio to attempt to explain blockchain in simple terms: how it could shape the future of the news industry, the technology’s monetisation potential, and why it is now like the Internet was in the early 1990’s.
What is blockchain?
Schlesinger tells us to look at Blockchain like a beehive where each cell within the hive is linked to another. If one of those cells disappears or turns bad, it is immediately visible and the hive is no longer intact.
- Blockchain is a decentralised and distributed ledger: a consensus of data across many different computers, or nodes, allowing reliable transactions between people.
- All transactions or blocks are organised in chronological order and linked together, open for the entire network to see.
- Every block is associated with a unique cryptographic signature that is easy to verify and almost impossible to falsify, making it highly secure.
- If there is an attempted modification, it will be visible to the entire network. Anything that happens to the blockchain has to have total consensus across the entire network.
What is ethereum?
- Ethereum is a blockchain based computing platform that allows smart contracts — a secure, transparent transfer of assets between a buyer and seller.
- It provides a cryptocurrency called ‘ether’ that can be transferred between accounts.
What is a token?
- A token is built on top of a blockchain and represents a digital asset that you own and can transfer to somebody else (like bitcoin or ether).
What is an ICO (Initial Coin Offering)?
- An ICO is used by companies to raise capital very quickly.
- Instead of selling shares like in an IPO, companies sell tokens in return for money or other cryptocurrencies like bitcoin.
- The tokens capture the value of the ecosystem. The busier the ecosystem, the more demand there will be for tokens, thus making them more valuable and prone to being sold and given out early on.
How will this be useful for journalism, you ask?
Smart contracts–Enshrine rights, guarantee rights, guarantee payment
Schlesinger says media organisations need to go back to doing what they do best: recognising and commissioning talent, being an editorial brain through directing coverage, and aggregating different types of content into a package. The things they don’t do so well, such as making sure that rights are obeyed, authors get fair payment, and that content is distributed as widely as possible, should be taken off their hands.
Blockchain can do this.
The smart contracts within ethereum can keep track of things that in the current world have to be tracked in controlled and centralised one-to-one relationships between advertiser and publisher, publisher and author, publisher and reader. With blockchain, the power of the middleperson — the advertiser and publisher — is transferred to the author and the reader: instead of just one or two bodies controlling the ownership of the information, it is controlled by everyone who has sight of the blockchain.
Imagine you are writing an article for the Global Editors Network, says Schlesinger. Within the smart contract of the blockchain, you can say that the article is free to use for anybody who has attended a GEN Summit, but anybody else who wants to reprint it has to pay you a certain amount of money.
Or you are a freelancer who has very little control over their own rights. The blockchain smart contract would allow you, if you so wished, to specify that your article is free to use, but publishers that have a circulation of more than 50,000 would have to pay you.
If nobody bites, you can change the price in the contract.
One of the companies that Schlesinger advises — Norway-based Hubii — is currently undergoing a blockchain transformation. The company began its life as a location-based news aggregator and has recently undergone an ICO and will use the blockchain environment to create a marketplace for content. The tokens that have been sold in the ICO will become more valuable as more people get involved and the tokens can be directly transferred between publishers and authors as payment.
The company also wants to introduce a verification process, where people are rewarded with micropayments for helping to verify news content. If an author uploads an article to the platform, they can request verification to minimise danger of being labelled ‘fake news’. Fact checking is then crowdscourced from the community, and according to the rules of the smart contract, ‘X per cent of the earnings of the article will be shared among the verifiers’.
Solving all the industry’s problems at once: no censorship, no advertising, no fake news
Another online content marketplace that will soon be undergoing an ICO is Civil.
‘The net result of Civil is a self-sustaining global marketplace for journalism that is free from ads, fake news, and outside influence’, states Civil’s whitepaper. The marketplace will include journalists, readers, officers, and an advisory board.
‘Journalism will be one of the first, truly consumer-facing applications of blockchain technology. Civil’s model will introduce the power of blockchain to a much broader, consumer-centric audience, marking one of — if not the — first consumer-focused applications of blockchain,’ says Sieberg.
According to Civil’s whitepaper:
- Civil is building a newsroom platform using blockchain technology and cryptoeconomics to create an open marketplace for journalists and citizens.
- In this self-governing marketplace, readers directly sponsor journalists using Civil’s cryptocurrency (CVL) and journalists collaboratively run their own publications called Newsrooms, thus kickstarting a new collaborative model for the production and distribution of news.
- Incentivised collaborative editing and fact-checking will limit misinformation. Fact checkers earn CVL tokens and build reputations. Newsmakers will seek out highly effective fact checkers to build their reputation.
- The CVL tokens will be sold in the ICO, and they should increase in value as more and more people sign up over time. This will make Civil a self sustaining market place that can in turn fund more ambitious reporting.
The easiest way of understanding Civil is that blockchain allows for an immutable record of data that promises a permanent archive of content, which is completely transparent and open to the public. This means that no third parties, including the traditional intermediary institutions like governments and corporations, can alter information without the entire network being made privy to the change and having to give consent. This should therefore limit censorship and intellectual property disputes.
‘As journalists, it’s pretty obvious why that would be valuable to us. The whole idea of being an incorruptible record is what journalism is all about’, says Maria Bustillos, head of Popula, an alternative news and culture publication, in an article on Nieman Lab.
Sieberg says ‘Civil brings together people and journalists in a way that can put a spotlight on underreported areas like local, investigative and policy reporting. This can be driven by people wherever they live — or around topics that matter to them.’
The question here is whether such an endeavour really needs blockchain technology.
The platform and the CVL token sale (IPO) will launch in early 2018 with live newsrooms including Popula. ‘Bustillos, whose writing has appeared in The New Yorker, The Awl, Harper’s, the Guardian and The New York Times, will manage the Popula newsroom, joined by Sasha Frere-Jones, Ryan Bradley, Aaron Bady and other well-known journalists’, according to a Medium article.
‘More than a dozen journalists from the likes of New Yorker, LA Times and Politico’ have already signed up to create the ‘first fleet’ of journalists, who will be running their own Civil-based publications, adds Sieberg.
That all sounds well and good, but…
For Civil to work properly, founder Matthew Iles writes that ‘what we really need is A LOT of DIFFERENT people to use that thing A LOT’ in a medium article.
Mads Holmen, founder of Bibblio, questions whether this reliance on the ordinary citizen to get involved is the answer. His company, a recommendation service for internet users, is proposing a B2B blockchain token approach where publishers can trade traffic and revenue with each other through tokens without any users or other third parties having to be involved.
He explains by telling us to think of two publishers: let’s call them Publisher A and Publisher B. They both have a module on their page that recommends content related to the user’s interests and the content they’re currently consuming. Some of that content is from Publisher A, some of that content is from Publisher B. In the Bibblio model, when a user clicks through from A to B, Bibblio can determine if it’s a real user who is now engaging with B. A would then get a token from B as they sent the user. Some publishers will gain more traffic than they give, and some will give more traffic than they gain. The publishers either end up having to buy more tokens to keep getting traffic or sell tokens to keep making revenue to fund more content in the future. Bibblio will monitor this system to bring transparency to how traffic moves and to allow publishers to buy and sell tokens.
The key behind this B2B system is to diversify sources of traffic for big publishers. ‘[The Guardian] gets maybe 90 percent of their traffic from Google or other social media. If we can make sure that maybe 25 or 30 percent comes from other publishers, we would make [The Guardian’s] future business a lot more secure and diversified’, notes Holmen. No money would leave the news eco-system: if news publishers are transferring value between one another, the money will go towards creating more content.
Anything else, according to Holmen, is like ‘pouring water into a leaking bucket’.
‘As an example, we work with a travel publisher from the US, called AFAR. What they want to do is basically go out and generate a lot of traffic from travel blogs. The publisher is better at capturing the value of any given visitor than the travel blog is, because the former has better sales teams and they have this travel planner from which they can sell leads to the travel industry. A visitor is worth more to them than than they would be to the blog — the publisher is therefore happy to pay the blog to receive traffic from them. If you’re a blog, it means that now you can actually make revenue and invest in going to more places and creating more travel entries’, explains Holmen.
According to Holmen, Blockchain is the ‘superior’ method for this, as it allows for a transparent peer-to-peer system without anybody sitting in between and running off with the money. Bibblio will benefit from this token system through being able to see how traffic flows between sites as well as having access to more diversified content, allowing them to create a more advanced and accurate recommendation system for their users.
Is it all that easy, though?
A collaborative journalism marketplace such as that of Civil might well be faced with an adaptation problem seeing as it relies so heavily on people. Can ordinary citizens be persuaded to partake in something that relies on a technology that so few properly understand?
Subscriptions are on the up
Some of the nay-sayers are also pointing out that there might not be a real need for blockchain in the news industry since subscriptions for news outlets like The Washington Post and the New York times are picking up. These outlets are continuing to conduct the ‘top-notch investigative and enterprise journalism they’re known for’, writes Ken Doctor of Newsonomics in an article published on Poynter. ‘What we’ve seen in traditional models is that people will pay, and if people will pay on a subscription basis, the system works […] It is the institutional structures of longstanding media brands that have resonance in the modern world. We don’t need to create new brands or works and hope that people will hopefully try them.’ (Pew research, however, has found that while subscriptions for the largest US newspapers have surged, circulation and revenue for the industry overall are still falling.)
A conservative industry
Schlesinger points out that the news industry is a ‘horrifically conservative industry […] People hate change, people hate to embrace new things, there are plenty of people who would probably go back to typewriters if they could. The idea of embracing a whole new ecosystem is scary to some people. They would rather avoid it than think about how it could actually benefit them’.
Schlesinger also draws our attention to the fact that things can go wrong in the incorruptible world of blockchain. While cryptocurrencies and blockchain are separate things, they are tied together.
‘I think there is currently a huge bubble in cryptocurrencies and if that pops, or [if] there is some scandal around cryptocurrencies, it could damage the trust that is necessary for people to experiment more with blockchain’, Schlesinger says.
He adds that blockchain in the news industry has been completely tied up with token issuance and token environments, which regulators have been taking a very close look at.
‘I think excessive regulatory zeal could really dampen the experimentation that is necessary for this to take off.’
Will Blockchain save the news industry then?
Holmen and Sieberg agree that the blockchain space is like the Internet in the early 1990’s.
‘You can laugh now. And in ten years it might not have changed very much, but it will change the whole world’, says Holmen. ‘There are currently 18 million [cryptocurrency] wallets in the world, which is the equivalent of Internet users in 1994.’
Blockchain is placed just before the Trough of Disillusionment on the Gartner Hype Cycle for Emerging Technologies, 2017, meaning that we are about to reach the stage ‘where all the good [blockchain] companies will actually be built’.
Schlesinger concludes that it is clear that the current news ecosystem is failing and that blockchain has the potential to transform it.
‘Whether it is the panacea or not, I don’t know that. But I do think there are many aspects to it, particularly the smart contract, particularly the distributed ledger, particularly the notion of community trust that could help form the news ecosystem of the future’.
David Schlesinger is founder and managing editor of Tripod Advisors, a D.A. Schlesinger Limited company. He was chairman of Thomson Reuters China after serving as editor-in-chief of Reuters for over four years. Disclaimer: he is adviser for Hubii.
Daniel Sieberg is cofounder and head of journalism operations at Civil. Before that, he worked at Google News Lab for over six years.
Mads Holmen is founder of Bibblio. Before founding Bibblio, he was planning director at AOL Europe.
Blockchain: so that newsrooms can go back to doing what they do best was originally published in Global Editors Network on Medium, where people are continuing the conversation by highlighting and responding to this story.