Blockchain relevance and advantage over the existing model

The existing model of film distribution was created decades ago and hasn’t adapted well for the Internet age.

It suffers from several serious problems:

· Lack of trust and transparency

· Administrative burden

· Limited content availability

· Excessive monopolization and centralization

Blockchain offers effective solutions for these problems – both for the content providers at the backend and the audience at the frontend.

Trust and transparency. All the existing VOD-platforms control both the information and the cash flow, which puts the content providers in a disadvantaged position. The platforms receive the money from the customers, then at some later point (next month or next quarter) send royalty reports to the content providers. Content providers have no way to verify any royalty reports and can only blindly trust them. In the trustless blockchain-based system it’s completely different: every film is treated as a smart asset and every digital sale or rental is stored as a transaction in a distributed public ledger. Both the platform and the rights holders have the same access to the information, which nobody controls, and nobody can manipulate.

Administrative burden. Royalty reporting and invoicing are complicated and time consuming – both for the platforms and the rights holders. This burden is especially heavy for independent companies with limited administrative resources. Blockchain nullifies this burden. The rights holders will be able to integrate the public ledger with their own data systems or to export the information from it in any suitable format. No more issuing invoices, tracing them and making angry phone calls about payment delays – the rights holders will receive the money automatically, according to smart contracts, in tradable crypto tokens, with zero administrative efforts on both sides.

Limited content availability. The main film distribution model at today’s global market is based on a century-old concept of selling exclusive rights for a limited period (usually 7-12 years) for every country to a local distributor. Changes in distribution technologies and consumers’ behavior make distributors’ situation increasingly difficult, which results in falling number of films being sold. If a film is not sold to a local distributor in a certain country, it’s not legally available for the audience there and can’t generate any revenues for its rights holders. We offer rights holders a possibility to make every film globally available through a blockchain-based marketplace, which would guarantee them instant revenue sharing and transparent incorruptible reporting. Smart contracts for every film would define the recipient of revenues generated in each country: either the local distributor if the film is sold for this territory or international sales agent if not.

Excessive monopolization and centralization. Today’s global VOD-market is strongly dominated by a handful of gigantic and highly centralized companies. Their platforms have a similar architecture: they hold rights for a vast number of films but make only a small fraction of their libraries visible for browsing at their virtual “store windows” at web, mobile and smart-TV apps. Most of the films remain invisible to the audience and generate very little income. As the “shelf space” is limited the platforms strongly prioritize the most commercial mainstream fare from major studios, leaving more edgy, independent, niche and foreign language content behind. Our decentralized alternative offers a completely different architecture: we’ll let independent third parties to run their own virtual video stores at our VOD-marketplace. Each of these stores will have full access to our vast film catalog and enjoy total creative and managerial freedom to select, arrange and structure the content for their stores in any way they wish to attract their target audience. Smart contracts will guarantee store operators a fair share of revenues generated by their customers.

True Decentralization. Our marketplace is decentralized on several different levels:

· User – Rightsholders. Any user can buy or rent films from any rightsholder which joins the marketplace. The rightsholder’s share of the revenue is paid by user directly to the rightsholder’s wallet, bypassing the platform.

· User – Stores. User can buy or rent content from an unlimited number of independent stores instead of being confined to a single “one-size-fit-all” store as at today’s major platforms. The store’s share of the revenues is paid by users directly to the stores, bypassing the platform. Any user can start his own store.

· Stores – Rightsholders. Every store can sell or rent any film available at the marketplace, according to the basic terms of the smart contract defined by the rightsholder. No further consent either from the platform or from the rightsholder is required. The stores and the rightsholders can communicate with each other directly to maximize sales and visibility of the content.

Monetizing of content and token’s role: The marketplace will be based transactional video-on-demand (TVOD) model, which means that the customers will pay for each film rental and download, upgraded to a new “BVOD” level, i.e. the blockchain-based video-on-demand. The prices will be defined by the rights holders. Our own ERC20 CNZ-token will be used as a means of payment inside the marketplace and to support a self-sustained eco-system. There are several purposes for CNZ-tokens inside our system:

· As a mean of payment for films purchases and rentals by the marketplace users.

· As a mean for remuneration of stores and rightsholders

· As a resource needed to run a store on our platform. Every store would need a certain number of tokens prior to its set-up. Popular stores will get a corresponding token reward and easily recoup the upfront costs and generate profits, while unsuccessful and dormant stores will be gradually filtered off the system.

· As a reward for users that will be adding value to the content. For example, enriching content metadata, creating new localizations, or writing reviews.

· Tokens can be used for facilitating further royalty payments down the production chain. For example, a sales agent must pay royalties to the film’s producer and a producer might need to

pay royalties to actors, director and other crew members. All these splits of revenues can be tokenized and included into smart contracts.

A fixed number of CNZ-tokens will be issued at the start of the project and a part of it would be offered for crowdsale. The price of tokens will be defined dynamically based on the library volume and number of transactions. The constantly increasing numbers of both films and users will create an upward pressure on the token’s value.

Blockchain: Our main goal now is a functioning and usable software. That is why we put much effort into designing the best possible solution that is fast, cheap, and safe at the same time. Considering the drawbacks of many current blockchain implementations, we are running our custom distributed ledger on top of the public blockchain. Such hybrid solution eliminates unnecessary transaction fees for end users, increases system throughput, and at the same time provides trustless properties and high level of security that is backed by the public blockchain network.

Protocol: We are creating a trustless blockchain-based media protocol that protects the content. Content providers will have a possibility to store their locked films on a distributed file storage (e.g. IPFS) and our protocol will guarantee that this content can only be unlocked by executing the smart contract. Our smart contract in turn will guarantee a fair token distribution among all contributing parties.