Blockchain technology has reached e-books.
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B2C applications focus on the user experience, by using blockchain technology to help emulate consumer ownership of digital content. The idea is this: a user buys a digital content file. A record of the purchase is put on a blockchain, which establishes the user’s ownership of the file. The user gets a token — a small digital file — signifying ownership. The user can alienate (sell, lend, rent, or give away) the file to someone else. When that happens, a record of the new ownership is put on the blockchain, and the token moves from the user to the new owner.
The question of whether you own a digital file you’ve obtained legally has been a controversial one for a long time. If you own a copyrighted work, you get a set of rights under copyright law. But if you get a digital file that takes up space on your device (as opposed to a digital physical object such as a CD or DVD), the law says that you don’t get that bundle of rights; instead you get whatever rights the distributor decides to give you in a license agreement, which is a contract. Often those rights are narrower than the copyright rights bundle. For example, typical license agreements of this type forbid you from alienating the file — which you have the legal right to do for physical objects. The law also says that such restrictions in license agreements are enforceable, despite the fact that they curtail the rights in the copyright bundle.
But legal constraints on use are not the same as practical, technical constraints, which may be tighter or looser than the legal constraints. Broadly speaking, there are two current paradigms for this. In one, users are technically able to do anything they want with their files, including sending copies to their million best friends, posting them online for anyone to download, selling copies and keeping the revenue, and extracting samples to create derivative works — as long as they don’t get caught, because the license agreement with the retailer probably forbids those activities.
In the other paradigm, technical constraints make it difficult or impossible to alienate content, share it with others, create derivative works, and so on — regardless of whether the license agreement forbids or allows such activities. This is the case with movies and TV shows; it’s also the case with most e-books in the U.S. and some other countries.
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The basic concept behind today’s e-book/blockchain startups is to emulate ownership — as a practical, technical matter — more closely than existing digital content distribution systems do. The idea is to use two properties of blockchains that help facilitate digital ownership. First, blockchains are ownerless, so that a record of file ownership on a blockchain is not controlled by a central distributor such as Amazon or Apple. Second, blockchains are immutable, so that if a system puts an entry on a blockchain that you own an e-book, that entry is there to stay forever, even if the vendor whose technology you used to buy the e-book goes out of business. And if you sell the e-book to someone else, another entry goes onto the blockchain that also stays there, unaltered, in perpetuity.
In other words, blockchains enable transfers of ownership that are secure and not controllable by a third party after the fact. But there are other aspects to emulating ownership, such as not being able to send copies to your million best friends or keep your own copy after you’ve alienated it. For this, DRM is necessary. Files must be encrypted, and tokens are really glorified DRM license files that contain encryption keys and information about usage rules.
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Most e-books still have DRM, at least in the United States, UK, France, South Korea, and elsewhere. Most users expect it, even if some don’t like it. Furthermore, explicitly non-ownership models for e-books have been held at bay, mainly by major trade publishers that won’t license their titles to monthly-subscription services such as Scribd and Amazon Kindle Unlimited. Therefore, a B2C blockchain scheme could possibly work for e-book distribution.
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Sure enough, both of the startups I’m talking about here use DRM, even though neither of them likes to talk about it. One is Bookchain, from Montreal-based Scenarex, which the company expects to launch next month; the other is Publica, based in Gibraltar and Latvia, which is up and running. Publica calls its Token Key Protocol (TKP) a “successor” to DRM.
Both of these schemes are targeted towards independent authors who want to sell their books outside of the mainstream e-book platforms. Both use the Ethereum blockchain, which supports smart contracts. Smart contracts are constructs that enable rules to be encoded and enforced across all copies of a blockchain. In this case, smart contracts embody rules about e-book ownership. They ensure, for example, that when you sell your e-book to someone else, they get rights to the e-book and you don’t anymore. Or if you bought two copies of the e-book and you give one copy away, you only have one left for yourself.
Bookchain and Publica both enable resale and other forms of alienation. Bookchain allows sellers (authors or publishers) to place constraints on resale, such as minimum or maximum prices, or whether a portion of resale revenue goes to the original seller; whereas Publica doesn’t enable such constraints. Both make their money by taking commissions on all transactions (first sale or resale). Both use the standard EPUB format and have their own e-reader apps: Bookchain’s will be web browser based while Publica’s are mobile apps for iOS and Android.
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What does ownership mean, anyway? Two legal scholars, Jason Schultz of NYU and Aaron Perzanowski of Case Western Reserve, wrote an entire book about ownership in the digital age two years ago, in which they explain what ownership means in legal terms, lament the deterioration of digital ownership, and propose legal mechanisms to restore it. But in lay terms, ownership means that you get something that you can call your own, that belongs to no one else; that you can point to and keep and protect as your property; that you can alienate as you wish but then it’s not yours anymore. This means that being able to make a file freely available online for anyone to copy and use — while certainly desirable for consumers — isn’t ownership anymore; it’s something else. As a practical matter, it doesn’t coexist with the other attributes of ownership.