This article was written by Digital Asset News editor, Ralph Windsor and is the second of a two part series.
In the first part of this article, I examined what blockchains are (including associated technologies like smart contracts), why they matter for Content Digital Asset Management and how they could be utilised. I also discussed why I believe referring to them as ‘the transactional internet’, rather than ‘internet of money’ is a superior description that better represents their role as a foundational technology with a wider application than is currently realised.
In this second article, I will analyse some example uses of blockchains and also consider their risks. I also introduce the concept of Digital Asset Services Exchanges which I predict will have a major and wide-ranging impact on how Content DAM applications are delivered in the future.
As expounded in the previous article, if you were to base your opinion of blockchains on the press reports about them contained in popular media or on the first page of internet search engines, it is possible to get a skewed perspective that they are exclusively a financial technology concern. While many larger financial institutions have recently become interested in blockchains, they were quite late to grasp their significance and are far from the only stakeholders.
A brief examination of many of the digital tokens currently being released reveals a diverse range of use-cases. As might be expected, there are a number of copycat schemes and others which appear both opportunistic and highly dubious, however, the most common usage scenario seems to be to use blockchain technology as a method to fund open source distributed applications. It is interesting to also compare the first-round funding obtained by some of these projects, with that achieved in the first or even second rounds by the relatively small number of content DAM system vendors who have sold equity to obtain capital investment.
The following is an arbitrary selection of projects that use blockchains and illustrate where they are being applied to a diverse range of problem domains.
Matryx is targeted at academic and scientific users and aims to allow participants to construct a collaborative platform using blockchain technologies where problems can be posted and solutions offered with attribution assigned to everyone who participated and rewards in the form of tokens.
The case-study above references shipping containers, however, from a digital representation perspective they are simply digital assets,. Substitute ‘shipping container’ for ‘content digital asset’ in the description above and you could have a case-study for a Content Digital Asset Management workflow feature. There are a number of other examples of IoT blockchain applications which have similarities with the kind of problems that Content Digital Asset Management solutions have to solve.
As is often the case, new technologies like blockchains have a new set of risks that must be mitigated and there are some major roadblocks which will limit their adoption in the short-medium term also. I believe the force of momentum (and the capital those sort of effects attract) is such that they will eventually get resolved or mitigated to an acceptable degree, but as those readers with a background in history will be aware, nothing is inevitable until it happens.
From the technical minutiae through to industry challenges and wider economic and political issues, here are some of the many issues that may frustrate adoption of blockchains for Content DAM (and a number of other applications also).
Many Content DAM vendors have not re-architected their applications to use either a true Services Oriented Architecture, or microservices where each component can be separated from the rest (and potentially offered independently). This is essential to implement them as smart contracts that run on blockchains. Most Content DAM systems are ‘balls of mud’ and use a monolithic, quasi mainframe-era sales model where the vendor requires customers to single-source everything from them. Until/unless enough of them are willing to address this, blockchain-based Content DAM applications are impractical. A mitigating factor is that once a few software vendors begin to realise there is demand from end-users for this model (and that they can generate increased revenue as a result) that might, in-turn, encourage more to follow suit.
The performance of blockchains when it comes to storing and retrieving data makes it impractical to use them as a direct replacement for conventional databases. The current throughput of the Ethereum blockchain is between seven and thirteen transactions per second – which is exceptionally slow compared with a conventional database. Even if that issue gets resolved, migrating very large volumes of data from existing databases to blockchains will still be impractical. The current method of rationing blockchain usage is to charge fees, which would have the effect of forcing costs up and reducing adoption. For this reason, databases like Oracle, SQL Server, MySQL (and some more recent NoSQL, non-relational kinds) are still likely to remain the tool of choice for many applications and progress to replace them with blockchain alternatives will take a long time to achieve.
Although cryptography is used to validate transactions, data held inside the blocks on blockchains is not encrypted unless whoever is adding data does it themselves. This means that data is visible to anyone who has access to the ledger and will be in the same state that they supplied it. This implies that encryption keys need to be stored with even greater care than is the case now since if they fall into the wrong hands, the data is available to anyone who can access the blockchain – which means everyone in the case of a public blockchain. This factor is likely to make prospective blockchain/distributed application users reticent to agree to their data being committed to public ledgers (or even shared ones with a limited number of participants). A likely scenario for some time is a hybrid approach where only non-sensitive data is held on a blockchain and the rest is kept off it (see the Dun and Bradstreet example earlier).
Despite recent pullbacks, there is currently an on-going speculative bubble in the price of both the tokens required to use blockchain distributed applications and the forms of funding to finance them. If this market corrects in the manner of railway mania or late 1990s-era dotcom businesses, risk capital will evaporate and innovation slow considerably. Notwithstanding the current token price volatility risks, over the medium to long term all the examples mentioned have eventually recovered and some very large businesses grew out of the wreckage left in the wake of the earlier ‘irrational exuberance’ (to coin a phrase). The risk is still sufficient to slow adoption, however (especially if combined with some of the technical problems described earlier).
Connected to the above risk is a problem with current volatile token exchange rates (which must be purchased to create transactions on most public blockchains). Since these are being used for speculative purposes, the price fluctuations (even on a daily basis) are too extreme to make blockchains practical as platforms to deliver applications. If the tokens are used as mediums of exchange then there must be predictability about the price. Even hedging mechanisms to offer a greater degree of price stability are not ideal because one party might enter a forward contract on one day and then the price declines by 40 or 50% that same week which they are then locked into (thus handing their competitors a substantial cost advantage). While this does occasionally happen with other physical commodities (e.g. crude oil) it is relatively rare and is usually the result of a one-off external physical or geo-political factor affecting supply, such as war or adverse weather. Tokens which act more like data storage in terms of price behaviour are required, i.e. they have deflationary characteristics and prices decline at a gradual rate which can be estimated to allow risks to be managed more easily.
There are some points to note about the current state of the Content DAM market, its history and precedents which have relevance to this discussion as they give context to the discussion and help illuminate the direction it should take.
The Content DAM market in the period from the early 1990s to the early 2000s was heavily oriented towards media companies whose business depended on content assets such as photos, videos etc. This is one reason why the word ‘digital asset’ got used early on, because that what was bought and sold had a tangible financial value which was frequently integral to their ‘unofficial balance sheet’ (even if not present on one that an auditor would be prepared to sign off). The change in delivery technology to web-based interfaces around 2004-2005 was accompanied by an increase in the uptake of Content DAM systems by corporations and other organisations whose primary business was not trading media. The nature of the value being created was more associated with re-use (avoiding re-origination) and productivity opportunities (finding things more quickly). The revisions to both the delivery technology and the typical Content DAM user precipitated a growth period which was sustained for roughly ten years.
The era which we are now in is one of wholesale digital transformation or the digitisation of not just business processes, but the value (or products) they generate. At a fundamental level, this is what digital assets are. As discussed in our digital assets definition article, the range of uniquely identifiable types of digital assets is growing at a rapid pace, along with exponential increases in the volume of digital assets in circulation.
Few people argue about the breadth and depth of digital assets scaling up, however, the poverty of adequate management facilities available is less widely acknowledged, especially where user’s needs are more sophisticated. It should no longer be necessary to need to go to different applications to locate what you want and have to piece it all together with spreadsheets and other ad-hoc manual methods. Further, the artificial distinctions between types of digital assets are disappearing (or at least can become very flexible, very quickly). This is happening within Content DAM as more users demand a digital asset supply chain rather than a DAM system, but I predict it will soon extend across functional boundaries also.
End users will ask why it is not possible to cross-reference sales data with media used for marketing campaigns and combine this with statistics about length of time to deliver to customers to see which factor was the significant reason why product A outperformed product B. While they might be prepared to tolerate some professional services work to carry out these kind of studies, they will expect the cost to get cheaper and the process to become incrementally easier with the ultimate objective of them being able to quickly set this up on their own analysis with no special effort nor training being required. They will not put up with being presented with expensive demands for fees each time. Further, they will want to be able to use the skills and talents of a more diverse range of personnel and specialists according to their current (and ever-changing) needs.
The previous paragraphs define the problem. In the section below, I will describe a solution that is both scalable, sustainable and which uses transactional internet technology such as a blockchain.
I believe that Content DAM meets all the criteria for a problem domain that is suited to blockchain technologies, however, the current limitations make it impractical to implement everything using one exclusively (and that will remain the case for quite a long period of time). The major opportunity for Content DAM with blockchains is the creation of what could be referred to, ‘Digital Asset Services Exchanges’.
As the adoption of microservices architectures to deliver applications increases and more users seek out platform solutions that can be loosely coupled together, something is required to link up all these disparate components. All the efforts to derive Content DAM standards have so far come to nothing and the major reason for this is because there is no commercial incentive for anyone to do much to seem them come about. There is also a lack of trust between market participants on the sell-side (nor a great deal on the buy-side, it should be noted). Blockchains and the associated components that accompany them such as smart contracts etc provide an ideal platform to deliver a Digital Asset Service Exchange where buyers and sellers of content digital asset services (whether applications or those offered by human beings) can be connected. The shared data blocks and method of access offer a method to give access to only the relevant data, without exposing it all. Most existing blockchains provide a ready-made capability to record fees applied (this being their original use-case) so accounting for usage is relatively easy to achieve. A further benefit is that other digital assets (that may not be content-oriented but are stored on the same blockchain) can be leveraged to meet some of the reporting or other special case requirements such as those I have described earlier.
This is how I foresee Content DAM expanding to make use of blockchains. It is the foundational technology to provide a Content Digital Asset Management services exchange where different participants can contribute to a solution collectively and in an ad-hoc manner that is more responsive and adaptable to modern business needs.
As hinted at earlier, the opportunity to earn revenue by providing microservices to other users obliges whoever provides them to adhere to some common standards, otherwise they will be harder to integrate with and less likely to be utilised. A digital asset services exchange can therefore be a catalyst for interoperability that has some clout behind it, because if vendors don’t adhere to it, they can’t sell anything via that channel.
There is opportunity for greater separation between the front-end user interface and the back-end services. A brief analysis of Content DAM vendor products reveals that some are better at interfaces than they are at services like transcoding, search, metadata management etc. Using a DAM services exchange, they can focus on this aspect and use another provider for the other elements. The same is true in reverse also.
Those who want their own custom Content DAM can cherry pick how much (or how little) they want to build themselves rather than engaging in ‘fishing-trip’ software developer indulgences because the available off-the-shelf options lack one or two features which render them unsuitable.
Ancillary tool vendors who currently have to develop integration components with vast ranges of different products only have to provide a single integration protocol which is compatible with the requirements of the exchange.
Information scientists and others who have an interest in more sophisticated schema such as the Semantic Web can build a data access layer using the integration protocols enforced by the exchange. These can exist optionally and independently, side-by-side with whatever schema are already in-use.
Human service providers (e.g. keyworders, findability experts, consultants etc) could offer their services and use the blockchain to record service contracts, billable time and other administrative tasks that are necessary but add little in the way of client value.
Information about Intellectual Property and Rights Management can be recorded on a blockchain operated by this Digital Asset Exchange so there are immutable records about the origins of assets. These can be integrated with embedded metadata protocols to bolster what is already being stored inside a media file and also potentially use checksums or hashes from assets to re-connect stripped embedded metadata back with the original source again.
A Content DAM Services Exchange would offer a very large repository of human activity and interaction with content digital assets (or other types). This would all be recorded in a structured format using standardised protocols. For those with an interest in AI and Machine Learning, this offers a far more reliable source of data than relying solely on imprecise and error-prone visual recognition techniques like bitmap pattern-matching.
Irrespective of what your interest is in Content Digital Asset Management (whether buy or sell-side) I cannot think of anyone involved who would not find a Digital Asset Service exchange of value. A blockchain offers the infrastructure necessary to support Content Digital Asset Supply Chains and avoids all the custom implementation work that is currently necessary to implement them.
I see the widening scope and the interest in digital assets in other sectors as a huge opportunity for Content DAM. Blockchains (and specifically, the fact the proponents of them use the word ‘digital asset’ to describe the value they represent) offer a method by which the Content DAM sector can get out of the innovation rut it currently finds itself in, solve multiple interoperability issues and integrate content digital assets with other digital transformation initiatives. Content digital assets are going to be part of a wider digital asset supply chain because the economics will encourage enterprises to progress towards ever greater efficiency in order that they can extract ever greater value from their digital assets and convert that back into bottom-line profit. More organisations will want to manage content digital assets using tools and services they can re-use for all the other kinds of digital assets they are now increasingly being required to deal with. Those application vendors that refuse to acknowledge the commercial realities at work here are at risk of becoming obsolete.
I invite those who share my view to consider what a Content Digital Asset Services Exchange implemented using blockchain technology could offer Content DAM to resolve both the structural economic issues within the sector and the interoperability challenges it has still to successfully resolve.