Yesterday, Japan’s Media Do Holdings said it plans to use blockchain for distribution of ebooks, a Nikkei report said. Media Do is an intermediary between publishers and electronic bookstores and accounts for 34% of total ebook distribution in Japan, especially comic books. Its net sales in 2019 exceeded half a billion dollars.
The company will use blockchain for ebook distribution, starting with MyAnimeList, an anime and manga social cataloging site which has more than 11 million monthly users. Apart from fighting piracy, the key innovation is digital content can be re-sold. But digging into the company’s annual results presentation, it has a big vision beyond ebooks. For example, its digital asset model could be applied to live events.
Media Do recently reported its annual earnings, which showed that net sales of ebooks increased by 30% year-on-year to 64.5 billion yen ($601 million). The company deals with over 2,000 publishers and 150 retailers in its distribution channel. The COVID-19 pandemic has influenced the trends among content consumers, who are opting for digital copies.
“The strength of ebooks is the convenience of being able to purchase and use them 24 hours a day, 365 days a year. With the new corona, the value of electronic books is recognized and it will further spread their use,” said Kyoji Fujita, President of Media Do.
To address rising demand, and protect the interests of content creators, Media Do said it will explore blockchain applications in its ecosystem. It plans to invest about 300 million yen ($2.8 million) over two years to introduce blockchain in the distribution of ebooks. The first service will launch in Q3.
Some of the benefits that Media Do expects from this innovation is creating a secondary market so that users can sell used ebooks. Previously, it was difficult to keep track of second-hand books, but using blockchain Media Do will be able to record such transactions and pay royalty fees to content owners.
New digital asset business models
In its investor presentation, Media Do outlined its vision of what it calls a Digital Content Asset.
It classified existing platforms such as Spotify, Kindle and Netflix as content sales and subscription models. With blockchain, it sees the addition of an asset model that can co-exist with legacy models. And it’s not just talking about ebooks, but also music and visual media including live concerts.
With a hypothetical average fee per transaction of ten yen (9 cents), it sees potential annual revenues of 1.7 trillion yen ($15.8 billion).
Media Do’s analysis showed that before the digital era in the pre-2000s the business model for music was CD sales and live events, with live concerts being the most important. As sales migrated to digital, the importance of the two models, rights sales and live events equalized. They gloss over the intervening era when sales were low because of piracy.
Since 2016, Spotify marked the evolution of the subscription model and the relative importance shifted to subscriptions over live events. Media Do sees digital content assets as starting a revival of the importance of live events.
Media Do envisions itself as an intermediary in all these transactions. But one of the aims of blockchain is disintermediation.
Meanwhile, Media Do isn’t the only company targeting this area. Earlier this year, Japan’s Dentsu said it was using blockchain to reward secondary content creators for select manga titles.
And Sony has developed a blockchain rights management system for written works.