Ledger Domain: How and Why Marketers Can Improve Their Implementations of the Blockchain

Looking At Milky Way, Image by Wall Boat

Is there any product, service or technology out there today that’s just a click away from offering people the virtual equivalent of a cure for the common cold that costs less than a dollar and tastes better than chocolate? No, of course not. But as new innovations inevitably rise and fall along the waves of the tech hype cycle, the true potential of The Next Big Tech Thing often takes years to become fully realized and optimized for a deep and wide variety of markets.

One of today’s leading candidates competing for this top-level billing is the blockchain.¹ It is enjoying massive media buzz, investment and experimentation in configuring it for a diversity of applications including, among many others, food supply chains, financial services and artists rights. This technology is providing new means to accomplish business tasks more securely and reliably, thus increasing operational efficiencies.

Yet whether the blockchain can and will fully and effectively scale in all circumstances still remains to be seen by many sectors of the business world. An inherently key question at the very heart of the blockchain’s growth and acceptance is whether marketers and advertisers can leverage many of its technological virtues and, if so, how they can best accomplish this?

Taking a deeply insightful and informative look at of the latest developments concerning this is a highly informative recent article entitled How Blockchain Can Help Marketers Build Better Relationships with Their Customers, by Campbell R. Harvey, Christine Moorman and Marc Toledo, posted on the Harvard Business Review website on October 1, 2018. I highly recommend a click-through and full read if you have an opportunity.

I will summarize and annotate this, reference in some related Subway Fold posts, and then pose some of my own ad-free questions.

The Benefits of Diminishing Transaction Costs

Economic Gardening, Image by Missy Schmidt

According to a February 2018 CMO Survey, just 8% of its participants rated the usage of the blockchain in their marketing operations as being “moderately or very important”. This technology is still “not well understood” among marketers and perceived as being over-hyped. This has resulted in a “wait and see” attitude about it. Nonetheless, there are compelling reasons to understand the blockchain and build specific marketing applications for it that will be more likely to benefit early adopters and innovators.

The blockchain’s virtues of “transparency, immutability and security” make it very suitable for a wide range of transactional and managerial functions. Likewise, it lowers the costs involved in executing all of these activities and, even more importantly, the need to rely so heavily on the web’s giant advertising intermediaries (primarily Google and Facebook), may be reduced. As well, the means now exist using this technology to permit consumers to better “own and control” their personal data.²

Currently, electronic transactions using credit and debit cards involve significant costs to online and real-world vendors. These associated costs are passed along to consumers. Sellers often set minimum purchase thresholds to maintain their profitability.

However, the transactional costs of using the blockchain are approaching zero. For example, MasterCard and Visa have implemented blockchain-based alternative systems enabling customers to “send money in any local currency”, without using a credit card. This again removes any embedded intermediaries and “connects directly to the banks” involved. Consequently, cross-border fees can be dispensed.

There are other advantages emerging for marketers and advertisers involving exchanges of real monetary value with consumers. Rather than these professionals all relying on third-parties such as Facebook for acquiring troves of customer data, they could instead use a system of micropayments³ to directly reward consumers for their personal data. For instance, under this alternative model, a supermarket chain could provide shoppers with a mobile app that pays them to install it, tracks their location, and use it for special deals on merchandise at personalized prices4.

Similarly, marketers could employ the use of smart contracts that vitiate the “need for validation, review, or authentication by intermediaries”. These can be engaged when participants subscribe to an email newsletter or customer rewards program. (More on this below.) The micropayments here are dispensed to consumers whenever they respond to a vendor’s emails or advertisements.

Like Flamingo Synapses, Image by Donal Mountain

Alleviating Google’s and Facebook’s Dominance in Online Advertising

This direct-reward-to-consumers architecture could similarly be deployed for the engagement of website ads. Presently, most users are put off by the current system of intrusive pop-ups and other forms of unavoidable online advertising. A growing Web-wide push back to this has been the use of ad-blocking browser add-ons.5

New alternatives based upon the blockchain can “recapture” some this lost ad revenue by directly compensating online consumers “for their attention”6. This could potentially diminish Google’s and Facebook’s lock on the majority of online ad and data revenues.7 Blockchain options will also enable individuals to “control their own online profiles and social graphs”.8

Taken together, these possibilities might permit companies to:

  • interact directly with their consumers
  • bypass patronizing the social media and search giants, and
  • avoid relentless email solicitations and “follow-me ads”

Furthermore, meaningful cost savings can be directly passed along to consumers by virtue of this voluntarily consumed advertising via these types of blockchain-supported conduits.

Image from Pixabay.com

Shutting Down Online Frauds and Spam

By 2016, $7.6 billion was appropriated by “fraudulent or deceptive activity” and is expected to increase soon to nearly $11 billion. Nonetheless, marketing teams who deploy the blockchain to “track their ads” can:

  • maintain control over their online activities
  • be more confident that expenditures are going to “ROI-generating activities”, and
  • measure the effects of their efforts on a per-user and per-mail scale

Thus, to the benefit of marketers and vendors and to the detriment of bad actors online are the following technological advantages:

Verification: The blockchain can be used to provide verification of “the origin and methodology of marketers”. It can likewise reduce or eliminate large-scale phishing spam through the use of micropayments to the recipients of marketing emails. This will enable “companies to identify consumers” who are genuinely interested in their offerings. Micropayments could then be dispensed in exchange for access to various forms of onscreen content.

Security: Such implementations could also potentially defeat malicious hacks using denial of service attacks (DoS) and could make social media sites more resistant to automated bot accounts. The former are attempts to overwhelm web servers with a flood of traffic and latter are widely used for massive distributions of deceptive information, as well as to illegally appropriate “online advertising from big brands”.

Authenticity: A user’s bonafides is one of the main cornerstones of the blockchain. Turning this into a service, Keybase.io is a company currently working on reducing social media fraud. Their blockchain-enabled app permits individual users to prove they are the “rightful owners” of various social media account. This makes marketing easier to monitor and advertising expenses more supportable.

“Origami Fish – Made by June”, image by Penny

Increasing Revenues from Media Viewership

Original and editorial web content built upon blockchain technology can potentially permit media companies to increase their “quality control and copyright protection”.9 For example, Kodak has developed a new product called KODAKOne, an image rights and distribution platform. It uses the blockchain to record the ownership rights to individual images. Photographers will be awarded greater control over their work than they currently have with how their pictures distribution online. In the future, photographers will automatically be sent payments whenever their content is used. This could probably also be used for video content creators whose work has gone viral.

A company called Coupit also uses blockchain tech to enable marketers to join loyalty and affiliate programs whereby consumers can opt-in and “trade rewards with each other”. As a result, marketers can increase their “visibility and transparency” in order to distinguish inactive from loyal consumers. They can next sharpen their marketing strategies to distribute “targeted offers” to each of these categories.

In those cases where marketers employ a data aggregator or analytics processor, using micropayments will permit companies to circumvent ad-blocking apps10. For consumers, this gives then more fine-point control over their personal data and privacy, and rewards them for their willingness to view advertising that they have chosen.

Taking an alternative approach to content monetization is a new web browser called Brave. In addition to providing many built-in privacy and security features, it contains a blockchain-based feature called Basic Attention Tokens (BATs). These enable “publishers to monetize value added services” whereby users can dispense these tokens to sites they choose for content they select.

“The Crystal Ball”, Image by Gyorgy Soponyai

Companies and Consumers are Both Beneficiaries

Along with the progression of the blockchain’s reach and capabilities, business “intermediaries will need to adapt” accordingly. As discussed above, consumers will be exercising increased control and discretion over how they decide to engage with advertisers and Web threats such as spam and phishing will become self-limiting as their current tactics will be economically undermined.

Balancing this power and attention shift, companies might be able to exert greater control over the “quality of inbound traffic” to their marketing programs and achieve greater understanding of their customers’ needs and motivations.  When pursuing such “high value customers”, these economic incentives will perhaps result in a correspondingly increase in value.

Given all of these advantages that marketers and advertisers have to gain from further embracing blockchain technology, “finding ways to design and implement” them should be a joint effort among corporate decision-makers not just in marketing but also from the strategy, finance and technology departments. Moreover, innovative applications of the blockchain may ultimately be more beneficially in connecting marketers and advertisers with their intended audiences in ways that may have not been otherwise previously possible.

My Questions

  • Given that Google and Facebook currently have an overwhelming lock on online advertising’s multi-$billion revenue streams, will they meet any potential challenges to this with their own blockchain-founded variants? If so, how might they be different in their approach to benefit both advertisers and consumers? At the very least, do they even perceive this as a legitimate threat to their business models?
  • In addition to rewarding consumers with micropayments for ad clicks and content views, what, if anything, could companies do to correspondingly build incentives into their pricing structures for consumers’ purchasers? How should pricing be affected for repeat or bulk purchases by consumers? What if consumers make referrals of additional interested consumers to these blockchain-based vendors?
  • Would using mixed media such as augmented reality and virtual reality lend themselves to blockchain-based marketing implementations to further attract new potential consumers? That is, in return for micropayments disbursed to capture users’ attention, might enhanced advertising or content consumption experiences benefit both advertisers and consumers who would both end up feeling as though they are receiving added value for their participation?
  • What new entrepreneurial opportunities for goods, services and technologies might arise from these new and extensible blockchain-based marketing capabilities?

 


1.  Some examples of earlier implementations of blockchain technology were covered in these Subway Fold posts.

2.  X-ref to the concluding paragraph of the June 7, 2018 Subway Fold post entitled Single File, Everyone: The Advent of the Universal Digital Profile, concerning another innovative effort to return full control of personal data to consumers called the Hub of All Things. Two other similar startups that have emerged during the past few weeks are Inrupt and Helm. This is starting to become a very interesting and innovative space. Furthermore, there was a fascinating and far-ranging article in The New York Times on October 19, 2018, entitled How the Blockchain Could Break Big Tech’s Hold on A.I., by Nathaniel Popper, exploring the possibility of using the blockchain as a means for individuals to control and distribute some of their personal information to be used in AI databases.

3.  Virtual reality pioneer, Microsoft scientist and author Jaron Lanier presented a persuasive case for this, among many other thought-provoking insights about the digital world, in his book entitled Who Owns the Future? (Simon & Schuster, 2013). Highly recommended reading if you have an opportunity.

4Amazon constantly and widely varies it prices based on all of the personal and market data they have accumulated as reported in an article posted on BusinessInsider.com on August 10, 2018, entitled Amazon Changes Prices on Its Products About Every 10 minutes — Here’s How and Why They Do It, by Neel Mehta, Parth Detroja, and Aditya Agashe.

5.  For example, AdBlock and Ghostery, among others, are browser add-ons that can effectively remove nearly all online ads. These apps are continually updated by their developers.

6.  Columbia University Law School professor and New York Times contributing opinion writer Tim Wu wrote a highly engaging book on the past, present and future of how advertising and mass media compete for our attention entitled The Attention Merchants The Attention Merchants: The Epic Scramble to Get Inside Our Heads, (Alfred A. Knopf, 2016). It is very worthwhile reading for its originality and insights.

7.  See the July 25, 2018 Subway Fold post entitled Book Review of “Frenemies: The Epic Disruption of the Ad Business (and Everything Else)” for more detailed coverage on the current state of the online advertising market.

8.  See again the June 7, 2018 Subway Fold post entitled Single File, Everyone: The Advent of the Universal Digital Profile for some of the emerging innovative alternatives in this space.

9.  See also these Subway Fold posts in the category of Intellectual Property.

10.  See the August 13, 2015 Subway Fold post entitled New Report Finds Ad Blockers are Quickly Spreading and Costing $Billions in Lost Revenue.

Does 3D Printing Pose a Challenge to the Patent System?

"Quadrifolium 3D Print", Image by fdecomite

“Quadrifolium 3D Print”, Image by fdecomite

Whenever Captain Picard ordered up some of his favorite brew, “Earl Grey tea, hot”, from the Enterprise’s replicator, it materialized right there within seconds. What seemed like pure science fiction back when Star Trek: The Next Generation was first on the air (1987 – 1994), we know today to be a very real, innovative and thriving technology called 3D printing. So it seems that Jean-Luc literally and figuratively excelled at reading the tea leaves.

These five Subway Fold posts have recently covered just a small sampling of the multitude of applications this technology has found in both the arts and sciences. (See also #3dprinting for the very latest trends and developments.)

Let us then, well, “Engage!” a related legal issue about 3D printing: Does it violate US federal copyright law in certain circumstances? A fascinating analysis of this appeared in an article on posted January 6, 2016 on ScientificAmerican.com entitled How 3-D Printing Threatens Our Patent System by Timothy Holbrook. I highly recommend reading this in its entirety. I will summarize and annotate it, and then pose some of my own non-3D questions.

Easily Downloadable and Sharable Objects

Today, anyone using a range of relatively inexpensive consumer 3D printers and a Web connection can essentially “download a physical object”. All they need to do is access a computer-aided design (CAD) file online and run it on their computer connected to their 3D printer. The CAD file provides the highly detailed and technical instructions needed for the 3D printer to fabricate the item. As seen in the photo above, this technology has the versatility to produce some very complex and intricate designs, dimensions and textures.

Since the CAD files are digital, just like music and movie files, they can be freely shared online. This makes it likely that just as music and entertainment companies were threatened by file-sharing networks, so too is it possible that 3D printing will result in directly challenging the patent system. However, this current legal framework “is even more ill-equipped” to manage this threat. Consequently, 3D printing technology may well conflict with “a key component of our innovation system”.*

The US federal government (through the US Patent and Trademark office – USPTO), issues patents for inventions they determine are “nontrivial advances in state of the art”. These documents award their holders the exclusive right to commercialize, manufacture, use, sell or import the invention, while preventing other from doing so.

Infringements, Infringers and Economic Values

Nonetheless, if 3D printing enables parties other than the patent holder to “evade the patent”, its value and incentives are diminished. Once someone else employs a 3D printer to produce an object covered by a particular patent, they have infringed on the holder’s legal rights to their invention.

In order for the patent holder to bring a case against a possible infringer, they would need to have knowledge that someone else is actually doing this. Today this would be quite difficult because 3D printers are so readily available to consumers and businesses. Alternatively, the patent laws allow the patent holder to pursue an action against anyone facilitating the means to commit the infringement. This means that manufacturers, vendors and other suppliers of CAD and 3D technologies could be potential defendants.

US copyright laws likewise prohibit the “inducement of infringement”. For example, while Grokster did not actually produce the music on its file-sharing network, it did facilitate the easy exchange of pirated music files. The music industry sued them for this activity and their operations were eventually shut down. (See also this August 31, 2015 Subway Fold post entitled Book Review of “How Music Got Free” about a recent book covering the history and consequences of music file sharing.)

This approach could also possibly be applied to 3D printing but based instead upon the patent laws. However, a significant impediment of this requires “actual knowledge of the relevant patent”. While nearly everyone knows that music is copyrighted, everyone is not nearly as aware that devices are covered by patents. 3D printers alone are covered by numerous patents that infringers are highly unlikely to know about much less abide. Moreover, how could a potentially aggrieved patent holder know about all of the infringers and infringements, especially since files can be so easily distributed online?

The author of this piece, Timothy Holbrook, a law professor at Emory University School of Law, and Professor Lucas Osborn from Campbell University School of Law, believe that the courts should focus on the CAD files to stem this problem. They frame the issue such that if the infringing object can so easily be produced with 3D printing then “should the CAD files themselves be viewed as digital patent infringement, similar to copyright law?” Furthermore, the CAD files have their own value and, when they are sold and used to 3D print an item, then such seller is benefiting from the “economic value of the invention”. The professors also believe there is no infringement if a party merely possesses a CAD file and is not selling it.

Neither Congress nor the courts have indicated whether and how they might deal with these issues.

My Questions

  • Would blockchain technology’s online ledger system provide patent holders with adequate protection against infringement? Because of the economic value of CAD files, perhaps under such an arrangement could they be written to the blockchain and then have Bitcoin transferred to the patent holder every time the file is downloaded.  (See the August 21, 2015 Subway Fold post entitled Two Startups’ Note-Worthy Efforts to Adapt Blockchain Technology for the Music Industry which covered an innovative approach now being explored for copyrights and royalties in the music industry)
  • Would the digital watermarking of CAD files be a sufficient deterrent to protect against file-sharing and potentially infringing 3D printing?
  • What new opportunities might exist for entrepreneurs, developers and consultants to help inventors protect and monitor their patents with regard to 3D printing?
  • Might some inventors be willing to share the CAD files of their inventions on an open source basis online as an alternative that may improve their work while possibly avoiding any costly litigation?

 


These seven Subway Fold posts cover a series of other recent systems, developments and issues in intellectual property.


If this ends up in litigation, the lawyers will add an entirely new meaning to their object-ions.

New Visualization Service for US Patent and Trademark Data

A new startup call Trea has just launched a new visualization tool that establishes a dynamic user interface to all of the patent data available on the US Patent and Trademark Office’s (USPTO) massive public database. The full details of this appeared in a July 30, 2014 report on Gigaom.com entitled Powerful New Patent Service Shows Every US Invention, and a New View of R&D Relationships.

Trea’s UI not only illustrates whom is patenting what, but also types of fields (for example, data processing, telecom, chips, and so on). It is expected to be useful to inventors, corporate competitors, investors, journalists, academics, and I would also venture to say lawyers specializing in intellectual property practice.

The features described in this article along with accompanying screen captures include:

  • A “unified knowledge graph”, a networking representation of relationships between and among inventors.
  • A means to further zoom in on a single inventor and his or her collaborators.
  • A “notary feature” that permits inventors to encrypt and submit “diagrams and ideas” and receive a time-stamped receipt.

I suggest a full read of this story for the details of Trea’s business plans and the sampling of three highly informative graphics their product generates.

The visualization of government data sets continues to draw the interest of such entrepreneurs. Just to provide an initial sense of the breadth of governmental data available for these efforts, have a look at the categories and the data sets made publicly available by the US government can be viewed and downloaded at Data.gov. Similar data sets are available elsewhere online on the state and local levels across the U.S.

Furthermore, I once again recommend reading Smart Cities by Anthony Townsend as I wrote about in my April 9, 2014 post about the developers involved in transforming the availability and analytics of civic data.