How Smart Contracts Are Changing The Game For Filmmakers

June 13, 2023 by Mimi Phan

In a world where filmmaking dreams often crumble on the hard rocks of financial reality, smart contracts, also known as Web3 contracts, are emerging as the new superheroes ready to rescue the realm of filmmaking. Their power? Simplifying the difficult process of film funding and injecting efficiency, fairness, and transparency into a system that often lacks all three.

Buckle up as we delve into the heart of this revolution, exploring the dynamic duo of film NFTs and smart contracts and discovering how they’re changing the movie game, one block at a time.

What Are Smart Contracts In Crypto?

Smart contracts are digital self-executing agreements driven by terms programmed into the contract with code. They live in a blockchain network, where they operate securely and transparently.

Imagine you’re at a vending machine. You insert a coin, punch in the code, and voila! A can of soda drops down. This is how a smart contract works. You fulfil a condition (insert coin), and the contract automatically executes an action (drop soda).

But wait, doesn’t that sound like an NFT smart contract? Well, yes, and no.

While both are parts of the blockchain universe, NFTs (non-fungible tokens) and smart contracts have different roles. NFTs are unique digital assets representing ownership of a particular item in the digital or physical world. On the other hand, a smart contract NFT could be written to govern the buying, selling, or usage of that NFT.

Now that we’ve got smart contracts explained, let’s see how they’re stealing the limelight in the film industry.

Under The Hood: How Smart Contracts Work

Just like a movie script, smart contracts follow a set of “if-then” scenarios that are encoded into them. Think of them as robotic lawyers – they interpret and execute these predefined conditions, making sure every party plays their part.

Let’s look at a quick example of a smart contract for filmmaking.

Imagine you’re a screenwriter who’s been promised a bonus if your script turns into a box-office hit earning over $100 million. With a traditional contract, you would have to trust the producers, wait for them to calculate revenue, possibly engage in negotiations or disputes, and then finally receive your payment. Sounds tiring, right?

Enter the smart contract. It’s coded with the rule: “IF box-office earnings exceed $100 million, THEN transfer X amount of bonus to the screenwriter.” Now, once the box-office numbers roll in, the smart contract automatically checks if the condition has been met. If yes, it triggers the payment to your digital wallet instantly. No fuss, no delays!

How Blockchain And Smart Contracts Work Together

Since they are basically Web3 contracts, smart contracts work by making use of blockchain technology – a kind of digital ledger that records transactions across many computers so the records cannot be altered. This offers an additional layer of trust, transparency, and security, since the agreement cannot be changed once it’s been deployed.

Isn’t that a real game-changer?

Smart contracts are more than just a tech gimmick; they’re a path to smoother, fairer, and more efficient business relationships in the film world.

Smart Contracts And Filmmakers: A Dynamic Duo

Think of the filmmaking industry as a complex symphony, with many actors, artists, producers, and distributors all contributing to the final piece. Traditionally, managing these relationships has been, let’s say, a bit of a drama. But here’s where smart contracts are stepping up as the new leading star.

1. NFTs & Crowdfunding

Imagine launching a new film project and offering unique NFTs to your potential backers. These NFTs could offer various benefits, from exclusive early screenings to a cameo in the film itself. The fundraising happens quickly, securely, and automatically through a smart contract NFT platform, getting the show on the road quicker than ever.

2. Royalties

With smart contract crypto magic, automatic royalty payouts become as easy as clapping the slate. The smart contract can be written to distribute royalties each time a movie ticket is sold or a streaming platform charges for a view, ensuring a transparent and fair share of profits. This can also be built into a smart contract NFT within an NFT marketplace.

3. Contracts & Agreements

There’s no need for ambiguity with smart contracts. They execute when predefined conditions are met. So, let’s say a filmmaker promises a bonus if the film hits a certain box office number. When that happens, a smart contract would automatically transfer the promised bonus. No debates, no delays, just action!

4. Contracting Talent

It can be a logistical nightmare to manage contracts for the array of talent in a film, from actors to directors, composers to crew members. Smart contracts can make the process as smooth as a red-carpet walk. Once the terms are agreed upon – say, payment upon completion of specific scenes, or reaching milestones in post-production – the smart contract takes center stage. It’s like having a diligent assistant director, ensuring everyone gets paid on time, as per the agreed terms.

5. Budget Management

Budget overruns? That’s a plot twist no producer wants! Smart contracts could serve as the diligent accountant, tracking all expenditures and ensuring the budget is spent as planned. They can be set up to release funds only when specific conditions are met, adding another layer of financial discipline to the production process.

6. Distribution Rights

Who can show a film, and where, when, and how much they should pay for the privilege – these are complex negotiations that can tie a film into legal knots. But with smart contracts, these terms can be agreed upon, written into the blockchain, and then automatically enforced. No more squabbles over who was allowed to stream what and when, because the smart contract is the impartial judge and jury, making sure everyone sticks to the script.

7. Anti-Piracy Measures

Piracy is a horror movie that the film industry has been battling for ages. While smart contracts can’t eliminate this issue, they can help track and manage digital rights more effectively. If a legal copy of a film is tied to a smart contract, it could monitor and verify the rightful owner of the digital copy, discouraging unauthorized distribution and use.

8. Fan Engagement

Imagine creating a smart contract that rewards loyal fans. If a fan watches all films in a franchise or shares promotional content, they could automatically receive tokens or exclusive benefits. It’s a fun and fair way to foster fandom and create buzz around a movie!

Final Cut: Changing The Game

Smart contracts are setting the stage for a new era of film financing, ensuring transparency, efficiency, and fairness for all players involved.

In the end, it’s about bringing more fantastic films to the screen, rewarding the talented people who make them, and ensuring that the audience continues to be captivated by stories that make us laugh, cry, and ponder.

And…cut! That’s a wrap on our smart contract adventure. Keep your eyes peeled for more fascinating insights into this exciting new world of blockchain and beyond. You never know what’s next in the script.

Featured image by Shubham Dhage on Unsplash