Porter Richards, Contributing Member 2024-2025
Intellectual Property and Computer Law Journal
I. Introduction
The digital age has revolutionized the way music, photographs, and other content is produced, distributed, and consumed. However, this transition has also brought significant challenges, particularly in the realm of copyright management and ownership. Traditional copyright law and regulations struggle to keep up with the rapid replication and distribution of creative works. The fundamental issues affecting copyright protection remain the lack of a central database and excessive financial costs for users and rights holders. The lack of a unified database for organizing information about copyright owners’ works has created substantial hurdles for those wanting to use, license, or repurpose copyrighted works. These issues have led to significant transaction costs for users of digital content and have resulted in creators receiving unfair compensation for their works. This paper explores the challenges surrounding copyright laws and regulations while examining potential solutions, including the use of blockchain technology to address these problems.
II. Background
Lack of a Centralized Database
One of the core problems in copyright management today is the lack of a centralized, accessible database that provides clear information about content ownership and licensing of music, photos, and other copyrighted content.[1] Ownership information is often scattered across various databases maintained by publishers, record companies, and other entities.[2] One of the key reasons for this problem is that these databases do not work together, and commercial interests prevent data sharing thus this information is typically unavailable or expensive to access.[3] This lack of coordination and sharing creates significant transaction costs for those seeking to use copyrighted materials.[4] For example, someone looking to license a song for a film may be forced to navigate multiple databases, contact various rights holders, and endure drawn-out negotiations processes that can be both costly and time-consuming. For smaller creators or organizations with limited resources, these hurdles are often insurmountable, resulting in missed opportunities and the underutilization of creative works.
The absence of a centralized database also hurts creators, as they may not get paid for their work or must share their earnings with intermediaries like mediations such as performing rights organizations, which use a portion of creators’ royalties to support operating costs.[5]
Further, this lack of transparency has allowed piracy to become a major issue in the digital world, and the disputes surrounding digital copyright cannot be ignored.[6] Copyright holders struggle to control how their works are used online. Digital copies of copyrighted content are especially difficult to manage because they can be replicated perfectly, at little to no cost, and shared instantly across the globe.[7]
At the heart of the issue is copyright law itself, which provides broad protections for an overwhelming amount of content—especially online—with minimal requirements for proving ownership.[8] Although registering a work with the U.S. Copyright Office is a formal process, it is not mandatory, making it difficult to determine ownership.[9] Furthermore, while copyright transfers and licenses can be registered, this practice is not common, adding to the uncertainty about rightful ownership.[10] Technology may not have caused this problem, but it has certainly worsened it. However, the use of emerging technologies and better tools could help mitigate this challenge.
Excessive Costs and Difficulty of Fair Compensation
The challenge of determining copyright ownership also creates problems for users who may refrain from using certain works due to the unclear legal landscape of the rights associated with them.[11] Potential users may hesitate to license works due to the opaque or inaccessible legal status of the rights involved.[12] Given the vast amount of content available on the internet and the fact that its authors can be located in various jurisdictions, recovering license fees for the use of their works can be quite challenging.[13] Each jurisdiction may have different legal requirements and procedures for processing payments, making it difficult to create a seamless system for collecting these fees. In most cases, to facilitate the payment of license fees, the user and the rights owner must enter into a formal agreement.[14] This often imposes substantial transaction costs on both parties, as these agreements are legally binding and require careful negotiation to ensure both the protection of the author’s rights and fair compensation for the user’s access to the content.[15]
Creative Commons licenses have been the most frequent solution for sharing creative works on the internet.[16] However, these licenses might not be suitable for direct commercialization because they are typically royalty-free.[17] These licenses are designed to allow users to legally share, use, and repurpose content without the need to pay the creator, so long as they provide appropriate attribution.[18] The other commonly used licenses are open-source software licenses, but these also include royalty-free provisions.[19] According to the first principle of open-source licensing, “the license shall not require a royalty or other fee” for distributing or selling software.[20] The primary goal of both Creative Commons and open-source licenses is to encourage the widespread sharing and legal use of copyrighted material, while exempting creators from liabilities or warranties that could arise from how their work is used.[21]
Because of their royalty-free nature, these types of licenses are not tailored for collecting license fees.[22] The complex legal and financial procedures involved in enforcing payment agreements run counter to the goals of Creative Commons and open-source licenses, which prioritize easy access and legal sharing.[23] In contrast, exclusive licenses—where payment for the use of the work is required—are usually better suited for commercial ventures, as they offer a structure for collecting fees and provide stronger legal protections for both the user and the rights holder.[24] Therefore, while Creative Commons and open-source licenses promote sharing and open access to creative works, they are incompatible with traditional fee-based licensing models that rely on formal agreements and payment processing.
III. Discussion
What is Blockchain Technology?
A potential solution to these issues lies in the emerging field of blockchain technology. To fully appreciate how blockchain can transform copyright law and benefit both creators and users, it is important to first understand the basics of what blockchain technology entails. Blockchain technology can be understood as a chain structure where each block is connected in order based on a timestamp.[25] This structure employs several techniques, including hash functions, timestamps, and peer-to-peer networking.[26] A hash function, also known as a hash algorithm, generates unique digital “fingerprints” for data.[27] It compresses data into a fixed-length summary that appears as a string of random letters and numbers.[28] In blockchain, each block’s hash is linked to the previous block, forming a chain.[29] Even the slightest alteration in the input data results in a completely different hash, making tampering easily detectable.[30] If an error occurs in a recorded transaction, rather than altering the existing entry, a new transaction must be hashed into the blockchain to reflect the correction.[31] This immutability, or resistance to modification is one of the key reasons blockchain is so appealing for copyright registration, ownership tracking, and licensing records.
Each block consists of two main parts: the block header and the block body.[32]
The block header contains key information such as the block’s version number, the hash of the previous block, the timestamp (accurate to seconds), the mining difficulty target, and a random value used during the mining process.[33] Meanwhile, the block body includes information about the number of transactions and the specific hash values for each transaction.[34]
Blockchain operates as a decentralized digital ledger, with every participant in the network maintaining a full copy.[35] New blocks are validated and added to the chain, each cryptographically linked to the preceding block.[36] The technology’s immutability is particularly suited for applications like copyright registration, ownership verification, and license management.[37] Once a transaction is recorded, it cannot be directly altered but can only be corrected by adding a new transaction.[38]
By leveraging blockchain, the cost of digital copyright protection can be significantly reduced, while efficiency is improved.[39] This technology offers unprecedented transparency, security, and efficiency compared to traditional publishing methods, providing a new avenue for the collection of evidence, trading of digital assets, and protection of creators’ rights.
Pros of the Application of Blockchain Technology
One key advantage of blockchain technology is transparency, which plays a crucial role in copyright management. Blockchain can publicly disclose essential information about the initial ownership of copyright works, track all transactions since the initial registration, and provide a list of current rights holders and licensees.[40] This transparency ensures that all parties have clear and accurate information about the status of copyrighted works.
Another significant way blockchain enhances transparency is through “trusted timestamping.”[41] A timestamp is a sequence of characters that mark the exact date and time which an event occurred, providing an indisputable record.[42] Trusted timestamping secures the creation and modification times of documents, ensuring that interested parties can verify when a document existed without any doubt.[43] This system is essential in business, where establishing the exact timing of events can resolve crucial disputes.
Blockchain can be viewed as a database of verified public timestamps, allowing anyone to state publicly and immutably that a specific event occurred at a certain time.[44] This feature makes blockchain particularly useful for establishing the presumption of authorship and resolving disputes over copyright priority. This transparency helps lead to traceability, or the capability to track an asset’s complete journey on a blockchain, from its creation to its present condition, which guarantees trustworthiness, efficiency, and security.[45] Traceability is important for planning copyright transactions and resolving copyright disputes. Since blockchain technology enables rights management information to be inscribed onto the chain, it recalls past efforts to develop digital rights management tools to strengthen copyright protection.[46]
Another key advantage is immutability. A crucial element of blockchain’s security and immutability is the hash function.[47] As described earlier, this mathematical function transforms original data into a unique “fingerprint” called a hash. Even the smallest alteration in the data generates a different hash, ensuring the distinctiveness of each copyrighted work.[48] When a copyright transaction occurs—such as an assignment or licensing—a hash of the work is embedded in the transaction.[49] Once verified through the blockchain protocol, the transaction is timestamped and encoded onto the blockchain, making it tamper-proof.[50] As a result, blockchain provides an immutable record of ownership and subsequent changes, verifiable by anyone.[51]
As mentioned above, one of the major concerns in current copyright law is the inadequate compensation for authors and artists. Blockchain technology has the ability to transform rights management by enabling secure storage of ownership data, leading to the development of fairer, more favorable royalty arrangements for authors and artists.[52] Beyond simplifying these structures, blockchain can also support more complex royalty schemes, reducing transaction costs while facilitating payments to a larger number of contributors for each copyrighted work.[53] These royalties ensure that artists are compensated when their works are resold, allowing them to benefit from the increased value of their art over time.[54] Blockchain enables creators to predefine the distribution of future resale proceeds, recording these arrangements immutably on the blockchain. In doing so, blockchain technology institutionalizes and enforces resale royalties, ensuring artists receive appropriate compensation long after the initial sale.[55]
To ensure that musicians and artists are receiving their royalty fee, copyright law can embrace one of the most promising applications of blockchain technology, self-executing “smart contracts.”[56] These contracts can enable automatic, real-time payments to designated parties and can enforce the expiration of licenses after a set period.[57] This technology also holds the potential to create more inclusive and equitable royalty systems, ensuring proper distribution of compensation for composers, musicians, and all other stakeholders in the creative process.
Cons of the Application of Blockchain Technology
While blockchain technology offers numerous opportunities for improving copyright law, it also presents some challenges. One of the most significant concerns is the lack of established policies and regulations, both in the United States and globally.[58] Although blockchain’s potential has generated considerable interest, regulators remain cautious, particularly regarding the risks associated with cryptocurrency transactions, which are currently the most prominent uses of blockchain technology.[59] Some countries have imposed restrictions on cryptocurrency activities, while others have implemented outright bans.[60] This regulatory uncertainty creates hesitation in adopting blockchain technology, as sudden policy shifts could dramatically reshape the landscape.
Security is another critical concern in blockchain technology. While blockchain technology is considered to be tamper-proof due to its immutability, vulnerabilities still exist, especially at points of control. A notable example of this can be seen in the DAO attack.[61] Launched in 2016 on the Ethereum blockchain, The DAO was a decentralized autonomous organization that raised $150 million USD in ether (ETH) through a token sale to fund various projects. However, in June 2016, The DAO was hacked, exploiting vulnerabilities in its code.[62] A hacker leveraged a flaw in The DAO’s smart contract to siphon off approximately $60 million worth of ETH.[63] This incident raised significant concerns regarding the security of smart contracts and led to a contentious decision within the Ethereum community to implement a hard fork to reverse the hack’s effects.[64] Ultimately, this hard fork resulted in the division of the Ethereum blockchain into two separate chains: Ethereum (ETH) and Ethereum Classic (ETC). The hack highlights the vulnerability of blockchain security and illustrates the profound effects a breach can have on the blockchain itself, as well as the significant economic repercussions for its members.[65]
Storage issues also pose significant challenges in adopting blockchain technology.[66] An important question in designing a blockchain-based copyright solution is where the copyrighted works will be stored—on the blockchain itself or off-chain.[67] Current blockchain technology faces significant limitations when it comes to storing large creative content directly on the chain.[68] This challenge becomes even more pronounced in a large network with increasing transaction volumes that must be recorded on the blockchain.[69] Finding the right incentives for users willing to store this data is a difficult task, as the costs associated with storage can be substantial.[70] This lack of adequate storage capabilities raises issues of scalability. Currently, the technology is too slow to effectively manage day-to-day copyright transactions.[71] Bitcoin processes a block approximately every ten minutes, while Ethereum issues a block every 12 seconds.[72] However, even with its faster speed, Ethereum remains insufficiently rapid to accommodate a high volume of copyright transactions.[73]
The energy and power requirements to efficiently operate and store blockchain technology can pose significant environmental challenges.[74] Many of the most popular blockchains are inefficient and often excessively provisioned. For example, a single entry-level laptop consuming about 50 watts can easily store and maintain a modern blockchain. In contrast, Bitcoin mining alone consumes approximately 122 terawatt-hours of electricity per year—roughly 50% of the world’s total electricity production—equivalent to the energy consumption of entire countries like Sweden or Norway.[75]
The traditional proof of work consensus mechanism is a major contributor to this inefficiency, prompting discussions about alternative models that could mitigate environmental impacts.[76] While proof of work has its advantages, it is not the only consensus mechanism available for developing blockchain systems. Other approaches, such as proof of stake,[77] proof of authority,[78] and hybrid models have been suggested as alternative avenues for correcting this issue. These newer mechanisms present opportunities for creating more sustainable blockchain solutions, and there remains significant potential for further innovation in reducing the environmental footprint of blockchain technology.
Operating costs are yet another concern associated with blockchain technology.[79] This raises questions about whether utilizing blockchain technology can be economically viable despite these increased operating costs.[80] Even if user fees are implemented to help offset these expenses, organizations must carefully consider how these fees might impact low-income users or deter overall participation in the blockchain-based system, affecting both wealthy and low-income users alike.[81] On the other hand, if organizations choose to establish their own blockchain systems, they will face equally substantial costs for building and maintaining the necessary technological infrastructure.[82] In short, both options come with high operating expenses, which will need to be supported by well-resourced governments or through pooled resources from multiple countries.[83] This scenario may necessitate coordination with an international or regional intergovernmental body to effectively manage these financial challenges.
IV. Conclusion
The current landscape of copyright management presents both unprecedented opportunities and formidable challenges. While traditional copyright frameworks struggle to keep pace with the rapid distribution and replication of creative works, the emergence of blockchain technology offers promising solutions to these issues by providing a decentralized, immutable, and transparent system for managing copyright information and transactions. While blockchain holds the potential to enhance the efficiency and security of copyright management, significant challenges remain, including regulatory uncertainties, security vulnerabilities, storage limitations, environmental impacts, and high operational costs. As we move forward, it is imperative for creators, policymakers, and technologists to collaborate on developing effective solutions that ensure fair compensation for artists while fostering innovation and accessibility in the digital landscape. By using and enhancing the current technologies such as blockchain technology, we can pave the way for a brighter future for copyright protection in the digital age.
[1] Alexander Savelyev, Copyright in the blockchain era: Promises and challenges, 34 Computer Law & Security Review, 550, 561 (2018), https://www.sciencedirect.com/science/article/abs/pii/S0267364917303783#:~:text=Savelyev%20(2018)%20investigates%20copyright%20in,many%20of%20the%20legal%20aspects [https://perma.cc/HFP9-ATQA]
[2] Id.
[3] Id.
[4] Id.
[5] Id.
[6] Yanhui Liu, et. Al., Research on digital copyright protection based on the Hyperledger fabric blockchain network technology, PeerJ. Computer Science (Sept. 17,2021), https://pmc.ncbi.nlm.nih.gov/articles/PMC8459789/ [https://perma.cc/AL2J-53EN]
[7] Id.
[8] Savelyev, supra note 1 at 2.
[9] Id.
[10] Id.
[11] Liu, supra note 6 at 3.
[12] Id.
[13] Id.
[14] Id.
[15] Id.
[16] Savelyev, supra note 1 at 3.
[17] Id.
[18] Id.
[19] Id.
[20] Id.
[21] Id.
[22] Id.
[23] Id.
[24] Id.
[25] Liu, supra note 6 at 4.
[26] Id.
[27] Id.
[28] Id.
[29] Id.
[30] Peter K. Yu, Deploying Blockchain Technology in the Copyright Office (October 17, 2023). NFTS, CREATIVITY AND THE LAW: WITHIN AND BEYOND COPYRIGHT, Enrico Bonadio and Caterina Sganga, eds., Routledge, pp. 64-81, 2024, Texas A&M University School of Law Legal Studies Research Paper No. 23-56, https://ssrn.com/abstract=4605472 [https://perma.cc/T9VH-5DHM]
[31] Id.
[32] Liu, supra note 6 at 5.
[33] Id.
[34] Id.
[35] Id.
[36] Id.
[37] Id.
[38] Id.
[39] Id.
[40] Balazs Bodo, Daniel Gervais & Joao Pedro Quintais, ‘Blockchain and Smart Contracts: The Missing Link in Copyright Licensing’ [2018] 26 Internation Journal of Law and Information Technology, 311, 315; Jake Goldenfein & Dan Hunter, ‘Blockchains, Orphan Works, and the Public Domain’ [2017] 41 Columbia Journal of Law and the Arts, 1.
[41] Savelyev, supra note 1 at 6.
[42] Id.
[43] Id.
[44] Id.
[45] Blockchain Technologies and IP Ecosystems: A WIPO White Paper, World Intellectual Property Organization (2022), 63, https://www.wipo.int/export/sites/www/cws/en/pdf/blockchain-for-ip-ecosystem-whitepaper.pdf [https://perma.cc/ZU4A-GC3S]
[46] Id.
[47] Savelyev, supra note 1 at 7.
[48] Id.
[49] Id.
[50] Yu, supra note 28 at 7.
[51] Id.
[52] Amanda Anderberg, Elena Andonova, Mario Bellia, Ludovic Calès, Andreia Inamorato Dos Santos, Ioannis Kounelis, Igor Nai Fovino, Marco Petracco Giudici, Evangelia Papanagiotou, Maciej Sobolewski, Fiammetta Rossetti & Laura Spirito, Blockchain Now and Tomorrow: Assessing Multidimensional Impacts of Distributed Ledger Technologies, Publications Office of the European Union (2019), 329-331, https://publications.jrc.ec.europa.eu/repository/handle/JRC117255 [https://perma.cc/A3RG-E3R5]
[53] Id.
[54] Yu, supra note 28 at 7.
[55] Id.
[56] Savelyev, supra note 1 at 7.
[57] Id.
[58] Yu, supra note 28 at 8.
[59] Id.
[60] Id.
[61] Id.
[62] David Morris, How the DAO Hack Changed Ethereum and Crytpo, Consensus Magazine (May 9, 2023), https://www.coindesk.com/consensus-magazine/2023/05/09/coindesk-turns-10-how-the-dao-hack-changed-ethereum-and-crypto [https://perma.cc/Q42U-AYM8]
[63] Id.
[64] Id.
[65] Id.
[66] Savelyev, supra note 1 at 8.
[67] Id.
[68] Id.
[69] Id.
[70] Id.
[71] Yu, supra note 28 at 9.
[72] Id.
[73] Id.
[74] Savelyev, supra note 1 at 7.
[75] James Grimmelmann & A. Jason Windawi, ‘Blockchains as Infrastructure and Semicommons.’ 64 William and Mary Law Review, 1097, 1123 (2023).
[76] Id.
[77] “The ‘proof of stake’ consensus model ‘is funded on the basis that the more stake or investment one has in a network the more likely the investor wants the system to succeed, and the less likely one would sabotage their own investment’.” World Intellectual Property Organization, supra footnote 45 at 7.
[78] “[On a blockchain using the “proof of authority” consensus mechanism], nodes . . . must have their identity at least visible to the “owner” or the managing authority of the chain. The node seeking to publish a new block is staking its reputation and/or authority to publish. As a result, a node can lose its ability to publish or access the blockchain.” World Intellectual Property Organization, supra note 45 at 7.
[79] Yu, supra note 28 at 10.
[80] Id.
[81] Id.
[82] Id.
[83] Id.
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