In news that will have significant implications for the online economy in the West, Facebook announced today “a global cryptocurrency” called Libra that will be managed by an alliance of 100 companies. It also announced a digital wallet called Calibra, which will be run by a subsidiary of Facebook also called Calibra.
In this edition of the Cybercultural newsletter, I’ll examine Libra from the perspective of the cultural industries. What does this news mean for sectors such as music, tv and movies, book publishing, the arts, news media, and other parts of the global economy that market cultural products?
Of the 27 initial partners who make up The Libra Association (“an independent, not-for-profit membership organization headquartered in Geneva, Switzerland”), just one of them is from the cultural industries: Spotify. So I’ll dive into what Libra may mean for Spotify – and the music sector in general – below.
I’ll also look at possible implications for subscription businesses, particularly in digital media.
But first, a quick bullet-point list of what Libra is.
What is Libra
Facebook’s new cryptocurrency announcement comes with the obligatory white paper, and yes it is filled with the requisite buzzwords. Libra is described as “a new decentralized blockchain, a low-volatility cryptocurrency, and a smart contract platform.”
I will spare you the rest of the crypto mumbo-jumbo. Instead, here are the main points for cultural businesses:
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Libra will launch in 2020, after about a year of testing.
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On launch, Libra will be made available in Facebook Messenger and WhatsApp via the Calibra wallet. Third parties will be able to utilise this payments functionality, similar perhaps to the chatbot feature in Messenger today.
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Facebook says its aiming for low-fee money transfers globally; a kind of PayPal 2.0 (but note, I would never call PayPal “low-fee”).
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Libra is being positioned as a way to reach new “unbanked” global markets; in the words of its co-creator David Marcus (who used to run Messenger and prior to that was President of PayPal), Libra was created “because it’s time for the internet to have a protocol for money, and it’s time to try something new for the 1.7 billion people who are still unbanked 30 years after the invention of the web.”
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The “smart contract platform” mentioned is basically a developer platform, featuring a new programming language called Move. Initial usage will be focused on facilitating payments (likely using Calibra), but the potential is there for a flexible developer platform that could in future power innovative third party apps.
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Libra is a so-called “stablecoin”; which means it won’t fluctuate in value like Bitcoin and other existing cryptocurrencies. That will make Libra a good medium of exchange.
Spotify’s Libra use cases are basic & purely commercial
In a media release today, Spotify positioned its participation in Libra as being about “accessibility” – which turned out to be Spotify’s keyword for access to payment systems and access to developing markets.
Alex Norström, Spotify’s Chief Premium Business Officer, had this to say (emphasis mine):
“One challenge for Spotify and its users around the world has been the lack of easily accessible payment systems – especially for those in financially underserved markets. This creates an enormous barrier to the bonds we work to foster between creators and their fans. In joining the Libra Association, there is an opportunity to better reach Spotify’s total addressable market, eliminate friction and enable payments in mass scale.”
So what Spotify is focusing on with Libra is converting free users in developing markets to paying users. Although as Techcrunch noted, it may also offer users incentives to pay in Libra – rather than via credit card or other payment methods. But mostly, this is a PR play by Spotify.
That’s rather disappointing, because there’s much more Spotify could do with a system like Libra. For instance, Spotify makes no mention of using Libra to pay artists directly or using the Libra blockchain to help manage rights. These are potentially exciting use cases that have been explored by multiple blockchain startups and projects, like Mycelia, Ujo and Musicoin.
I wrote about Mycelia, which was founded by British musician Imogen Heaps, back in 2016. At that time, Heap’s first Mycelia project was the release of a single called “Tiny Human” on the blockchain-enabled site Ujo Music. The rights management aspect of it intrigued me:
“While the user experience was a little kludgy, it did prove that you could store a whole lot of information – not just the purchase details, but various music files and policies around its use – on the blockchain.”
Heap’s latest Mycelia project is Creative Passport, which aims to be a “digital container to hold verified profile information, IDs, acknowledgements, works, business partners and payment mechanisms.”
In a profile last month on music streaming service Tidal, Heap explained more:
“I conceptualized Creative Passport after a long, 23-year career of frustration due to the inefficiencies in the music industry. I want all the data around songs out in the world for everyone to see any time they want it. Whether that’s payment information, data around where the song was written, what gear a musician was using, or which musicians were on the record, who wrote it — all that.”
Of course Spotify is a large, VC-backed corporation. So it has little incentive to adopt the open data technologies that Imogen Heap is building and promoting. Most likely Spotify will continue on the traditional internet bigco path and be as much of a “walled garden” as Facebook currently is. Which is to say, creator data (including payments data) will be controlled by Spotify.
I’m not holding my breath that Spotify will do anything more with Libra than what its press release stated: to surface revenue from developing markets. But at least Imogen Heap shows what’s possible.
Implications for news media
NiemanLab wondered today what Libra will mean for news media. That old chestnut, micropayments, was floated as one idea:
“It’s possible that Libra could solve the micropayments-for-news problem that many other small and news-focused companies have tried and thus far failed to successfully tackle. (Let’s count Civil here too.)”
Civil had grand plans to revolutionise journalism by using cryptocurrency. When I reviewed it last year, I thought Civil’s token model held some promise. But what killed the idea for me was the convoluted governance rules, which the company came up with in order to be “decentralized.”
If you strip away the worst features of Civil (the red tape governance and the obsessive need to be decentralized), the actual digital payments token idea was a good one. That’s something Libra could yet provide for news media organisations, as well as independent creators like yours truly.
It’s too early to tell if Libra will easily facilitate micropayments – or indeed subscriptions – for news media. But here are a couple of potential scenarios:
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I recently came across a Business Insider article I really wanted to read (an expose of a health startup I once wrote about in a book). However, I didn’t want to buy an ongoing subscription to BI, since I’m not a fan of that publication. But what if I could buy just that one article, for say $1? Libra could potentially allow me to do that.
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I’m just about to launch my own subscription plan for Cybercultural. But what if I could enable people who come across my work on social media to donate small amounts of money to me, to support what I do instead of (or even in addition to) the set-rate subscription? Theoretically, Libra could enable people to send me micropayments via Facebook Messenger.
As for subscriptions in general, currently that relies on credit cards and middlemen like Stripe to process credit card payments. Libra could enable a much simpler online payment mechanism – not to mention cheaper, if its low-fee promise is kept.
Certainly, from a publisher point of view, the more payment options the better!
Conclusion
If you can get past the very real concerns about trusting Facebook with your money (and the further opportunities that provides Facebook to invade your privacy), Libra does hold promise for cultural sectors.
Even if it was just to further boost the subscriptions market, which covers everything from news media to Spotify and Netflix, Libra would be an overall win.
But to really make an impact in the cultural industries, it’s going to take a lot more imagination and experimentation from members of The Libra Association than Spotify has shown so far.
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