In this installment of the NexChange Interview Series, NexChange’s Olga Yaroshevsky chats with Dr. Patrice Poujol, founder and CEO of Lumière (芦明) – a blockchain and smart contract solution that helps capital for movie production move freer and more transparent. The platform is part of the Motion Protocol ecosystem, a global alliance of blockchain and media companies, which has developed working solutions for film professionals throughout the entire production chain from finance to distribution.
In Part One, Dr. Poujol talked about his past in banking, the O’Kane Centre for Film Studies in Dublin, his patron Martin Scorcese, and how to lower investment risk for those who want to invest in movies. Here, he talks about movie funding, his PhD research on The Great Firewall, and blockchain.
“Blockchain technology might not be the ideal system, but might be a conduit for humanity from a fish tank to the ocean.”
Dr. Patrice Poujol: The day we came up with our press release, Wesley Snipes said he was launching his 25 million dollar tokenized movie fund. It’s stunning!
Olga Yaroshevsky: Am I getting this right: blockchain platforms as a 360-degree service for film making, so you can manage rights, finance, production solutions, invest through global fundraising. Do you think the industry, which is relatively strong and big enough these days, especially in the US, to stay as it is, is ready for such… technical disruption? It takes a lot of knowledge, a lot of understanding, and sometimes courage.
PP: Well, that’s why you gotta make it as simple as possible. Without going back to the dinosaurs, the history of cinema, which is more than 100 years old, and cinema IS technology. Cinema is a theatre that’s been recorded, originally, right? So it’s more than 100 year history of a constant technology adaptation. From drum recording to sound recording, from color to 3D, from VHS to DVD to Internet etc. In terms of distribution it has constantly evolved technologically. The thing that it had been able to do before the Internet was to constantly monetize these technological improvements, and that’s why cinema industry made a killing with VHS in the 80s, made even a bigger killing with DVD. But then, all of a sudden, there was the Internet, and there was already a massive disruption. Now you’ve got Netflix, and Amazon, and a few more online outlets. But the truth is – the film industry is not going well at all. The only people who are going well are the people who are already online. And even that’s shaky, because they really depend on their content. The minute their content goes lower – nobody will want to pay a subscription. They will be gone. Amazon and Alibaba are different, because they have a cash cow backing them up, with e-commerce. That’s why they are not making much noise, they are not as proactive as Netflix, because they don’t need to be. But eventually they will be the ones that are going to BE there.
Amazon, even if something bad happens, already has a lot more power than the studios. WIth big corporations like Alibaba, Tencent making a step further. Facebook is trying as well. So in terms of disruption – forget about blockchain! This is already a massively disrupted system. Studios are trying to keep up, Disney is probably the strongest one – they have franchise, merchandising, they have revenues, leisure parks. Warner has some cross sale and cross promotion. But these are not their days, to be honest.
With independent movies it’s even worse. If you’re trying to raise money with an independent movie and you haven’t done anything before – forget it. Either you have a rich family or friends who can help you out, or you’ll have a really hard time being able to put some money together. On top of it, and it’s another point of convergence, governments are starting to find it hard to finance culture and movies. I’m not gonna name the countries, but there’s been a drastic reduction in budget for movies and entertainment in general.
Even if you take TV, it’s not going well, not at all. Netflix lowered down the amount of money they used to give to producers, now they squeeze margins, and I understand why. They’ve got a business to run, and they’ve got shareholders to please.
We’re not trying to do 360 at Lumiere, but to establish partnerships with the existing companies. We’re not in charge of rights, we don’t manage rights. To tell the truth, blockchain is not scalable enough. But there are interesting models. For example, Motion – they convert viewership into fractions, so people would spend money in accordance with the right orders. For example, I would spend 4 or 5 cents to watch a film in 4K. That’s disruption!
We don’t think it’s a single platform doing 360, it’s gonna be more decentralized than that. We’ll see where “Papicha” goes, but we already have people and projects approaching us, and we can respond to their needs. We’re in B2B business. The endgame is to be able to open finance to retail customers. Eventually we want to open 20% gap, but that’s not gonna come in another few years. We’re now setting up liquidity and making sure we lower the risk. You know, B2B wasn’t the endgame for the internet adoption.
OY: Your PhD research was about Chinese market, right?
PP: Yes, but I was looking at China since 2001, since it was opening massively to the world. China, and in that extent, Russia, didn’t have much to say in the way the Internet was developed. None of the domains are in Cyrillic, none are in Chinese. It was all pretty much rolled out from the West. Which is why China built massive walls around themselves, a Great China Firewall. Which is the same as they built in the old days from the invaders from the North. They don’t want any disruption from the outside. The founder and the father was actually blocked out of his own system a few years ago, so that shows how effective the thing is.
OY: And when it comes to the film industry?
PP: Very effective too. But it’s broken down. Alibaba, Tencent, they play dual aspect. At the end of the day they are accountable by the government and the rules it imposes. There are hits and misses, but usually it’s very effective. That’s why the way that blockchain is being researched and implemented is very different from the Internet. The Internet was very unilaterally created, and then we had to adapt to it with mostly English language basis. And it’s great, it connected us to each other, and we all speak English now – even the French manage to speak English, it’s quite an achievement!:) Blockchain is much more interesting as a development model. Now everybody is involved. Russia and China are driving the process. Israel is involved, Europe, Latin America, Africa is a major driver for adoption. Any of the Asian countries are really pushing, Korea is obviously very strong, having a massive network effect. Japan… I could list literally every country on Earth, everyone is involved in this change, this transformation. What’s interesting is that smaller countries that usually wouldn’t have a say in the Internet developments now are punching way above their weight. Like Singapore, Estonia, particularly when you look at securitization, Liechtenstein, Malta, even Hong Kong at some extent. A lot of countries are emerging through this technology. People are trying to build a model together that is interoperable.
At Lumiere we’re not looking to become the next monopoly, we believe in cooperation – with what already exists, with what’s going to exist. We are just a cell in a million of other cells, which eventually may lead to decentralization.
Blockchain is going to be a very interoperable system when we start using public chains on a daily basis, for IOT, for the way that information is gonna be managed. It will be peer-to-peer.
I remember being at a meeting in September 2017, where John McAfee was saying that there will be a lot of resistance. People were not going to understand at the time. Now, with a bit of perspective, I think he’s right. It’s in the very essence of the model. The resistance will be between a world that’s essentially centralised, and our mindset that is centralised. Blockchain transcends politics. It brings a philosophical angle.
OY: I just thought of Tommy Shelby saying that phrase in the latest season of Peaky Blinders: it’s not revolution, it’s evolution.
PP: Exactly, you got it. It’s also about how we manage this, and I think we should manage it smoothly. Nobody wants to go head-to-head, governments VS corporations, VS society. What’s happening in many countries, like in France, the Yellow Vests movement, these are just symptoms. Everybody’s trying to find a solution. Everybody is in an aquarium, trying to find a way to the ocean. And maybe blockchain technology, at least in terms of reflection, might not be the ideal system, might be a conduit from the fish tank to the ocean.