By now, it is impossible for most people not to have heard of cryptocurrencies, tokens and coins. But as bitcoin and other crypto coins are not widely accepted as a means of payment, one question remains: what do these coins and tokens actually do?
Cryptocurrency enthusiasts have long touted the possibility of attaching coins to a copyright or intellectual property, which could for example enable the fractional ownership of artwork, such as an oil painting.
For Nolan Bauerle, this idea is “a little bit convoluted” and “2017”. The writer at CoinDesk, a news site specialising in bitcoin and digital currencies, instead aims to sell a token related to the sales of his forthcoming science fiction book ‘The Satoshi Wedding Murders’.
The Satoshi Wedding Murder (SWM) coins retrieve value from their entitlement to 50% of the royalty proceeds of the book.
The aim is to use Amazon’s artificial intelligence for marketing, whereby early sales will lead to a stronger promotion of the book. Amazon has long embraced machine learning algorithms that mine data for patterns, for example to predict books that customers might like.
“People can buy the coin through buying my book which means theoretically, because they have a role to play or something to earn if my book sells well, they will effectively do the marketing for me,” Bauerle said at the Cayman Islands Digital Economy Conference on June 20. “You can program memoney to do things that you could not before. Mine will be tricking out the Amazon algorithm.”
The coin sale is backed by large companies and investors who helped Bauerle build the necessary infrastructure for free, because they believe every artist should use this type of system to sell their work and take control of their intellectual property.
Bauerle argues that royalty contracts in the publishing industry are “backwards”. Artists effectively sell the copyright to the publishers, who pays a small advance and 10% to 15% of sales as royalties in return. “They are making all the money and it is the same in music. This has been broken for a long time,” he said.
A royalty contract should be structured like an oil and gas contract in which a landowner who is unable to extract the oil will get investors on board and pay them based on sales, without giving up the intellectual property, he said.
In Bauerle’s case, the royalties derived from the intellectual property, which include any proceeds from book translations, audiobooks or movie rights are managed by a limited liability company. The owners of the SWM coin do not become owners of the intellectual property itself but have an entitlement to a pro rata share of the royalties, which are assigned by a smart contract.
Using a coin attached to book sales creates a new form of ‘tokenomic’ marketing and production, where investors are promoting what they have invested in.
“We have a science fiction book about bitcoin and readers can earn bitcoin, if people buy the book about bitcoin,” the CoinDesk writer said. “You want to reward people’s taste for discovering new artists early. You want to reward their appreciation for art and being first,” he said. “Finding a band and promoting them might be a job of the future.”