Blockchain is a decentralized ledger—essentially a database—for securely tracking and storing a string of sequential information. It offers the ability to create a transparent, tamper-proof, and trustworthy record of ownership, value, chain of custody, authenticity, and other attributes of an individual product over time, from raw materials through sale and resale.
Pilots based on blockchain technology have become more frequent over the past year, and more tests are turning into ongoing initiatives. A growing number of examples involve companies in licensing or in sectors of interest to the licensing business. Most of these, to date, are tied to one of the following objectives:
- Enhancing collectibility. Blockchain gives buyers and sellers of digital and physical goods an accurate record of who has owned a particular collectible throughout its lifespan, and how much money changed hands when it was sold, ensuring authenticity and helping give a sense of value. Sports entities such as the MLB and NFL Players Associations, the U.S. Women’s National Soccer Team, and European football clubs and leagues (e.g., Belgium’s Jupiler Pro League, Real Madrid, Borussia Dortmund, and Arsenal) have all entered into agreements with blockchain partners related to collectibles.
- Ensuring authenticity. The fashion and luxury industries are looking to blockchain to guard against counterfeiting. LVMH, for example, plans to utilize blockchain to monitor the authenticity of Louis Vuitton and Parfums Christian Dior items this year before adding its other labels to the initiative. One of the highly anticipated uses of blockchain is to track whether organic products are compliant with regulations from start to finish, giving consumers confidence that the items they buy are in fact organic. Finnish dairy company Arla started tracking one of its organic milk brands using a blockchain this past November.
- Monitoring safety and ethics. Food safety has been a big issue of late, with e. coli and salmonella-related recalls impacting not just the marketer of the dangerous product but all vendors in the affected category, since it takes a long time by traditional means to identify the culprit. Blockchain helps trace an outbreak back to its specific source quickly, protecting consumers and allowing innocent companies to continue with business as usual. After enlisting retailers such as Kroger and Carrefour and food marketers such as Dole, McCormick, Nestlé, and Unilever into a successful test of blockchain for this purpose (among others), Walmart is now requiring all of its produce suppliers to join the program. The diamond industry, meanwhile, is working with blockchain to ensure that “blood diamonds,” the sales of which fund violence, do not make their way to retail. And companies such as Levi Strauss are developing blockchain-enabled processes to track safety and health issues affecting workers in fields and factories.
- Improving operations. Blockchain can better the logistics process by enabling smart contracts, speeding up inventory and temperature tracking, and enhancing many other elements of manufacturing, marketing, and transportation. Companies ranging from shipping firm Maersk to Pepsico to C.H. Robinson—a fresh produce licensee for several food-industry brands—are among those implementing blockchain platforms to boost speed and efficiency, locate and solve problems in nearly real time, and reduce costs.
- Enabling quick and secure payment. Kroger, Rakuten, Starbucks, and Canadian jewelry chain Birks are among the retailers testing or considering blockchain-enabled cryptocurrencies as payment methods in their stores or on their sites. Some consumers in nations where local currencies fluctuate wildly or have little value are starting to rely on cryptocurrencies, which maintain a consistent value from country to country, for international purchases. Blockchain can also assist licensors and licensees in powering accurate and efficient processes to track and trigger royalty payments, as well as monitor the accomplishment of other licensing activities. Microsoft is implementing its blockchain platform to ensure creators get paid for their content.
- Engaging fans. Sports organizations are key players in this sector, as they are in collectibles. Football/soccer clubs such as Paris St. Germain and West Ham are partnering with Socios.com to offer fans the opportunity to purchase or earn blockchain-enabled tokens that give them perks such as a say in decision making, exclusive merchandise and experiences, and bonus content. There can be an element of collectability integrated as well. Another soccer team, Leicester City, is using blockchain to give fans accurate and real-time statistics related to betting, through its partner FansUnite, which improves users’ results and their overall experience.
Marketers, manufacturers, retailers, and other companies involved in consumer products industries are just starting to explore potential uses for blockchain. That said, the technology is gaining momentum in licensing and beyond, with examples becoming both more frequent and more sophisticated than even a year ago. It will be interesting to see what happens next.