Custos Media Technologies, a Stellenbosch, South Africa-based company that uses the blockchain to fight media piracy, has raised $265,000 USD in seed funding from Digital Currency Group (DCG) and a South African private investor, according to Ventureburn.com .
The company uses technology that watermarks bitcoin into a piece of media that it tracks in the blockchain to identify infringements. The system uses crowdsourcing to provide a bounty to downloaders who identify pirates. Content creators and distributors can embed an identifying code into each piece of content that they provide to a particular user, Custos noted in a press release [PDF] on its website .
The code embedded in each piece of content can be used to access a deposit in the form of cryptocurrency – a “finder’s fee.” If the content is leaked or shared and a third party gets ahold of the content, they can cash the code in for the finder’s fee.
The content producer can then be alerted through an analysis of the cryptocurrency transaction ledger that the original authorized user leaked or shared the file. The producer can then subject the user to legal or financial penalties, or to limited access to future content. Authorized users can thereby be discouraged from sharing or leaking files. At the same time, authorized users need not be inconvenienced by cumbersome security measures.
Custos landed one of South Africa’s largest film producers and distributors as well as one of the continent’s biggest broadcasters. The company won these accounts while still at the LaunchLab incubator at the University of the Western Cape.
CJ van Rooyen, Custos CEO, said the company will use the funding to increase its client base, particularly for companies that have lost tens of millions of dollars in production funds due to a title leak.
Fred Lutz, chief operating officer, said the largest studios can absorb such losses, but the losses are very harmful to smaller independent producers. He said a pirate leak can cause a studio not to be able to pay employees, or possibly go bankrupt.
Barry Silbert, the CEO and founder of DCG, said Custos developed an innovative bitcoin application to solve a costly problem for content producers.
The new funding follows an R2 100,000 ($140,000 CSD) initial investment by Innovus last year. Innovus is the Stellenbosch University’s Technology Transfer Office. The concept was developed at the university.
Custos will target independent producers for the time being, but its ultimate goal is Hollywood.
Custos is also testing a solution to protect ebooks.
Lutz said identifying first infringers is only Custos’ beginning as it explores the blockchain’s potential to make media consumption, distribution and production more equitable for all parties involved.
The blockchain has already prompted some industry restructuring, Lutz said, noting that Custos provides the component that will create a layer of content protection for this new distribution wave.
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