Smith+Crown has been focusing on ICOs and crowdsales recently. Such projects often demonstrate the most disruptive potential of cryptocurrencies: decentralizing ownership, pushing some aspect of management to a functional crypto-economy, and raising capital instantly from around the world. Many likely overshoot, but if someone wants to understand the promise and limits of blockchain technology, we recommend reading about these projects. Read more summaries here. SingularDTV is such a project, and they launch their crowdsale
next week, October 5th Sunday, October 2nd.
SingularDTV is an Ethereum-based token “for a Blockchain Film & Television Entertainment Studio & Distribution Portal, with a Smart Contract Rights Management Platform”. The initial project plan consists of several parts – an original television series, a documentary division, a digital rights management (DRM) platform built on Ethereum, and a video-on-demand portal based around Ethereum. They are launching a crowdsale for their token SNGLS.
The project is slated to produce one season of “Singular”, a three-episode mini-series about a technological singularity. The theme is around a technological singularity and is shot in San Pedro in the Caribbean. The project will also produce a feature-length documentary on Ethereum and blockchain technology and an eight-episode short-form documentary series.
On the software side, the project will create a digital rights management platform that will allow other artists to use the platform to sell their work directly to the audience using their software. There will also be a video on demand portal where the company will acquire the rights to other original content and make it available to the users of the platform, similar to Netflix and Amazon.
The ICO money to be raised is capped at $7.5 million, which will be used to create original content and also the software that can be licensed to others for rights management and a video-on-demand product.
What SNGLS tokens?
The SNGLS tokens will confer holders with a claim to a portion of revenues and IP to show content. They will not have voting or governance rights, but they may have additional rights in the future. The tokens can also be used to pay for and view content. They will be released near the middle of autumn 2016, and S-DTV intends to list them on crypto-currency exchanges.
The tokens represent ownership in a unique decentralized organizational structure called a Centrally Organized Distributed Entity (CODE). They developed a legal and tax infrastructure in collaboration with law firm MME, which helped developed the structure behind the Ethereum Foundation. They clarify that they did not change this in reaction to The DAO events.
What are the terms?
Tokens are distributed on a pro-rata basis. The ICO will raise a maximum of $7.5 million in Ethereum, and a minimum of $3.75 million.
There will be a total of 100 billion SingularDTV tokens, SNGLS. 500 million (50%) of these tokens will be distributed in the ICO. 100 million (10%) is reserved for the team and core investors. 400 million (40%) are held in a storage vault with the aim to retain earnings to invest back into the project.
There is no dilution via issuance of future SNGLS tokens to raise money. Hence all the working capital for the project will come from the initial ICO and the retained earnings via the storage vault. Also, the team promises to store and use only ETH instead of fiat or other stores of value.
The ownership of the vault tokens resides with the founders of the project, Zach LeBeau, Joseph Lubin and Arie Levy-Cohen. This means in the event of an exit, the earnings from the event will go to the founders. Note also that the tokens belong to the founders in the legal sense, and there is no smart contract to ensure that the revenue collected from the tokens in the storage vault is reinvested back into the project.
The $7.5 million raised in the ICO will be used as following:
- ‘Singular’ Season 1 (3 episode mini-series): $3.25M
- Documentary Division: $0.50M
- Rights Management Development: $2.00M
- Video-on-Demand Portal Development: $1.00M
- Marketing: $0.50M
- Administration, Legal & Contingency: $0.25M
It’s worth noting the use of the vault is a novel idea for revenue-generating tokens. It allows the project to obtain continual cash-flows, thus allowing the team to look for opportunities to invest in projects that might have a positive return for investors. It appears that the use of these funds will be at the sole discretion of the SingularDTV team and not put to vote to the general ICO investors. Therefore the investors will need to trust the management team to be prudent stewards of capital generated from the SNGLS tokens. It makes them analogous to corporate earnings that are not distributed as dividends.
Rapid Reaction from Smith+Crown
- There is a solid, non-anonymous team behind the project. Co-founder Joseph Lubin also co-foundered Consensys, a big presence in the Ethereum community and one of the most active producers of decentralized apps on Ethereum. The names associated with this project should give any skeptic pause.
- Content management and distribution on the blockchain is hot right now. DRM will remain a big hurdle, especially for existing works: how do you prevent users from uploading blockbuster content without the gateway function centralized entities play?
- Existing documentation doesn’t address other benefits blockchain management brings to the media space, particularly creator attribution in major projects.
- Licensing existing content is not cheap. Estimates for licensing costs for Netflix vary, but in 2013, the company reported spending $2 billion on content and that “the vast majority of our spending is on movies and prior-season TV shows from other networks.” That number has only risen. This is an obvious question, and the team’s background in the industry suggests they are aware of it. More details of how they will address it would be helpful.
- Summary overview
- Bitcointalk announcement and discussion
- Post about ICO Terms and FAQs
- Medium post about the organizational structure
- The whitepaper states, “ In the beginning, SNGLS functionality will be basic, only representing the holders pro rate IP/revenue claim in the S-DTV CODE Smart Project. As the S-DTV platform grows, additional and emergent functionality will be upgraded/installed. Tokens will be used to maneuver through the S-DTV ecosystem to pay for and view content, as well as applying rights, revenue and royalty management to projects distributed by the TVOD portal and other emergent activities.”