How blockchain could speed up payments from magazine sales?
Thanks Sebastian Esser and Dr. Malte Behrmann for the time they devoted to me as well as for inspiration to write this article.
I’ve always thought that we live in a world where money moves fast. Really? It may be the case in Wall Street, but it is totally not case in media industries.
Problem: Slow payments through long route
Media publishers still wait a months to get paid for their magazine sales from their distributors. Why? Mainly for two reasons:
- Long chain of payment flow. Publishers send magazines to distributor, it distributes money to retailers, retailers sell magazines to readers, retailers transfer money and unsold copies to distributor, distributors send unsold copies to destroy them, and finally distributors send money to the retailer. It is quite a long chain and takes a lot of days to pay to each party in the chain.
- Manual reconciliation. Money does not flow fast not only due to long payment days but due to manual procedures to reconcile information among all parties as well. Information is reconciled in all stages of this chain. Publishers are paid only when the final calculations are made by distributors and distributors have received all money from retailers.
Solution: Smart supply chain financing
How to speed up payments? I would propose recipe from three ingredients
- Privately distributed database among all parties (including 3rd parties). Blockchain as an immutable database could be created, distributed and connected among all value chain of magazines sales (including retailers). This database would bring trust to the data not only to involved parties but 3rd parties as well.
- Algorithms (or smart contracts) to automate information reconciliation. If the IT systems of all parties are connected via blockchain, then we can start automate orders, deliveries, calculations, invoicing by the help of algorithms. They could replace a lot of manual work and will foster faster payments.
- 3rd parties financing to speed up payments. If we created trust in data and parties, then it would be possible to streamline faster payments by using factoring or supply chain financing options. New owner of an invoice will be registered in a blockchain and its payments will be automatically routed to the new owner.
I see the future where standard contracts are settled by technology. If you are eager to assess costs and benefits from using this solution, I am ready for an up to 45 min Skype talk or meeting you in person. You are welcome to send email to sandris.murins@gmail.com.
Read my other articles on blockchain powered media industry:
How AI could help manage cash flows for media companies?
How to automate journalist contracts?
