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My recent Cryptocurrency 101 article did pretty well, so I decided to follow a similar format for explaining the new blockchain company I’ve been working on, Stream.
As with Cryptocurrency 101, the purpose here with Stream 101 is to have anyone be able to understand the value behind what we’re doing. I’ll only dive into the technical details of how we’re doing what we are when necessary to explain why we’re doing what we are. If you’d like to dig deeper into all the details of what we’re doing, our Project Overview is a great place to start.
What is Stream?
In a nutshell, Stream’s mission is to fairly reward video content creators for their work, and to create a much better ecosystem for streaming than currently exists with centralized players such as YouTube, Twitch, Periscope, and Netflix. To do this, we’re building the economic infrastructure necessary to make decentralized streaming imminently practical and lucrative.
The Problem
The starving artist paradigm must go
Across every form of streaming today, content creators are getting an extremely raw deal. It’s next to impossible to earn a living purely by creating content alone. Most creators are forced to resort to auxiliary means of earning an income, such as advertising or promoting corporate products. This, unfortunately, is often viewed by fans as ‘selling out’, and generates much criticism and backlash for not being ‘pure’ to their content and work.
It’s hard to be pure to your work when you’re starving, unfortunately. At Stream, we believe that the starving artist paradigm must go. If we truly want creative content to flourish, we have to find ways to make it a lucrative endeavor to create such content. Passion at the expense of food and shelter only goes so far.
An article by Gaby Dunn, who runs a YouTube channel with millions of views and over half a million subscribers and yet can barely afford to pay rent, viscerally highlights the struggle many content creators face:
The channel I have with my best friend Allison Raskin, Just Between Us, has more than half a million subscribers and a hungry fan base.
Despite this success, we’re just barely scraping by. I’ve never had more than a couple thousand dollars in my bank account at once.
The high highs and low lows leave me reeling. One week, I was stopped for photos six times while perusing comic books in downtown LA. The next week, I sat faceless in a room of 40 people vying for a menial courier job. I’ve walked a red carpet with $80 in my bank account. Popular YouTube musician Meghan Tonjes said she performed on Vidcon’s MainStage this year to screaming, crying fans without knowing whether she’d be able to afford groceries.
Another piece by the massively successful Hank Green, who runs the YouTube channel Vlogbrothers and has amassed over a billion views, emphasizes the fact that content creation isn’t even profitable for many of the most successful creators out there. It just doesn’t work, at any level:
Sometime in the last year, my YouTube videos received their billionth view. At the average YouTube ad rate of $2 per thousand views (a $2 CPM), that’s around $2 million in revenue from advertising over the last eight years. Not bad!
Though, during those eight years, we have spent more than $4 million on the creation of YouTube videos. So also, not good!
To make matters worse, it’s clear this isn’t an inherent problem. The platforms that serve streamed content are more wildly profitable than ever. YouTube, Twitch, and Netflix are all billion dollar corporate operations (with YouTube approaching an estimated 100 billion in value), and yet those who create the content that allows these platforms to flourish can barely scrape by.
How is this possible? Simple. Content creators are being wildly exploited by existing centralized platforms. They have no alternatives, suffer from platform lock-in, and must accept whatever shitty deal the platforms offer them.
How bad are these deals? Pretty damn bad. Platforms generally take anywhere from a 30–60% cut of all revenue (Youtube takes 45% of all revenue, Twitch 40%, and Periscope’s cut is so obtuse that there’s a whole article about how byzantine and unknowable it is). Keep in mind that cut is of all money earned, without taking into account any of the hefty costs incurred in producing videos. Taking into account production costs, platforms are often taking literally all the profit, often leaving content creators not even break-even for their efforts, but in the red, as in the case of Hank Green making $2 million off videos that cost $4 million to make.
This doesn’t even begin to take into account the blood, sweat, tears, and time it takes to be a full time content creator, which is what’s necessary to even have a remote shot at making it. From an article on Twitch streamers:
Bonnell, a mega-popular streamer known for his skill in StarCraft, broke down how he makes money streaming. He has 62,071,582 total views at the time of publication.
“I make probably less than $1,000 a month off of Twitch, streaming around 200–250 hours a month, with an average of maybe 2,500 concurrent viewers,” said Bonnell.
Two things are worth noticing here. First, Bonnell works roughly 60 hours a week, 20 hours more than your average, full-time employee. He wouldn’t have time to even think about another job.
So again: Why are content creators not making money right now? Not because there isn’t money to be made in content — there’s at least several hundred billion dollars available, if the valuations of YouTube, Netflix, Twitch, Periscope, and other streaming platforms are to be used as a good benchmark — but simply because streaming platforms exploit content creators and take all the profit.
What’s worse, when artists try to make what money they can not through their content alone but with auxiliary means such as through advertising and brand placement, they’re denounced as being ‘sell-outs’. From yet another article about starving content creators:
Dunn, from Los Angeles, says many supporters hate the idea of their idols making money from sponsorships, ads and product placement, which they see as “selling out”. While sites including Patreon and Kickstarter allow fans to crowdfund their favourites, no one really bothers with a channel as big as Just Between Us, Dunn says. Its Patreon page has just 59 givers.
“They don’t understand how you go from Point A to Point B, where you’re financially stable and creatively fulfilled,” she adds.
That leaves these digital celebrities stuck with no way of monetising the videos they spend all their time and money scripting, shooting and editing to flawless professional standards.
“Hard to work when you’re constantly worried about if you can buy groceries,” Dunn told news.com.au.
“My whole life creatively has been largely unpaid labour.
“There needs to be some more discussion around this and solutions for content creators because as it stands, it’s unfair and not working.”
The issue is so contentious that Anna Akana, another famous YouTuber with 2 million subscribers and over 200 million views, made a video explaining why she had to sell-out. She deliberately left the video as unlisted, presumably because it was such a controversial subject.
I recently had the pleasure [sic] of experiencing this phenomenon first-hand, when a few videos about me went viral on Facebook, and ended up garnering over 50 million views. Neither I nor my good friend Nas, who filmed these videos, received a cent from these 50 million+ views.
In fact, Nas, who has 2 million followers on Facebook and has received over 200 million views, has never directly made a single cent from any of his videos. Out of principle and the desire to be ‘pure’ to his work (and to avoid the controversial stigma of selling out), he has never accepted advertising on any of his videos, and as a consequence makes pennies today just from sporadic contract gigs.
What’s particularly striking is that Nas used to be a software engineer at Venmo. There, fresh out of college, he was pulling 6 figures working a relatively comfortable 9–5 as a faceless office worker. Now, even as one of the most successful producers of video content with over 200 million views, working around the clock producing a video literally every single day and barely ever sleeping, he makes only a tiny fraction of what he used to before.
Something is clearly wrong here. It’s time for a solution.
The Solution
So, to recap: content creators need to make money. Content creators aren’t currently making money. Content success != financial success. This is the problem.
Streaming platforms today often take the entirety of the profit generated from content, with 30–60% transaction fees on all revenue earned before costs are taken into account. It’s also extremely difficult to make money directly from content alone right now — one often has to resort to ‘selling out’, which many are either loathe to do or simply don’t have the time for, since professional content creation is already a full-time job. This is the reason the problem exists.
The advent of the blockchain offers novel, paradigm-breaking solutions to this problem that have heretofore simply not been possible. Specifically, the newfound ability to create custom forms of decentralized currency specifically tailored to the needs of a given industry or economy opens very exciting new economic doors. Further, the ability to create an extremely cheap decentralized, trustless, and fully anonymous micropayments/transaction system also creates incredible economic opportunities that weren’t available before.
To break things down simply, Stream is introducing a few discrete solutions to solve the economic problems content creators presently face.
Solution #1: Developing a novel revenue stream for creators
For the first time ever, Stream has developed a method for video content creators to be paid directly for the content they create, without a direct cost to viewers of that content.
This solves a number of really important problems. One, content creation is a full time job. If you want to have any shot of really making it, you have to throw your all into it. Nas, for instance, has filmed, edited, and published a video literally every single day for the past 500 days. He doesn’t understand the concept of taking a single day off. He rarely has time to sleep, much less think about ways to make money on top of making all his content. As things stand, these are two jobs, when people only have time for one.
Two, it’s a powerful way for content creators to earn money without requiring a fundamental cultural shift in convincing users to pay them for the content they’re providing. This is a cultural shift that is happening, with very cool innovations such as Patreon, but the fact remains that the vast majority of users are not used to paying for much streamed content, and there is a long way to go before that becomes the norm, if it ever does become the norm. In the interim time to that distant possibility, Stream offers a distinct solution whereby content creators can start earning money immediately without having to somehow convince their fans to start paying them.
Three, there’s no ‘selling out’ needed. Content creators can stay true and pure to the content they really want to make and fans really want to see, without having to be constantly cognizant of the terms and conditions of their corporate sponsorships or advertising relationships, either self-neutering the content they put out and/or living in fear that their sources of income may be capriciously cut off at any moment by a mercurial and arbitrary ‘benefactor’.
So how exactly does this work? Great question. In short, new tokens are minted proportional to the growth of the underlying economy, and distributed directly to the people responsible for the growth of that economy: content creators.
To understand the basic economics behind this, and why this is something that’s only possible to do effectively with the advent of the blockchain, imagine you have a fixed supply of 100,000 tokens representing your currency. Imagine that the total value of all the money being transacted in the economy backing this token is $100,000. Not taking into account any pricing around expected future growth in this economy, each token would be representing about $1 in value.
Now imagine the economy grows to $500,000 in money being transacted in and represented by this token. Now, each token is representing about $5 in value. With a fixed money supply, as the economy grows, each unit of that money supply is now representing more buying power, and is worth more than it was before.
In the world we live in today, currencies are generally controlled by governments, and the authority to create new money is delegated exclusively to a central bank. The central banks are more than happy to take advantage of this privilege. This is why, for instance, the US dollar depreciates in value over time, even as the US economy expands. As the economy expands, the central bank generally expands the money supply at an even faster rate. The result of this is that each dollar, over time, actually loses buying power.
In the example above, it would be like if you started with 100,000 tokens representing $100,000, but as the economy grew to $500,000, you expanded the money supply to 600,000 tokens, meaning that while before each token represented $1, now each token represents just $0.83 (5/6).
What’s more, the central bank/government derives all the value from the new money created, effectively capturing all the value of the growth of the economy. In the instance above, they would now own 500,000 new units of currency/tokens that are worth $415,000 in value.
Not exactly the most fair system in the world, in my personal opinion, but until now, there hasn’t really been a viable alternative. Blockchain, however, changes that. Now, it’s possible to spin up a new currency that can fairly distribute value generated from the growth of an economy directly to the people most responsible for that growth. In this case, that would be content creators.
Stream does exactly this. As the economy grows and our token represents more money over time, we capture a portion of the value generated from that economic growth in the form of minting new coins, and distribute those coins directly to content creators. This creates a system where content creators can earn direct money without users having to pay anything. At the same time, by pegging the coin creation rate to the growth of the economy, we can ensure that tokens do not depreciate in value, and at the very least either hold their value or appreciate.
Going back to the example with 100,000 tokens and an economy growing from $100,000 to $500,000, imagine now that 100,000 new tokens are issued and distributed directly to content creators in proportion to the success of their content (defined by metrics such as say # of likes or views). Now, there are 200,000 tokens representing $500,000 of value. Abstracting away the value of future growth of the economy, each token represents $2.50 of value — consequently, $250,000 was able to be distributed as a direct monetary reward to content creators, while ensuring that existing token holders also still retain a highly valuable coin and are not unfairly diluted.
This isn’t pure conjecture, either. Steem has pioneered a version of this general concept with extreme success for what essentially amounts to economically incentivized Reddit. Steem is by far the most popular consumer application of blockchain technology today, with over 140,000 daily active users in just about a year of existence. Their growth rate has actually been greater than that of Reddit’s — over a year after Reddit’s inception, they were still only at about 70,000 daily users. Steem is already the ~1,300th most popular site in the US with twice that # of daily active users.
Steem’s claim to fame is distributing free Steem to writers based on upvotes received. Beyond that, the site is arguably much less UI/UX friendly and usable than Reddit, but the economic incentive alone has been more than compelling enough to bring vast swaths of people on board.
This is extremely heartening, because Steem has managed this degree of overwhelming success despite a few serious concerns with their economic model that personally give me caution. Namely, there doesn’t seem to me to be an inherent reason Steem is a useful transactional currency and should have any intrinsic economic value.
Steem manufactures some use cases through having multiple types of tokens with different value propositions, such as USD pegged Steem Dollars, but these are sparsely used and the predominant source of value for Steem tokens seems to be speculation. Steem also inflates at a rather high rate, and is not designed to be a currency that protects and retains value well. Nevertheless, Steem has achieved about a $300 million market cap and underpins a massively practically successful blogging platform despite these shortcomings.
An analogous economically incentivized system for decentralized streaming hasn’t been quite technically possible until now, but the underlying infrastructure is finally being developed (e.g. Livepeer) to the point that makes this the perfect time to introduce this solution for streamed video content.
The streaming economy is also far better suited for this economic model, and consequently Stream is able to solve a lot of fundamental problems that still plague even already extremely successful systems like Steem’s. In particular, the streaming economy already has a huge directly paid/transactional component alongside all the generally free or advertising supported streamed content available.
Recorded streamed content, such as that available on sites like YouTube, are generally free to watch and supported by advertising. Livestreamed content often works very differently, and incorporates a thriving tip and gift based economy. For instance, in China, where half the internet population watches livestreams, over $4 billion in value is exchanged in the form of virtual gifts to livestreamers.
This means a token specifically designed for the streaming industry is poised to uniquely benefit from this duality of free and paid content. Paid content, which generally has lower distribution but far higher profit potential, can drive a lot of the underlying growth of the economy, which then fuels the distribution of newly minted tokens to free content.
In turn, free content, which generally has low profit potential but very high distribution potential, can serve to drive new viewers into the network who can then directly support paid content with monetary contributions. Hence, a virtuous cycle of network effects can be created whereby both paid and free content serve to help each other maximally gain from their shared ecosystem.
Solution #2: Creating an extremely cheap, quick, scalable, and anonymous micropayments system
The solution above presents a very lucrative opportunity to earn additional income for anyone in the streaming industry, but for content creators who are already being paid for their work, such as livestreamers who subsist off tips from their fans, Stream presents an additionally powerful economic opportunity.
Specifically, Stream allows streamers to completely break free of the exploitative 30–60% cut current platforms take, and receive payments with fees approaching nothing. With the advent of off-chain payment channels, cryptocurrencies gain a significant advantage as a transactional currency over existing systems.
Most existing livestreaming platforms use site-specific, highly illiquid and arbitrarily issued tokens to facilitate payments to performers, and take a huge cut for providing this ‘service’. On top of this, these tokens are often difficult to cash out, and can be confiscated or withheld at a whim by the platform/company that controls the tokens. This is not a very performer-friendly system.
As a result, many livestreamers have already resorted to requesting tips in bitcoin and other cryptocurrencies, despite the rather large adoption hurdle required for a fan to use bitcoin today. The pain point is simply so great that streamers are willing to resort to something else that solves some of the problem, even at great cost.
Stream’s goal is to make the process of using our token far easier than the current process of using bitcoin directly, while retaining all the inherent benefits cryptocurrency offers over other forms of currency, such as the irrevocability of transactions and the general elimination of fraud (e.g. stolen credit cards, rampant in the industry today), as well as its completely liquid, global, and trustless nature (no fear of a centralized service confiscating your money, easily transactable across national borders).
We accomplish this by providing a system that abstracts away the need to even understand cryptocurrency or what the blockchain is. To use Stream, no working knowledge of the underlying technology is necessary. All you have to understand is the economic benefit you get from using Stream over an existing service — namely, no middleman cut and retention of all your hard earned profits.
On top of this, we’re working to build a system that provides even more advantages for streaming than a general purpose cryptocurrency could by design be capable of. Specifically, we’re working to implement a fully end-to-end anonymous micropayments and tipping system that would enable extremely fast, cheap, and scalable cryptocurrency transactions.
Off-chain payment channels such as the Lightning and Raiden Networks already provide numerous benefits over using bitcoin directly, and enable fast, cheap, and scalable transactions. This solves a huge part of the equation already, but is lacking one key component of pretty significant value: the option of true anonymity.
Thankfully, the Bolt payment channel protocol establishes a method of creating payment channels with unlinkable transactions, ensuring a fully anonymous system so long as the underlying blockchain that the payment channels are opened and closed on is also anonymous in nature (e.g. ZCash or Monero).
Taken in conjunction with the ZCash-on-Ethereum (ZoE) endeavor to add ZCash functionality to Ethereum, it becomes possible to create a fully end-to-end anonymous microtransaction system on Ethereum directly utilizing a custom token. This is what Stream is working towards.
Such a system, once fully implemented, opens the gate for enormous opportunity not merely for streamers, but for anyone in any industry that would benefit from having a fully anonymous microtransaction system. Streaming is our justification for opening this gateway, and is more than sufficient justification in of itself, but streaming is far from being the entirety of the ultimate utility that can be derived from the existence of such a system.
Focusing merely on streaming alone, however, we see very powerful doors that this system can open. There are plenty of reasons both content creators and content consumers today may choose to have their consumption and transaction history made private (maintaining privacy as a famous celebrity is often an intrinsically desirable feature in of itself), and we see the provision of this option to intrinsic privacy as a strong selling point for the inherent benefits of a system like Stream over existing solutions.
In the longer term future, I’m personally strongly compelled by use cases where the requirement for strong privacy is critically imperative, and possibly even of life-and-death importance. A landmark New York Times article published just this year chronicled the fate of one Mexican newspaper that was forced to shut down because it was simply too dangerous to continue operating:
With the headline “¡Adios!” in large type emblazoned across its front page, a newspaper in Ciudad Juárez, Mexico, announced on Sunday that it was shutting down after nearly 30 years after three journalists from other news organizations were killed last month.
The newspaper, Norte, said in a letter printed on its front page that the killings and the increasing violence and threats against reporters meant that journalism had become a high-risk profession.
“Today, dear reader, I am speaking to you to inform you that I have decided to close this daily because the guarantee for the safety for us to continue journalism does not exist,” the newspaper executive Oscar A. Cantú Murguía, wrote, adding: “Everything in life has a beginning and an end, a price to pay. If this is what life is like, I am not ready for one more of my collaborators to pay for it and I am not either.”
Reading this was extremely disheartening for me. It was a clear demonstration that free press was losing, and repression and censorship by violence was far too effective in the state of the world as it exists today. With centralized services like newspapers with publicly employed reporters, it’s far too easy to repress content with violence. Cut off the head, and the game is over. Bomb the headquarters, murder the reporters, threaten everyone, and you win.
Decentralized livestreaming solutions offer one defense to centralized censorship, but they can only go so far on their own without an economic support model. With fully anonymous payment and tipping functionality integrated directly with streamed content, however, a whole new world is opened up. For the first time, grassroots reporters can be empowered to report far more safely by maintaining their anonymity, while at the same time being economically supported in their work by consumers of their reporting, who are also able to remain safe by dint of the anonymity of their supporting contributions to the reporters.
This is a far off, idealistic future I’m painting, but it’s the future I hope for. Suffice it to say we see a lot of potential in what we’re doing here, both short-term and long-term.
Conclusion
In summary, Stream’s mission is to make content creation as profitable as possible, and ensure that content creators are able to reap the lion’s share of the reward from their work, as opposed to distribution networks as is presently the case. We’re doing this by introducing a wholly novel way for video content creators to be economically rewarded for their work without a direct cost to viewers, and by introducing a payments system that eliminates the huge transaction fees and overhead costs from things like fraud currently charged by existing platforms, among a host of other strong benefits, such as anonymity.
If this is compelling to you, we’d love your help in making our mission succeed in whatever form you’d like to contribute.
If you’re a content creator, we’d love to hear from you. We’re exploring guaranteeing content creators that decide to work with us will earn more than they have on other platforms. We’re also always looking for more content creators to help beta test and provide critical input with design and functionality decisions as we progress on this project. Please email me at ben@streamtoken.net so we can discuss more.
If you’re a content consumer and would love to use our platform, or are just a fan, we’d also love to hear from you. Please feel free to join our Slack group here, our Facebook group here, and our Telegram group here.
Critically, if you’d like to get in on the ground floor and use our product from day one, we’ll be releasing more details on our initial token sale/ICO on these channels, so be sure to join up if you’re interested in participating there.
If you’re a developer and want to help contribute on this project, email me at ben@streamtoken.net. We have plenty of token bounties available for development help.
If you’d like to help us spread the word, have connections that would be helpful for us, or would otherwise like to help us make this thing succeed, also don’t hesitate to reach out at ben@streamtoken.net. This is an open source protocol we’re building that we want to see have as much adoption as possible, so any and all help is much appreciated.
On the other hand, most critically, if any of this exposition didn’t make sense to you and wasn’t compelling, I’d also very much love to hear from you at ben@streamtoken.net. It’s imperative that we’re able to communicate this message and our vision as effectively as possible, as well as ensure that the implementation we’re pursuing is as practically useful as possible, so constructive feedback is by far the most valuable asset we can obtain at this point in time.
Thanks for reading! You’re amazing, and don’t let anyone ever tell you otherwise.
