Video Startup Can’t Outspend YouTube, So It Created New Currency to Pay Creators | Hacker News Reader

Video Startup Can’t Outspend YouTube, So It Created New Currency to Pay Creators

bloomberg.com

193 pointsberiboy104 comments

This is really just the same as saying they raised money to pay creators, but that wouldn't sound so innovative. One way or the other, it's people investing in this startup (or currency if that's what you want to call it) that pay the content creators.

What I wonder what will happen as more content creators join the pool, thus diluting the value of a "prop". Is the idea that this will also draw more consumers, thus balancing out the value of the prop ? How is the total market cap determined ? How will it grow ?

There's always room for Props 2.0!

(I don't think this is that bad of an idea. Is there a lot of packaging and marketing on top? Sure, but the fundamental idea is fine.)

Oh no! They're creating "money" out of thin air to "pay" creators.

Instead of using money that a government created out of thin air?

I can pay taxes, rent, buy groceries, etc with government money.

The source of the currency is not the issue, it's the longevity/stability of it as a medium of exchange. This startup has very little power (compared to the government) to ensure that the currency will continue to hold value to someone you want to trade with. If faith plummets, they can only guarantee as many assets as they hold themselves.

Which one is more likely to be around in 10 years?

General acceptance is inherent to the definition of currency. Unless we're going to move back to a pure barter system, all forms of currency are created out of "thin air" as the very definition of value is wholly dependent on perception. The more universally shared the perception of value is, the stronger the currency.

I think OP was referencing how US currency is fiat

Right, the source isn't important. What matters is whether what you've received is, for practical purposes, actually currency.

If your boss showed up and said "from today we're going to pay you in bananas, and our exchange rate is $1000 per banana. By the way here's a raise too" and drops a bundle of bananas on your desk... Would you consider yourself paid?

Bananas aren't even fiat! You gotta grow them first

This is a silly example, since in the article there's clearly consent on both sides of the equation. But if the coins remain as "e-points" in their system and there's not much incentive on the buy side, they're not super useful as currency.

In practice the crypto currency markets seem to fuel a good amount of liquidity. This is a pretty neat side effect of the block chain boom.

> our exchange rate is $1000 per banana

This implies that your boss is ready to trade both ways. I'd gladly accept the bundle of bananas.

> This implies that your boss is ready to trade both ways.

Again, this is the definition of currency. The root comes from Latin and means to "flow" or "run." It's this condition of "flowing" that defines currency. As I said before, this shared perspective of how well a currency "flows" is what defines it's value. Fiat or otherwise doesn't matter. In the strawman presented here, you (and maybe the rest of the company) accept and will participate in the exchange rate, so bananas have become a slightly stronger currency. For most of the world, it's still pretty terrible, but they are marginally better because at least some people accept it as currency.

Unless we plan to go back to bartering, this same logic applies for all forms of currency. There's nothing special about gold, bitcoins, rectangular plastic cards, or green sheets of paper with dead people's faces printed on them. What gives these things value is simply society's willingness to use these as a means of conducting transactions.

I would _mostly_ agree, but gold is actually a bad example as it has quite a bit on intrinsic value due to it's interesting metallurgical and electrical properties.

Except government money has nuclear aircraft carriers ensuring it's value. But yeah same exact thing!

Ha, ok then. I will happily swap my mega coins for your crappy government currency.

> This is really just the same as saying they raised money to pay creators, but that wouldn't sound so innovative.

Well the innovation, likely, is in the fact that they raised the money via an almost certainly illegal pyramid-style "investment" medium.

they added an asset to the market that has no intrinsic value other than to help the company that created it and to fuel the market making bots that run rampant on exchanges. There is some social utility to this

Is it a pyramid though? The money doesn't all flow to one place. Content creators 'earn' Props and can convert to traditional currency. The platform loses traditional currency in this case.

The platform generates the currency from scratch though, so they don't lose anything.

They don't generate dollars from scratch. If content creators are converting to dollars they need to pay out, those dollars need to come from somewhere.

Yeah, I was going to say: this sounds like a bond issuance lol. How boring is that!

That said, how cool would it be for companies that make products to issue you a portion of the company with every purchase, so that you could actually support them and be supported by them?

CoopCoin

Except bonds are regulated by the SEC, and are largely understood and able to be traded on open markets. The same cannot be said of this.

I am not sure about the exact structure but REI is set up as a coop.

Coops pay out a patronage dividend to members. Coop accounting is a wierd and special beast, and I won't claim any expertise. Typically a member pays something to belong, that is how ag coops raise some of their capital, for instance.

In the REI case, the dividend amounts to a discount on purchases for members. Others pay the full freight. Same goes for ag coops, but the stakes are much larger and the accounting more complicated.

There is no reason other businesses can't be structured as coops, but trying to find someone who understands the structure probably requires visiting a land grant university in fly-over land and looking up the business school.

yes.. but a bond issuance on the internet!!!

typically there is no dilution, which is what makes this asset class so attractive, but it depends on the individual token's mechanics.

although there are some investors, which primarily help for funding and price discovery, only a small portion of the float is distributed to them. the other portion of the float is doled out to contributors, which would be the video creators in this case.

a way to avoid dilution of the pool would be to price the rewards in USD and give the associated amount of currency

they have to create a demand model to support this, many cryptocurrencies have no demand model whatsoever and just think they can reward people in it

This is something I expected to come from a company like Medium. Basically a 'build your own content' portfolio using a block chain type currency to make the market.

User's pay $x per period (or merely periodically) in exchange for some amount of currency, which they 'spend' by consuming (viewing/reading/listening too) content offered by people creating things for them to view/read/listen to. Each month the artist can convert their accumulated currency in a $y payment. The platform lives off the difference between the $x -> C -> $y ratios.

If you can reach critical mass it makes for a very interesting twist on the existing model, sort of kickstarter meets bitcoin meets ebay. One way to finesse it would be for users to 'bid' on creative projects as well so a creator could say "I can do a video about kittens, free for anyone who contributes $.5C or more to the campaign, it will cost $C for non-backers to view it once it is complete."

You set up a virtuous loop where people willing to spend are advising the creators to the things they should work on, reducing risk on the creators part, increasing satisfaction on the users part, and overall creation/consumption overall.

Why does this need to have anything to do with blockchain technology? What do you gain over a central intermediary?

Free marketing , ability to sound hip, and also a way to cheat and steal from your users . Also an completely automated bug bounty system

> a way to cheat and steal from your users

So using a distributed blockchain database makes it easier for you to steal from your users than if you had a centrally controlled database. Really?

New tech always has security problems especially when it first comes out and the blockchain is no different.

Then you can claim you had a security problem and act like you have been hacked. Wait for your "company" to die. Then run with the money.

A properly traded cryptocurrency allows anyone to trade at anytime (so long as miners are still going), whereas a central intermediary may not be as liquid. Thus, the cryptocurrency route may include a liquidity premium

Is there any cryptocurrency that is more liquid than the US Dollar? What cryptocurrency is optimized for liquidity?

Wasn't comparing to US dollars, was comparing to other types of assets that YouNow could have sold (e.g., stocks or bonds) that each require something more than a crypto wallet to exchange making them possibly less liquid than the cryptocurrency

Blockchain is hip.

Don't underestimate the value of buzz.

In a meeting last week, with middle aged consultants who are work with IBM and the like - they ware all 'block chain this that'.

Those buzzwords help companies like IBM and other consultants generate business, and make them look like they are on top of the trends.

Nobody seemed to really understand it or it's implications - those 'pesky details' are for the Engineers!

Operationally the use of a distributed ledger for transaction data where people can be both consumers and producers helps make managing the system more efficient operationally. I expect it would also help defend against some internal threats such as embezzling or artificially inflating viewership or payments.

Trust. Or the lack thereof. Bitcoin today has a market cap of $162 billion. If it was "managed" by a central intermediary, what are the odds that they wouldn't turn to exploitative behavior? Whatever those odds are, they're infinitely greater than the 0% you get from a decentralized system.

And longevity. So long as any group of people has interest in Bitcoin (and there is no digital apocalypse) it will continue to exist -- as will any decentralized currency. By contrast companies, and even nations, come and go rapidly. If a coin is deemed a viable commodity then it can, and likely will, outlast the original creator of it. Anything dependent upon a centralized system tends to die when that centralized system does.

You get interoperability with trustless trading tools like EtherDelta and 0x, and ERC20-compatible wallets like MEW and Jibrel.

This is basically the model of https://flattr.com/ and a ton of similar things that cropped up around the same time.

I don't know of any that are actually doing well, except for extremely-niche markets. In niches they can be just fine, but that's true for any arrangement (probably even cash-via-homing-pigeon) so I don't think it actually qualifies it as broadly-applicable. I essentially like the idea, but they don't quite work (yet?).

Flattr actually ask the users for money. Here it's not clear where the money comes from. The whitepaper mentions in-app purchases and ads display.

What you are describing is essentially In App Payments in Free-to-Play mobile games. I buy bag of gems for $10, I can use gems on rare cards to continue playing and level up.

The common criticism of that business model is that the returns are disproportional to those who have money, and your livelihood is sustained by <1% of your consumers who are considered "whales" and spend very large amounts.

Actually very much NOT like pay to play games. User A pays User B for something User B created. The company that creates the platform is just overhead and gets paid indirectly through transaction fees. There are working models of this sort of in the porn industry with "web cams" (again not like in app game purchases :-)) and actual dollars.

So... Twitch bits on a blockchain?

> YouNow’s ICO is hardly huge by current standards; the largest sales have brought in upwards of $200 million. But it’s notable for other reasons. YouNow is already a profitable company with 40 employees, name-brand investors and 40 million registered users, a rarity in a world dominated by brand-new projects. People who work with cryptocurrencies say they’re fielding an increasing number of calls from established companies and predict that’s where the next wave of notable cryptocurrency projects will come from. The Props project is an early illustration of what that process could look like.

How are they profitable? What's their revenue stream? Selling coins to speculators? How on Earth does that definition of 'profitability' currently justify the value of the coins? "This is not like those other ICOs, because we made 200 million dollars selling coins!" is a huge stretch of reasoning for "So you should buy coins!"

I'm not saying the business sucks, or is a fraud, but that is an incredibly sketchy line of reasoning. I expect better from Bloomberg.

They are top 5th grossing app on android in social category. I think they have decent revenue from app.

Okay, that's a bit more reasonable. Even then, though, the token is not a share in the company. I suppose it is a signal that the company is not some fly-by-night operation.

The tone taken by the financial press towards cryptocurrencies is interesting. They give plenty of press to the sceptics, the warnings from central bankers, etc. But they also give plenty of positive press, arguably undeserved when compared to the size of similar ventures funded by traditional means.

It's almost as though they're writing about it solely because they feel that they should, to avoid the risk of being seen to be taking a stand. As a result coverage of ICOs gets softer coverage than it otherwise would.

See also LBRY (https://lbry.io), which is basically blockchain-powered video hosting (though technically it can host other types of files too) with cryptocurrency functionality. It is to YouTube as Steemit (https://steemit.com) is to WordPress.

This whole comment (https://cmt.io) sounds like air leaking out of the current tech bubble (https://tech.bbl) on its last days.

See also:

Chat startup can't outspend Facebook, so it created a new currency to scam gullible "investors": https://coinmarketcap.com/currencies/kin/

Look what these guys did (funded by the same VCs), and you'll see why this is more unethical than even some of the shadiest ICOs.

I can understand why they're doing this, but the founders and the VCs should just step back and think about it for a bit. Do they really think they can make a comeback because they raise dumb money?

I'm sure the answer will be a No, if they really think about it. The problem is they're probably past that point and can't think rationally. (And the VCs have nothing to lose by letting them go ahead with this because it's better than losing all their money)

> Do they really think they can make a comeback because they raise dumb money?

Maybe, maybe not, either way they'll probably walk away with a lot of money.

https://d.tube/ already did this and so far it seems to be working. Although they based it on Steem, an exisiting crytptocurrency.

You can read more about dTube here: https://steemit.com/science/@ms007/dtube-all-about-it

Everything that originates out of steem seems to be a lame attempt at making money and then pyramid scheming that through the rest of the steem community.

I'm not sure if props is any different yet TBH. Give us money for tokens we promise you will give you access to content you want at a later date? Depending on how much of that money goes towards content creation or attracting content creators really determines if this is some sort of pump and dump or something more complex.

What people just don't seem to understand is that a cryptocurrency has to be tightly intertwined with the service it offers in a completely trustless manner. Merely having a company which has the same name as a cryptocurrency or made by the same people just doesn't cut the mustard. The service and the currency need to be logically and inseparably intertwined.

I can't pay you in real dollars, so here's some nwah1-bucks

This is a pretty good idea. Google has been aggressively anti-competitive in the video space and the US government has made it abundantly clear that they don't care. Losing hundreds of millions a year for a decade just so no competitor could ever even hope to begin building infrastructure for a competitor has been very effective at shutting out all competitors. When traditional means are cut off through bad faith dealing like that, people have to get creative. And after reading 'The New Digital Age' where Schmidt makes his case for Google taking control of all of human culture with no more justification than 'we are rich, therefore better', I more than welcome anyone who stands even a faint chance of taking them down a thousand notches or so.

Losing money to get to scale isn't anti-competitive, it's basically how any business with economies of scale gets started.

It absolutely is

https://en.wikipedia.org/wiki/Dumping_(pricing_policy)

Or maybe not?

https://en.wikipedia.org/wiki/Loss_leader

Loose money to attract users/creators who put more money into the system.

I don't see how this would qualify as dumping in any way.

I don't think loss leader is the correct term either.

YouTube doesn't make money, nor intends to make money in the near future[1]. The key here is to get entrenched in the market, then assert their monopoly.

On surface this might seem okay, but it definitely is anti-competitive. We've just gotten used to it. Dumping isn't the proper term, but was the closest I could find. It comes under predatory pricing, but the problem is, this business practice is so different from what the current literature consists of, I don't think there even is a proper term.

[1]: http://fortune.com/2016/10/18/youtube-profits-ceo-susan-wojc...

Uh, isn't that just abusing their monopoly position? It's not a problem that YouTube grows, it's a problem when they abuse their monopoly position. This is why we (United States of America) have antitrust laws.

From your link:

"That doesn’t necessarily mean YouTube isn’t profitable, but it just means it’s not a focus at the moment. YouTube, which primarily makes money from advertising within its videos, doesn’t release revenue numbers (it is not separated in financial statements by parent company Alphabet). But some reports put revenue in the billions."

That sounds like corporate talk. It's been 11 years since YouTube has been acquired by Google. Insane amounts of money has been poured into YouTube.

Sure, it gets revenue, but I bet it's not close enough to justify the expenditure, and there's no clear path either.

Is there any place that has said how much Youtube lost due to operational costs?

I think snapchat should have a longer format video interface inside it and then maybe after that is successful pivot it to a apple tv app / separate app / website..

Amazon can open up twitch into a more direct youtube competitor.. Apple could buy vimeo and do something similar, and/or build out their own HQ video sharing site.

As other people in the thread have pointed out, "Creators" is not the right term. I visited the site once awhile back and not only is it just a livestreaming service, but it seems like 90% of the users are high school kids, so it's not a pleasant thought to think about who among their viewers has money to spend on "Props"...

Why not create a blockchain where ACTIONS online = PROFITS. The bigger actions would payout more, but coin is actually minted through online content creation, where you the creator of that content get compensated based on an algorithm.

Could even have that algorithm take in external things and re-calibrate the coins you were paid (i.e. give a bonus) for social media reach, or number of views...

E.g. : You post a video. -- You get 10 props. User B submits a comment. They have 500 comment karma so they get .01 props. User C submits a comment. They have 0 karma.. they don't get any props. User D has negative karma -- they actually have to pay props to comment till they're out of the hole.

Over a month you get 10k views, so the algorithm looks at all views across all videos for the month, and pays out a bonus where each view = 1 share out of the bonus pool of newly minted coins. Say there were 10 other users all w/ 10k and 100 props for grab you could basically give each 10 props as a bonus.

Obviously comments/etc isn't a huge time taking thing like creating a video, so video creator should get more.

I'm imagining something like Reddit + Steemit combined with some added rewards systems to keep users involved and providing QUALITY content, the karma system would be setup to basically try and ensure better quality.

I’m not completely against the idea, just a few comments:

1. Why would User D ever pay and not just make a new account?

2. This system seems to emphasize a certain type of content, though I wouldn’t necessarily consider it quality. I enjoy watching wood turning and blacksmithing videos, which are much less popular than some of the personality based content... I’m not convinced the popularity difference is based on quality.

3. A community like this needs to be careful to not allow a few s”superusers” to scale way ahead of the majority. The only way the system stays engaging (And it is meaningful to get these coins) is if you are getting a meaningful portion relative to your peers.

I like the idea overall, just some related thoughts.

Why do you need blockchains for that? It's effectively a token system.

Blockchain provides no benefit here though, just slows things down

Or simpler: play ads for content, get paid for ad clicks and X impressions. What your system needs is an influx of money - are the consumers going to pay for it?

Surprised nobody here has mentioned Brendan Eich's Basic Attention Token (BAT). It ostensibly solves a problem that I see mentioned often on HN (micropayments for online publishers), and the plan is also to pay users who opt in to seeing ads. Brilliant!

It's integrated into the Brave browser already.

I would put my content (development tutorials) on YouNow if it paid less than YouTube but didn't engage in the crazy shenanigans YT does. Meaning a real due process for DMCA including punishment for false claims, and truly specific and regularly enforced content restrictions for monetization.

>including punishment for false claims

I don't see that happening any time soon. The automated nature of the takedown system (which is really required due to volume) is going to have a set false positive rate. the very same companies/groups that will invest in these media type things are the same groups that will never accept that type of penalty.

the question is does this actually managed to side channel the investment around the major players and allow it to actually go against the market without penalty, or is this just another way to pump up an ICO on the promise of an ecosystem that will ultimately fail, but leave a lot of money out of investors hands and conveniently into those marketing it right now... I'm leaning towards the latter, but I might be wrong.

Has any company in history taken "inspiration" from it's competitors name and then supplanted them? "YouNow" just sounds like a typical YouTube-Without-The-Google type of app.

It's so horribly uncreative. Why not WeTube?

It's enough to remind one of Captain Slow:

http://www.wheels24.co.za/News/Capn-Slow-slams-Twitbook-Face...

Video.us

Lot of successful porn sites with variants of YouTube in the title.

But YouTube will never be their competition unless the world becomes a very different place.

They called it "Props".

The back of my head kept on trying to read that as "Beenz" instead.

(beenz: "the web's currency", also "one of the greatest dotcom disasters".)

1) start an ad based website;

2) pay content creators with a new cryptocurrency;

3) require advertisers to use the cryptocurrency in order to buy ads.

If YouNow implements step 3, then they might have something.

Who knows, maybe they'll end up doing a different #3, put the cash in their pocket, while creators get paid with funny money. Lotsa scams as people try to catch the next bitcoin

After reading the YouNow whitepaper, I am unsure how to argue that they are not doing exactly that

https://en.wikipedia.org/wiki/Truck_system

Just as an aisde: One needs an account from G.I.F.T. (goog, Inst, fb, twit) to use YouNow. No email option.

younow is very creepy. a lot of it is middle school and high school aged kids dancing around in their bedrooms or entertaining teen talk for thousands of viewers. I just get a really bad creepy vibe from the site in general

This is yet another block chain tipping product that is needlessly complex . Why not just give a set conversion table (one bit equals one dollar) like twitch? Also figure out your cut and fees and put that in the table.

YouNow is actually a live-streaming service so I wouldn't call it a direct competitor to YouTube. It's more like a competitor to Livestream.com or Justin.tv (previously)

YouTube is a live-streaming service.

YouTube includes, among other things, livestreaming.

It's noteworthy that this is an ERC20 compliant token. A pretty significant market of tokens is developing around the ERC20 standard, which should generate significant returns to scale (a high level of compatibility between applications supporting individual tokens means less duplication of work and more complementary development).

I have a feeling jobs on craigslist will say "paid in props" now rather than "paid in exposure".

Reading this, all I can think of is that South Park episode and "Theoretical Internet Dollars."

A potential value here is that you now support micro-transactions or can pay for an ad free experience.. but then I don't know why you don't just use bitcoin for this. Or maybe you can exchange to bitcoin.

Thought this would be about Viuly (https://viuly.com) but I guess there’s a few cryptotokens trying to compete in this space.

It's probably just me but this website is in no way in competition with YouTube, it kinda sucks.

Blockchain: The new thing to revitalize your stagnant growth startup.

I have been burned too much in trying to get into ALTs because Bitcoin is still rocketing. As long as bitcoin is rocketing, you lose money by trading BTC in for anything else.

Most alts in the top 10 market caps just follow the swings of bitcoin anyway

How is this different from paying in scrip?

How does younow compare to twitch?

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