As euphoric ideas about possible Blockchain applications proliferate, many startups hope to become the ones to replace major, lucrative platforms - the Googles, Amazons and Facebooks of today’s reality - with something more transparent, fair, decentralized and community based. The race for the next “Youtube” is heating up as well, with many players entering the field. CryptoComes spoke to Verasity co-founders David Orman and David Simmons about the not-so-distant future of Blockchain powered video streaming.
Katya Michaels: How did you arrive at the application of Blockchain technology to video streaming? How does Blockchain help achieve your goals with the platform?
David Orman: Our team has a deep research and technical background in the video space. We've been building a white-label video player, which needs advanced technology to be able to scale with high quality, low buffering and low latency.
We initially approached Blockchain to account and record individual views on a video platform - what we are calling Proof of View. In doing so, we realized we could change the value exchange within the ecosystem.
A viewer can come onto the platform, choose what advertising to watch and get paid for that in coin. Content creators can decide how they get paid for their content - whether it’s donations, pay-per-view or subscriptions.
We're also doing some developments around microtransactions, because a video platform could scale and go global very quickly. We are able to do up to 100,000 transactions per second on our own Delegated Proof of Stake Blockchain, which is absolutely immense and gives us a real competitive advantage. But we are not a peer-to-peer platform, which a lot of other platforms are, because that allows us to provide a higher quality user experience for viewers anywhere in the world, on any device.
Challenges of P2P for video streaming
KM: Could you elaborate on why P2P was not the best choice for Verasity?
Adam Simmons: We've done a lot of research and our technology significantly reduces the cost of distribution, as well as problems for viewers on global basis, such as being able to view on weaker connections.
In order to get adoption of the platform from viewers and creators, you've got to have a good viewing experience. If I went to a new video platform and the video didn't load, there was lots of buffering, the quality was bad - I'm never coming back. If there are no viewers - creators won't come over.
With P2P, you've got to have a huge amount of seeds for people to be able to view the content. That works great if the content is already popular and there a lot of people seeding it. But if you're trying to watch a video in California and the only seed for this video is in Asia, you're going to have a terrible viewing experience. It just doesn't scale. If it did, and if it was this wonderful thing that was so cheap and easy to use, then Google, Facebook, Vimeo, or these major platforms would have already utilized it.
The other challenge with P2P is the cost. Looking at it from a Blockchain perspective, as a free system, it's basically using tokens to incentivize people to use their resources to see the content. That may not cost the operating company anything, but it costs the token economy a huge amount to incentivize enough seeds to be even able to make a small amount of content have a good viewer experience.
The third aspect is that if you have a truly decentralized approach, moderation can be exceptionally difficult. In Verasity, our moderation policy for content is simple - is it legal? Having no moderation and no censorship is great from the point of view of freedom of the press. The trouble is, if you have a true no moderation environment, it doesn't take very long for people to upload highly illegal content. That's something that's going to get the entire platform taken offline and blocked on the national level by governments.
So, there are three major problems with P2P that are potentially catastrophic to a video sharing platform and we haven’t seen any good solutions.
A different advertisement model
KM: On Verasity, advertisers interact with viewers directly. Some decentralized video platforms aim to cut out the advertising aspect entirely, leaving just the transaction between creators and viewers. Do you think that's unrealistic or sub-optimal?
AS: It’s all about where the advertisers are in the value exchange. In a traditional platform like Youtube, the viewer watches the advert, the advertiser pays the platform, the platform takes their costs to pay shareholders, and then some revenue gets back to the creator. The creator doesn't have any options about the kind of advertising, the viewer doesn't have a choice of whether they want to watch ads or support the creator in other ways.
We haven't removed the advertising from the system entirely because it offers a lot of value to people who want to engage with it. What we've done is move that advertiser from standing between the viewer and the creator.
The advertising market for online videos is billions and billions of dollars, so there's a huge amount of potential revenue there. Why should we as a platform make that decision? It's up to our users and our community to choose how they want to engage with advertising and be paid for their attention in our coin, Vera. We provide the facility for the advertiser to have a direct value exchange with the viewer.
Direct creator compensation
KM: What are some factors for getting the public to transition from platforms like Youtube toward the model of direct artist compensation? Is it the financial incentives of watching the advertising, or being part of that community, or the opportunity to invest in a creator directly?
DO: If we can bring the content community into the platform, enabling people to find what they want to watch when they want to watch it, and give them a good viewing experience, then the advertising model fits around that.
We want to be able to say at some point in the future that we are giving far greater value than just the price they're paying has more value represented.
What we're doing with our Proof of View concept is ensuring that the platform can't be gamed. Therefore, we can create better accountability across the platform that will give true value to the advertisers, the content community and the viewers.
AS: Paying directly for content is actually a mechanism that is already used quite often. If you look at free-to-play mobile games, there are options of watching advert for gems or buying gems. Even within online video, paying directly for content is something that a lot of viewers are open to.
The challenge for creators on a purely ad funded platform is that the money you get per ad served is incredibly small. The only way to monetize effectively on those platforms is to get billions of views. Now that works great if you've got a funny cat video that was cheap to make, but that's only one type of content.
What about premium content, like TV shows or film? The value that content has needs to have either a pay-per-view model or subscription model. There is also niche or educational content, that may only be interesting to a few thousand of people in the world, but to those people the value of that video is incredibly high. If you put that video on an ad funded platform, it would make a couple of dollars. It wouldn't justify creating it and putting it online. When a creator has more options for monetization, audiences have access to a greater range of both genres and types of content.
Eliminating content manipulation
KM: Given that there's no third party interference, how will content discovery be handled on the platform?
AS: Our recommendation engines are quite advanced, built up by viewer behavior - what videos you are watching, what you're interacting or engaging with. The big piece to how recommendation engines surface content is based on how the content performed globally. The problem with that today on social media or other video sharing platforms is that data could be manipulated.
A really topical issue at the moment is fake news. It shows up in people’s feeds because it gets seeded first through buying fake views, likes and comments which trick the algorithms into thinking that video or piece of content is really popular.
Our Proof of View technology eliminates that, and it means that the recommendations are a lot more accurate. In turn, that means the viewer experience and the content surfacing for creators is better.
Investment and exchange of value
KM: Viewers can support creators through the Spark Marketplace, by investing in their channel - that almost seems like an ICO inside an ICO.
AS: We like to think of it as crowdfunding plus one. Crowdfunding is mostly support for products - you give them some money, you get something back. There have been people trying to crowdfund for content, like a documentary. But it's very difficult to get people to put a lot of money into that sort of thing because all you can offer them back is a thank you or a line in the credits.
In the Spark Marketplace, because all the content is distributed through Verasity and all transactions are done on the Blockchain, we can actually create a small contract which automatically distributes a portion of channel earnings to people who backed that channel.
It could be as simple as a typical Youtuber buying a new camera, all the way to funding an entire TV series. When viewers stake some Vera into channels, creators can produce better quality content, grow the channel, grow the audience and in exchange viewers can share in the success that they helped create. This gives a real incentive for people to back channels and they become bigger advocates as well. They aren't just sharing creator content because they like it, but because they've got a stake in it.
KM: When there is talk of stakes and returns, though, it makes me think of investor expectations and regulations. Do you foresee any issues with that?
AS: For everything we are doing with Sparks, we've got a big team of seasoned professionals and legal counsel. We're building a platform that we want to see succeed, so we’re really making sure that everything we're doing is by the book to meet global regulation guidelines in terms of how users interact with it.
This is another aspect where Proof of View comes in - it enables us to add that extra degree of scrutiny. All the transaction data, performance analytics and guidelines will be available to viewers who are looking into buying channel Sparksl. It’s something creators can share freely with their viewers.
DO: It's about building a community within a community. Our platform is being delivered with robust accountability and high-quality technology. On the basis of that, we are hoping to encourage pockets of communities surrounding content channels, and we will work with content creators to make sure that they can promote and monetize their content more transparently and efficiently.