Blockchain and PROPS Building Decentralized Video Communitybr>
PROPS is a decentralized ecosystem of video applications that hopes to leverage its relationship with the YouNow community of millions. Although there is an existing YouNow digital currency, PROPS is a new concept, one designed to pay content creators more than they could earn from any other video service. The hope is growing a sector in the video community, something that every investor in media is currently focused on.
The company recently had a token sale in which more than 1,700 institutions and individuals participated, raising more than $17 million. Combined with funds raised from venture backers, PROPS has a war chest of more than $25 million.
Yonatan Sela, the senior VP of business development and product strategy at YouNow, explained the PROPS mission to Block Tribune.
BLOCK TRIBUNE: Let’s begin with the basics. PROPS — what does it do, how does it do it, and what is its connection with YouNow?
YONATAN SELA: So PROPS is a cryptocurrency. It’s an ERC-20 token on the ethereum network, and it is also a project called the PROPS project, which is intended to create a decentralized digital media ecosystem. And the idea there is that digital media is a highly centralized space with a couple of companies that effectively control the distribution and a disproportionate portion of the value that’s created on digital media. As you look at the Facebooks and YouTubes of the world, hundreds of billions of dollars in enterprise value from a network of people that create and engage in content. But only a tiny fraction of that content ends up being shared with the people who actually drive the network, the content creators, the users, the developers who build a cap on top of these networks.
The idea with PROPS is that you can create a tokenized and decentralized digital economy that enables to algorithmically and equitably and proportionately reward these users of the networks with tokens, and effectively create a network where every user has a meaningful person stake in the network. That’s what PROPS is.
The connection with YouNow is that YouNow has been one of the first live video apps in the US, certainly the first one to gain traction, and we have over 40 million users on YouNow, and thousands of content creators. YouNow has also been the first two-sided virtual economy to take models that were invented in the gaming industry. If you look at some of these video games, where you can buy a virtual currency on the one end on in the gaming world, you would just buy the virtual currency and use it in the game. In a two-sided marketplace, that was created and still active and thriving on YouNow. The users buy a virtual currency, a non-crypto virtual currency. They spend it and the creators earn based on the spending that was done on them. Today, that’s a growing economy and that’s running at $24 million a year worth of sales of this digital currency, and we’re taking all of those users, all those content creators, and that type of behavior and use case, and applying it to a crypto economy with, again, a virtual currency, but this time a cryptocurrency.
A lot of the beauty in that is that you can create an ecosystem where that currency can have a meaning also outside the app where it can be used across multiple apps, or developers building additional apps that run on PROPS can be compensated in that currency, and where the users that earn that currency have a long term stake in the network that they’re building.
BLOCK TRIBUNE: The YouNow currency that’s currently in use can only be used within that ecosystem for various tasks, whereas PROPS hopefully will flourish outside the ecosystem and actually provide some equity. Is that the difference?
YONATAN SELA:Pretty much. Tokens are not equity. The tokens have utility within specific apps, and that’s their core function. They’re also used for compensation, and yes, they can become more valuable if this network grows, and if people see the utility that they provide as adding more value. So that is true, it’s important to say that PROPS doesn’t run on YouNow. It will be run on other new apps and not on YouNow necessarily. The first app within the PROPS network is an app called “Rize” that is gonna be launched at the end of January.
So anyone who purchased these tokens, right as they receive them, they’re already usable in that app, and they do a bunch of things within the app. They help you promote content, they help you have greater upload power, they help people get their user status. These are all the key things that people are willing to either pay for or work very hard for to get in social media today, including on YouNow, and that’s what these tokens do. And indeed any other app, and there’s 200 apps that are already being built on PROPS, any other app, it can essentially leverage and use these same tokens, leverage the type of user base already holding and transacting in these tokens, and create the functions around these tokens in their apps and also enjoy basically the more engagement you create on these networks, on these apps, the more PROPS you’re able to earn as a user, and those other apps will have similarly the same ability to reward their users with tokens, and that’s part of the idea.
BLOCK TRIBUNE: So clarify this for me. What is the pitch that you tell YouNow users as to why they should care about PROPS?
YONATAN SELA: So one key thing is that PROPS is starting on a brand new product that leverages brand new technology in many-to-many video. If you look at YouNow today, it’s basically mostly a one-to-many video, and all of the live video products that use a very similar template to what YouNow has built, where there’s one user on screen and then a lot of people writing in the chat, effectively 99% of users are not on screen and they’re not even able to get a like, not to mention they’re not able to earn anything.
On Rize, this first app that runs on PROPS, everybody can be on camera, everybody can have their face out there and can talk, everybody can get a like, and everybody can also earn PROPS. So it’s a major difference on two levels. One, this economic level that we talked about, everybody can earn. Another big thing there is that when we created this network – today, on YouNow, we take 40% of every transaction for those earning users, and today only 1% of users on YouNow can earn. But if you’re anyone besides this 1% of users, on Rize, on this new app, you can also earn. So 100% of people can earn, and not only can they earn, they also get almost 100% of the revenue generated. It is driven back to the users of the network.
So that’s a big change, and that’s enabled thanks to the crypto economics of Rise.The second thing is about the user experience, which is brand new. Instead of having the standard live streaming template, you have a brand new thing that includes many-to-many live, meaning everybody can be on screen, you can create multiple apps, and use cases within that, like a karaoke app, like a social game, like a card game, like a dating game, like a watching-together-of-linear-content, et cetera. And we provide a lot of examples of how that looks like on our materials. So it just opens the gates for a brand new user experience and the first thing that I mentioned which is a much better economics for the users in the network.
BLOCK TRIBUNE Is there anything banned or restricted as far as content?
YONATAN SELA: So every app that implements the PROPS video protocol or adopted a token can essentially create an app to their liking. That’s part of what we call the practical path for decentralization. It means that the different apps operate as separate, if you will, centralized entities that are operating within the decentralized economy on the decentralized network. So on the Rize app, yes, there are restrictions. You cannot have adult content, you cannot have nudity, you cannot have graphically violent content, but another developer can choose to create another app that has a different set of rules, and that would be up to that developer.
BLOCK TRIBUNE:This is working now, or are you going to be developing a prototype based on your crowdfunding?
YONATAN SELA: We’ve been working on this product for over a year now, and it will be launching in about four to six weeks.
BLOCK TRIBUNE: Okay.
YONATAN SELA: That’s the launch of the Rize app, which will exemplify a lot of capabilities of both the video protocol as well as what the token can do and what how users and content creators can work with it. So the product is pretty much ready to go, and then soon after the year starts, we’re gonna put it out in the world. It’s pretty exciting.
BLOCK TRIBUNE: Tell me about your content creators.
YONATAN SELA: A lot of content creators get really excited about this thing, there’s a lot of possibilities with the content. If you look at networks like the Snapchat IPO, $25 billion worth of IPO, and the content creators and influencers and stuff on Snapchat haven’t seen any financial returns from that. Similarly, on Instagram, a big part of the story here is about new type of model, where instead of being a tax collector like Instagram or Snapchat collecting 100% of the tax, or YouTube or YouNow collecting 55% or 45% or a 40% tax, here you can collect close to zero tax, and that’s why so many content creators are so excited about it, not to mention the fact that they’re becoming early adopters, there’s great incentives for them to join because of the mechanics of it.
So my one point worth mentioning is that reading the YouTubers, world leading YouTubers like Casey Neistat, Phil DeFranco, and others have purchased tokens, have invested in this thing, and shown great support for it, and intend to use this product. And we hope that once content creators become aware of the many benefits that this product has for them, we will see a strong adoption by many others. So it’s great to see those early signs of the content creators who already on board.
BLOCK TRIBUNE: If YouTube doesn’t adapt to your model, what do you foresee happening? Will you actually disintermediate them to the point where they might go away?
YONATAN SELA: No. I think it will be almost too ambitious of me to sit here and say that YouTube will go away. I would say that I hope that blockchain in general can create (that). The Internet started with the beautiful promise of a level playing field. That’s not how things played out. Today you have really just a couple of players that are controlling so much of it and reaping so much of the financial benefits that go along with it. I hope that a big part of the promise of blockchain is this ability to create distributed networks where the value of the network is also distributed.
I think that if that goes well, and I think it will be, hopefully by us. And if not by us, I think it will, anyway. It will inevitably go more towards that direction, then ultimately, the big players will need to adapt. But while Instagram can imitate Snapchat or Facebook can imitate Snapchat, or other players can kind of take leading features from other networks like Facebook, YouTube, and others have been doing, it’s much harder to adopt this business model because it undermines the very basic notion on which these networks reside, which is maximize shareholder value, reap as much profit as you can, and reinvest and to continue to capitalize on it.
The PROPS network is built on a different promise, which is we’re not trying to maximize profits. We’re trying to grow the network, and we have a way to get our financial upside regardless of us reaping any additional profits from the network. I think that more players will adopt this approach, and as blockchain-based networks are to emerge, the big players will need to find a way to adapt to that because this is something that is fundamentally different from what they’re able to do today. I’m not aware of any one of the big players working on this type of blockchain-based network at the moment, and for good reason.