Thank you.
So this is going to be a bit of a discussion starting with us three and I'll introduce myself and then allow the others to introduce themselves as well.
But feel free to put your hand up at any point and participate. I hope there's this, the general topic is, which flows on really well from Natalie's talk.
So thank you. That really set us up well. I was kind of looking back at Nate and our previous discussions and a lot of what we've talked about really resonated there.
But overall we bring it to app protocol specifically and building a new sort of creator economy here.
So from my perspective, I'm one of the co-founders of Spark. Spark is focused on content creators, the creator economy specifically.
More like short form creators and that kind of really, really big influencer marketing ecosystem that's grown on these incumbent social platforms.
And we work out of a space in New York called Versi, which is home to a lot of content creators.
I think they have a combined over 10 million followers and these are predominantly spread across TikTok and Instagram.
And a lot of them, a lot of the discussions and workshops that they run there is basically all about how they can extract their audiences from these closed platforms because they're at the whim of an algorithm change or a policy change and their career could potentially end tomorrow in their livelihood.
And app protocol we see is a great solution for that. Their current solutions are pulling that out to things like sub stack, to newsletters, Patreon, Pay World Gardens.
But app protocol is a way for them to natively own that audience on where they actually get discovered.
And so that's a bit about Spark and my motivation for building in the atmosphere.
Sorry, I'm Joe Bassoff, by the way.
Thank you, Joe. My name is Josh Chiquette. I'm also New York based.
I'm one of the bad guys in the room like Natalie. I'm a venture investor.
I work at a firm called Sentinel Global. We're a multi-stage investment firm.
I've spent my whole career translating open protocols to real world problems and commercial opportunities.
So this started in the FinTech and digital asset space where I've done a lot of work investing in companies from the seed stage to even underwriting public ones.
I've done a lot of work in the open social web serving communities from Noster to Farcaster, Activity Pub, came across at Proto and Bluesky a couple of years ago and is really drawn to the affordance of data and identity portability that the ecosystem offered.
And super excited to be here today and talk about some of the new novel business models that this protocol and technology foundation enables.
So pass it over to Nate.
Hello, I'm Nate. I work on open source for most of my life.
And recently I've become really enamored with that Proto.
So I'm working on some SDKs for at Proto and then recently a music app, which has brought me into this problem of what ways can artists express how their content should be used.
As Joe mentioned, how do you retain ownership of the content that you create without being subject to random things?
So, yeah, I just think it's really exciting to sort of break open the problem that you get when you reverse the Faustian bargain that sort of she was referring to in the previous talk.
So I'm excited to get into it.
Awesome. Yeah.
I guess everyone, the reason why everyone's here, everyone understands the issues with current social and the kind of power dynamics that are there, especially with content creators.
Even looking at the creators, we're looking at catering to the most of their revenue sources that are not actually through the platforms.
They operate on the TikTok, Instagram, revenue sharing programs is actually a very, very small fraction of their revenue source.
And it tends to be these kind of third party brand deals and things like that that make up the large portion.
Yeah, Josh, you posted a really good leaflet recently about kind of redistribution, the redistribution of attention and especially with algorithms and feeds.
So, yeah, I'd love to if you could share your thoughts more on how that can impact the creator economy specifically in the context of that proto.
Sure. We'll do a quick survey. How many people post on social media? Put your hand up.
All right, everyone hands down.
Who makes meaningful income from their posts? Hands up.
I see one hand in the room. Congrats.
The reality is users and publishers are the stakeholders in these social networks that create value, but they're not the ones that capture the value.
And this is because the platform at the end of the day is the entity that owns distribution. They own what they're the ones who control what content users see and in what order.
And they also control the interface. So the screen real estate that users see.
And these are really the two things that enable the platform to capture a meaningful majority of value on these platforms.
And as the entity that captures the meaningful amount of value on these networks, the platform is also the arbiter of value.
It is the entity that decides how that value gets allocated across the various stakeholders in the social in its social network ecosystem.
And ultimately, these platforms serve not users. They don't serve publishers. They serve shareholders at the end of the day.
And so there's really little to structurally no incentive for these platforms to to share back revenue to creators.
There are some of these creator monetization programs that exist where maybe a small fraction of advertising revenue is passed back to users and publishers, but they're prohibitively high thresholds to participating in these programs.
And so one of the core affordances that I mentioned of app proto my intro was this decoupling of data from application presentation.
Everyone's data lives in their own personal PDS and applications tap into each user's respective PDS and create a an application view by tapping into this data.
And so one of the one of the things that happens as a byproduct of this affordance is users in app proto are able to create their own custom feeds and algorithms that live outside of the platforms control.
And the algorithm at the end of the day is the the thing that decides distribution that decides who sees what content and in what order.
And so I'm hopeful that in this evolution of social platforms adopting at proto and decoupling data from platforms themselves will actually be able to live in a world of user controlled algorithms versus platform controlled algorithms.
And that gives a lot more agency to the user and the creator as well. Number one, they get to take back control of distribution, which enables them to control what their audience sees today.
If you're a user or publisher and you're broadcasting out into the social abyss, you have no control over what content your audience sees and in what order.
And so this is a really bad sort of trade off for users and publishers.
But if publishers are able to take back control of distribution through public feeds or through custom feeds and custom algorithms, not only do they take back distribution, but they also take back control of value.
And now they become the arbiters of value in this ecosystem, not the platforms. And I'm hoping that with publishers and content creators becoming the arbiters of value in this ecosystems.
Now they're the ones that decide how that value gets allocated across the ecosystem. And I'm excited to see how this envelope of value could get distributed across various stakeholders at the very extreme.
You could imagine like Andra, for example, who runs the largest custom feeder algorithm on Bluesky, a verified news feed that she built with grays.
She could embed advertising and sponsor posts within her feed, which she's already done, not a massive scale.
And then redistribute all of that ad revenue that she generates to users or subscribers of her feed.
And you could start to imagine how this envelope of value could get distributed across these various stakeholders that actually provide value to the feeder algorithm that creates these new incentives and new forms of economic coordination.
I'll stop there. Yeah, that's really great. I think.
Yeah, go for it.
So when you're talking about the creation of a redistribution of value to the creators.
As a platform creator as a venture capitalist, presumably, this is actively against your core interests, right? Because in order for you to gain value from the thing you're creating, you need to control what people see because that gives your platform value that then you can extract for yourself, right?
So how are you reconciling that? Like, are you planning on somehow building record deals with creators where they pay you for access to a platform?
And if they are the ones who are the ones creating value, how does the platform or the venture capitalist add anything to that that makes it worth getting the share of the value in return?
Great, thank you for the question. It's obviously tough to be the bad guy.
No, no, no, look, I think the competitive vectors are going to change in this space and the points of demand aggregation will change as well.
Obviously, in this world, the creator has a lot more leverage as someone who controls their own distribution, owns their their portable feed that they can take with them from one platform to another.
I envision again, it's still really early. It's still it's still too early to say, but I envision, you know, companies like graze, for example, will build will almost become like the stripe for creators and build monetization tools for them that allow them to, you know, for example,
graze has already built an ad marketplace that allows for feed creators on graze to embed advertising and sponsored ads within their feeds.
And, you know, graze will probably impose some sort of take rate on on that transaction. And so, yeah, as more as more people use graze, as more feed creators come on to graze, as more attention concentrates and in graze feeds.
Yeah, I expect graze to potentially in the future, you know, participate in some of those economics where they're introducing advertisers to attention that takes place within these feed create within these algorithms or feeds that that creators produce.
And I think the platforms will also play a role in this. Ultimately, if you create a feed or an algorithm, you still need distribution for your feeder algorithm if you just create it and put it out into the world.
You, there's not much value in that you need people to view it and you know Bluesky is 40 million users they provide distribution for feeds, they'll probably want a piece of the cut as well whenever they render an ad within one of these feeds whenever a user looks at one of these feeds in the Bluesky client
and sees an ad, you know, that that envelope of value will get split between the creator, the, and the platform, and probably graze as well, who's like this monetization tool or infrastructure for for creators so that's my response.
Yeah, I mean, I'll just make a quick point and then we'll go to the question over there. From the perspective of someone that's, you know, building an app there. I think I echo Josh, a lot there and that there's still the distribution surface and I think it does flip the power dynamics but there's still
the requirement for the interface to get the creators content to the audience and there's costs involved with that but I think that the competitive nature changes and the power dynamic changes so you know the the creator in this case has a lot more power and say and arguably more, much more bargaining power in that transaction so you know the the apps that exist depending on what roles they play you know looking at at protocol specifically
there's lots of different components there's there might host your PDS which actually has your content stored on it. It might they might have the app view and then they might be running the fee they might be doing the moderation. They might have a full stack in which case they deserve a larger bit of that pie but ultimately the creator has a lot more bargaining power and and these kind of other components of the system fall further back into the, you know, into the background and you know they've been doing a lot of the things that they've been doing.
You know they basically play a role as a broadcaster or the rails for which a creator can access the audience and the creator has the choice over which apps that they use as the surface to reach their audience. Yeah, there was I think there's a question over there.
Hi, so I actually use grace to create feeds and I have one feed enabled for monetization. But what I found in general with the feed creators with grace is that most of us are trying to create these feeds but we're not necessarily out there.
We're not necessarily out there trying to market to get advertisers like that's not our main skill set, if you will. Whereas the creators themselves who are trying to monetize their work are skilled at that.
So I guess I wonder both what do you see as a way that we can actually get advertisers even wanting to be part of this system? Yeah. Like how do you make that happen when you kind of have this weird distribution of creator versus more of a developer general interest person?
Yeah, I mean, where there's eyeballs is going to be value. And right now, like, yeah, we there's there's over 40 million accounts on Bluesky but then there's even less if you look at the actual monthly active users and there are already interest in advertisers, whether that's through grades or people, you know, sponsored feeds or brands participating in the network.
And there's a lot of clear value there. There's eyeballs is attention. And where there's attention is there's money to be made, especially if we're looking at, you know, advertising models, but there's a lot of other models. Well, I think what should come about when permission spaces become a thing on that protocol. But yeah, good question.
More that becomes a real thing.
So, sorry about that.
I think I would like to ask Nate to pass it to you. I mean, we've talked a bit about more from this perspective of creators and ads and that being their kind of source of revenue, but for musicians and artists, it's a pretty different revenue source and algorithms, especially today with, you know,
apps like Spotify and Apple Music that have a real impact on how the music is created in the first place.
How do you see kind of at proto changing that landscape.
Cool. So, I'm really excited about what, first of all, has how many of you have heard of at proto fans.
Okay, a good chunk of you. For those of you haven't, it's sort of like you show up, you hook up your bank, and then other people can show up and pay you five bucks like coffee or something like this.
And so what's exciting to me is that in my music app today, you can say when you upload a track or something, you can say only allow supporters to consume this track.
And so I can just, as an app view or an application, just respect that stated support, which when permission data is a thing that can be private as well.
And so it's sort of more, it's just like Patreon style, like creators have relationships that they build grassroots with people that's sort of divorced from the classical conception of distribution or the advertising models, which is exciting to me personally.
And so I think the tricky thing.
So, the tricky part in my mind comes around when you ask a question like, if spark is going to present a cameo of a song that appears on a music platform where the content is gated.
How do you trickle the value back to the artist who owns it? How do you quantify the value that the artist is providing by allowing their content to show up downstream?
And so I think that is where I want to press and try to figure out how do I do a handshake with Joe and say how much is it worth to the artist for their content to appear there?
And I think that's a very tricky problem and I don't have any answers to that right now, but that is where I'm really interested in thinking because it does seem like the value of an impression depends entirely on what the content is, first of all, and then second of all, the place where you see it.
Because you can just hold up, you can have your phone in front of you, but you can just not look at it and the system might count that as an impression.
So it's like there's a lot of different human ways that I think we need to think about what the value of content distributing downstream is that I think is an important problem.
But one thing I'm really excited about is that if an artist doesn't like the way that Joe and I do the handshake, as far as respecting the value of their content downstream, they can just take their content and go to a different app because of AppProto, which I think is really cool.
And so maybe a different app does a better handshake in terms of respecting the value of their work downstream.
Yeah, I think that's a great point. I mean, I, you know, Spark and Playa, we're going to interoperate one day, I promise you, we'll have, you know, you can add songs to Spark posts that are, you know, Playa record.
So an artist song that they have on their PDS can start to propagate interoperate across lots of different apps, not just Spark, but wherever there's music.
And where these kind of value exchanges happen, I think there's, it's really important that there's some mechanism to share value there.
I think right now we're starting to see like intra app monetization models where, you know, Leaflet is launching Leaflet Pro and they have their monetization stream.
You can subscribe to Leaflet. You know, you can have this other apps that are starting to do pro things as well, or Grey's has their own advertising.
But, you know, even if you're looking at a Grey's feed, which, which happens to your question, a feed builder on Grey's could have ads in their feed and Bluesky that are actually taking on the majority of the costs and distributing that content is getting none of that.
And sure that works for now while they've got $100 million in the bank, but it's not going to be a sustainable ecosystem.
So I am a bit of a proponent for, and this came up in the previous talk, micro payments there for the inter app ecosystem.
So, you know, for example, a player song being used on a sponsored post on Spark and a percentage of the revenue being made on that sponsored post automatically being distributed to the artists whose song is being used there.
And that also could flow in the other direction where you have niche artists, which this exists on platforms today. There's this kind of shadow economies where an up and coming musician will pay for a popular content creator to use their song on their post as a great way to get discovered.
And we see TikTok has been such a great discovery mechanism for artists recently. And this doesn't just have to stay within the, you know, creators like artists and UGC creators.
It can propagate across every other component of the ecosystem, PDS hosts, moderation services, app views, labelers, whatever.
They can all become sustainable models that don't just rely on donations, but share in the value that's being created across the ecosystem.
So if everyone, if anyone wants to chat micro payments on that proto, then please talk to me. But yeah, I think we're that Christian. Actually, this is, I'm glad you're asking a question because I was about to reference your most recent post and proposal about more artists specific metadata on on app protocols.
So, yeah, we'd love to hear it.
Thank you that you introduce because if you want to talk about what you want, talk about that, please.
Yeah, my name is Hilke. I'm a musician myself and I run a music label. So I know a bit how the music industry works.
And well, if you talk about monetization downstream for music that is post on that is in a video, we have a system for that it's called copyright.
Yeah. And I think this has to play a role, even if it looks much too complicated for technologists like like many of us.
But this is actually the system in place that the music industry and the big players use. And I think we need to find out with with this protocol how we can map their data to that proto data.
And yeah, I think that opportunity was missed in the first wave of Spotify and stuff. And then the whole mess that was made, then they had to buy out a bit of majors.
And that's how all the indie musicians and players got fucked. So I think now we have the opportunity to do this mapping, mapping properly.
And then then the music industry, the labels will gather along hopefully with with with this ecosystem that we try to build.
So that is where that's the reason why I made a proposal for Lexicon, who does actually that to translate the copyright system to add proton.
Yeah, I think looking at like, tick tock as an example, you know, they have a pretty complete library of licensed music there and they have deals with these record labels and they tend to pay on average 30 cents per song used on a post.
And this is this is a very static dynamic and they are able to achieve that because they have, you know, economics of scale, they have a lot of bargaining power there and distribution.
And I think looking at at protocol and music on our protocol, at least for now, there's kind of two angles, which is one is that library completeness on one end, which requires a lot of capital, a lot of bargaining power that we don't have.
And then the other end, it's starting from the indie artists, the creators at the at the other end that are starting from nothing and and owning their content from the ground up.
We can then over time build that and build that bargaining power and then get those kind of partnerships with with real copyright and real respect for for the laws that are necessary to protect artists.
We don't have much time left, but I think there's a necessarily necessary topic to cover with the creator economy and that is AI, which is, you know, I think there's a lot of talk about gen AI affecting content creation and and verification.
Verification of what's real and what's not and that affecting the economies. Josh, as an investor, like I would love to hear your thoughts on on AI and in the creator economy at large.
Yeah, I think I think Natalie touched on this during the last talk pretty well. She spoke about how the covenant of the web is dead. Google scrapes websites in return.
Websites get traffic, but we're evolving from a system of search engines to answer engines where it's nine, 10 times harder to get traffic on Google now than it was 10 years ago.
There's some stat. It's like 750 to 1000 times harder to get traffic.
If your website from from open AI and entropic and some of these model providers. So users aren't going to websites anymore.
They're just getting all the answers fed to them with natively within an AI chat interface and AI agents don't look at ads.
Right. And so, you know, for publishers, I'm thinking more news organizations.
You know, the current business model of the web doesn't work with the way in which AI works because, you know, typically these news media organizations are monetizing traffic to their website and
monetizing that attention and selling ads against it. And so, obviously, Cloudflare, Microsoft are doing some interesting work around content data marketplaces.
Publishers create unique niche content. AI model providers need data to train their models.
There was an interesting stat. So I think it was I forgot which AI model provider it was. So I won't I won't say the name, but
for the same amount of data, I believe Reddit got paid. It was something like, you know, five to seven X times more for their data. And the reason for that relative to New York Times, sorry.
And the reason for that is because the New York Times is content is a lot more substitutable to a lot of other news publications out there, whereas the information that lives on Reddit is more unique and niche.
And as a result, a lot more valuable to the AI model providers. And so, you know, while we haven't figured out an AI interface for social yet, I think we still swipe through the short form video reels.
And, you know, we haven't really AI hasn't really solved the interface for social in an AI native way, like Sora just died last week, right?
It will be interesting to see how this business model evolves for for publishers. And I think micropayments will be a really big piece of it.
Anything to add there?
Yeah, pretty much done for time. If there's any last questions, otherwise we'll wrap it up.
Thank you. I think, yeah, we're all excited for that kind of there's a big kind of sea change coming for creators in terms of how much power and the power dynamics there with creators.
And we're building that on our protocol. So it's exciting.
Excellent.
Thank you very much.
Just want to acknowledge the people on stream there's been a lot of questions there's interesting other cases Hillcrest blog post is posted on there so all sorts of action popping up on screenplays so please check it out.
Thank you.