Joe Basser 0:42 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. 0:52 But feel free to put your hand up at any point and participate. 0:57 I hope there's this— the general topic is, which flows on really well from, from Natalie's talk, so thank you. 1:03 Um, that really set us up well. 1:05 I was kind of looking back at Nate and our previous discussions, and a lot of what we've talked about really resonated there. 1:11 But overall, we, you know, bring it to App Protocol specifically and and building a new sort of creator economy here. 1:21 So from my perspective, I'm one of the co-founders of Spark. 1:27 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. 1:43 And you know, uh, I work— we work out of a space in, in New York called Versy, which is home to a lot of content creators. 1:51 As I think they have a combined over 10 million followers, and these are predominantly spread across TikTok and Instagram. 1:58 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 you know, they're at the whim of an algorithm change or a policy change, and, and their career could potentially end tomorrow and their livelihood. 2:16 Um, and App Protocol we see is a great solution for that. 2:19 You know, their current solutions are pulling that out to things like Substack, to newsletters, Patreon, Paywall Gardens. 2:27 But App Protocol is a way for them to natively own that audience where they actually get discovered. 2:35 And so that's a bit about spark and my motivation for building in the atmosphere. 2:42 Yeah, I don't know if I— I'm Joe Bassa, by the way. Speaker B 2:46 Thank you, Joe. 2:48 My name is Josh Shachet. 2:49 I'm also New York-based. 2:51 I'm one of the bad guys in the room like Natalie. 2:53 I'm a venture investor. 2:55 I work at a firm called Sentinel Global. 2:58 We're a multi-stage investment firm. 3:01 I've spent my whole career translating open protocols to real-world problems and commercial opportunities. 3:09 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. 3:19 I've done a lot of work in the open social web, serving communities from Noster to Farcaster, ActivityPub, came across @proto and Bluesky a couple years ago and was really drawn to the affordance of data and identity portability. 3:34 That the ecosystem offered. 3:37 And super excited to be here today and talk about some of the new novel business models that this protocol and technology foundation enables. 3:46 So pass it over to Nate. Speaker C 3:50 Hello, I'm Nate. 3:52 I work on open source for most of my life. 3:57 And recently I've become really enamored with App Proto, so I'm working on like some SDKs for App Proto and then recently a music app, which has sort of brought me into this problem of like, what ways can artists express how their content should be used? 4:13 As Joe mentioned, how do you retain ownership of the content that you create without being subject to random things? 4:22 So I just think it's really exciting to sort of break open the problem that you get when you reverse the Faustian bargain that she was referring to in the previous talk. 4:33 So I'm excited to get into it. Joe Basser 4:37 Awesome. 4:37 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. 4:49 Even looking at, you know, the creators I'm— we're looking at catering to, the most of their revenue sources are not actually through the platforms they operate on. 4:58 You know, the, 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, you know, the, the, the large portion. 5:13 Um, yeah, Josh, you, you posted a really good leaflet recently about kind of redistribution, the redistribution of attention, um, and especially with algorithms and feeds. 5:28 So yeah, I'd love to, if you could share your thoughts more on like how that can impact the creator economy specifically in the context of App Proto. Speaker B 5:36 Sure, we'll do a quick survey. 5:38 How many people post on social media? 5:40 Put your hand up. 5:42 All right, everyone. 5:43 Hands down. 5:46 Who makes meaningful income from their posts? 5:49 Hands up. 5:50 I see one hand in the room. 5:52 Congrats. 5:55 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. 6:06 And this is because the platform at the end of the day is the entity that owns distribution. 6:12 They own what— they're the ones who control what content users see. 6:18 And in what order. 6:20 And they also control the interface, so the screen real estate that users see. 6:26 And these are really the two things that enable the platform to capture a meaningful majority of value on, on these platforms. 6:34 And as the entity that captures the meaningful amount of value on these networks, the platform is also the arbiter value. 6:45 It is the entity that decides how that value gets allocated across the various stakeholders in the social— in its social network ecosystem. 6:56 And ultimately, these platforms serve not users, they don't serve publishers, they serve shareholders at the end of the day. 7:04 And so there's really little to structurally no incentive for these platforms to, to share back revenue creators. 7:12 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 there are prohibitively high thresholds to participating in these programs. 7:28 And so, you know, one of the core affordances that I mentioned of @proto in my intro was this decoupling of data from application presentation. 7:37 Everyone's data lives in their own personal PDS, and applications tap into each user's respective PDS and create an application view by tapping into this data. 7:53 And so 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. 8:05 In algorithms that live outside of the platform's control. 8:10 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. 8:20 And so I'm hopeful that in this evolution of social platforms adopting @proto and decoupling data from platforms themselves, will actually be able to live in a world of user-controlled algorithms versus platform-controlled algorithms. 8:39 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. 8:53 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. 9:06 And so this is a really bad sort of trade-off for, for users and publishers. 9:11 But if, 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. 9:30 And I'm hoping that with publishers and content creators becoming the arbiters of value in these ecosystems, now they're the ones that decide how that value gets allocated across the ecosystem. 9:43 And I'm excited to see how this envelope of value could get distributed across various stakeholders. 9:50 At the very extreme, you could imagine Like Andra, for example, who runs the largest custom feeder algorithm on, on Bluesky, a verified newsfeed that she built with Graze. 10:00 She could embed advertising and sponsored posts within her feed, which she's already done, not at massive scale. 10:07 Um, and then redistribute all of that ad revenue that she generates to users or subscribers of her feed. 10:13 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. 10:23 That creates these new incentives and new forms of economic coordination. 10:27 I'll stop there. Joe Basser 10:30 Yeah, that's really great. 10:33 I think— yeah, go for it. Speaker B 10:41 People on the stream can hear. Speaker D 10:44 So when you're talking about the, like, 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? 11:01 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, you can extract for yourself, right? 11:12 So how are you reconciling that? 11:15 Where, like, are you planning on somehow building record deals with creators where they pay you for access to a platform? 11:23 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? Speaker B 11:37 Great, thank you for the question. 11:38 It's, it's obviously tough to be the bad guy. 11:41 Uh, no, no, no. 11:42 Look, I think the competitive vectors are going to change in this space and the points of demand aggregation will change as well. 11:49 Obviously in this world, the creator has a lot more leverage as someone who controls their own distribution, owns their portable feed that they can take with them from one platform to another. 12:01 I envision, again, it's still really early, it's still too early to say, but I envision companies like Raze, 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. 12:29 And you know, Graze will probably impose some sort of take rate on that transaction. 12:33 And so, as more people use Graze, as more feed creators come onto Graze, as more attention concentrates in Graze feeds, Yeah, I expect Graze to, you know, 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 creators produce. 13:00 And I think the platforms will also play a role in this. 13:03 Ultimately, if you create a feed or an algorithm, you still need distribution for your feed or algorithm. 13:08 If you just create it and put it out into the world, there's not much value in that. 13:14 You need people to view it. 13:15 And, you know, Bluesky has 40 million users. 13:17 They provide distribution for feeds. 13:20 They'll probably want a piece of the cut as well whenever they render an ad within one of these feeds. 13:26 Whenever a user looks at one of these feeds in the Bluesky client and sees an ad, you know, that envelope of value will get split between the creator and The, um, and the platform, uh, and probably Graze as well, who's like this monetization tool or infrastructure for, for creators. 13:45 So, um, yeah, that's my, my response. Joe Basser 13:50 Yeah, I mean, I'll just make a quick point and then we'll go to the question over there. 13:53 Um, from the perspective of someone that's, you know, building an app there, I think I echo Josh a lot there in that there's still the, the distribution surface, and I think it, it does flip the power dynamics, but there's still the requirement for the interface to, to get the creator's content to the audience, and there's costs involved with that. 14:14 But I think that the competitive nature changes and the power dynamic changes. 14:20 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. 14:31 So the apps that exist depending on what roles they play, looking at protocols specifically, there's lots of different components. 14:40 They might host your PDS, which actually has your content stored on it. 14:44 They might have the app view and they might be running the feed. 14:47 They might be doing the moderation. 14:48 They might have a full stack, in which case they deserve a larger bit of that pie. 14:53 But ultimately, the creator has a lot more bargaining power, and these kind of other components of the system fall further back into the, you know, into the background. 15:05 And, you know, they basically play a role as a broadcaster or the rails for which a creator can access the audience. 15:13 And the creator has the choice over which apps that they use as the surface to reach their audience. 15:19 Yeah, I think there was a question over there. 15:31 Hi. Speaker E 15:31 So I actually use GRACE to create feeds, and I have one feed enabled for monetization. 15:39 But what I've 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 trying to market to get advertisers. 15:54 Like, that's not our main skill set, if you will. 15:58 Whereas the creators themselves who are trying to monetize their work are skilled at that. 16:04 And 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? 16:17 Yeah. 16:18 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? Joe Basser 16:28 Yeah, I mean, wherever there's eyeballs, there's gonna be value. 16:33 And right now, like, yeah, there's over 40 million accounts on Bluesky, but then there's even less if you look at the actual monthly active users. 16:41 And there's already interest in advertisers, whether that's through Grays or people, you know, sponsored feeds or brands participating in the network. 16:49 There's clear value there. 16:50 There's eyeballs, there's attention, and where there's attention, there's, there's money to be made, especially if we're looking at, you know, advertising models. 16:57 But there's a lot of other models as well, I think, which come about when permission spaces become a thing on App Protocol. 17:05 But Yeah, to answer your question, more that becomes a real thing. 17:11 So sorry about that. 17:15 Um, yeah, uh, I think I would like to ask Nate, uh, to pass it to you. 17:23 I mean, we've talked a bit about more from this perspective of creators and ads and, and that being their kind of source of revenue, but for musicians an artist, it's a pretty different, uh, revenue source. 17:37 And algorithms, especially today with, you know, apps like Spotify and Apple Music that have a real impact on how the music's created in the first place, um, how do you see kind of @proto changing that landscape? 17:54 Cool. Speaker C 17:54 So I'm really excited about— well, first of all, has— how many of you have heard of @proto fans? 18:01 Okay. 18:02 A good chunk of you. 18:03 For those of you who 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 $5, like coffee or something like this. 18:14 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. 18:28 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. 18:39 And so it's sort of more— it's just like Patreon style, like creators have relationships that they build grassroots with people. 18:49 That's sort of divorced from the classical conception of distribution or the advertising models, which is exciting to me personally. 18:57 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? 19:20 How do you quantify the value that the artist is providing by allowing their content to show up downstream. 19:28 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? 19:43 And I think that's a very tricky problem, and I don't have any answers to that right now. 19:48 That is where I'm really interested in thinking. 19:50 Because it does seem like the value of an impression depends entirely on what the content is, first of all. 19:58 And then second of all, the place where you see it. 20:00 Because you can just hold up— you can have your phone in front of you, but you can just not look at it. 20:05 And it's like the system might count that as an impression. 20:08 So it's like there's a lot of different human ways that I think we need to think about. 20:13 What the value of content distributing downstream is that I think is an important problem. 20:22 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 App Proto, which I think is really cool. 20:37 And so maybe a different app does a better handshake. 20:39 In terms of respecting the value of their work downstream. 20:43 But yeah. Joe Basser 20:46 Yeah, I think that's a great point. 20:48 I mean, Spark and Player, we're gonna interoperate one day, I promise you. 20:55 We'll have, you know, you can add songs to Spark posts that are, you know, Player records. 21:00 So an artist's 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. 21:12 Where these kind of value exchanges happen, I think there's— it's really important that there's some mechanism to share value there. 21:18 Um, 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. 21:28 You can subscribe to Leaflet. 21:29 Um, you know, you can have— there's other apps that are starting to do pro things as well, or Graze has their own advertising, but You know, even if you're looking at a Graze feed, which, which taps into your question, a feed builder on Graze could have ads in their feed, and Bluesky, that are actually taking on the majority of the costs in distributing that content, is getting none of that. 21:52 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. 21:59 So I am a bit of a proponent for— and this came up in the previous talk— micropayments there. 22:06 For the inter-app ecosystem. 22:09 So, you know, for example, a, 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 artist whose song is being used there. 22:24 And that also could flow in the other direction where you have niche artists, which— this exists on platforms today, there's these kind of shadow economies where 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. 22:42 And we see TikTok has been such a great discovery mechanism for artists recently. 22:47 And, uh, this doesn't just have to stay within the, you know, creators like artists and, and UGC creators. 22:53 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. 23:09 So if everyone, if anyone wants to chat micropayments on App Proto, then please talk to me. 23:14 But, uh, yeah, I think we're there, Christian. 23:17 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 artist-specific metadata on, on App Protocol. 23:27 So Yeah, I would love to hear it. Speaker F 23:30 Thank you that you introduced because if you want to talk about what you— Speaker C 23:33 what? Joe Basser 23:33 Yeah, talk about that, please. 23:34 Yeah. Speaker F 23:35 My name is Hilke. 23:36 I'm a musician myself and I run a music label, so I know a bit how the music industry works. 23:45 And well, if you talk about monetization downstream for music that is both on— that is in a video, we have a system for that. 23:56 It's called copyright. 23:57 Yeah, and I think this has to play a role even if it looks much too complicated for technologists like many of us, but this is actually the system in place that the music industry and the big players use. 24:11 And I think we need to find out with this protocol how we can map their data to the adproto data. 24:20 And yeah, I think that opportunity was missed in the first wave of Spotify and stuff, and then the whole mess that was made. 24:31 Then they had to buy out a bit of majors, and that's how all the indie musicians and players got fucked. 24:38 So I think now we have the opportunity to do this mapping properly, and then the music industry, the labels, will get along hopefully with this ecosystem that we try to build. 24:53 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 AdPro too. Joe Basser 25:06 Yeah, I mean, I think looking at like TikTok as an example, um, 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. 25:22 And this, this is a very static, uh, dynamic, and they are able to achieve that because they have, you know, economics of scale. 25:30 They have a lot of bargaining power there and distribution. 25:33 Um, 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, there's that library completeness on one end, which requires a lot of capital, a lot of bargaining power. 25:46 That we don't have. 25:47 And on the other end, it's starting from the indie artists, the, the, the creators at the, at their other end that are starting from nothing and, and, and owning their content from the ground up. 25:58 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. 26:09 Um, 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 verification of what's real and what's not and that affecting the economies. 26:32 Josh, as an investor, like, I would love to hear your thoughts on, on AI in the creator economy at large. Speaker B 26:39 Yeah, I think, I think Natalie touched on this during the last talk pretty well. 26:43 She spoke about how the covenant of the web is dead. 26:48 Google scrapes websites, in return websites get traffic. 26:54 But we're evolving from a system of search engines to answer engines where, you know, it's 9, 10 times harder to get traffic on Google now than it was 10 years ago. 27:05 There's some stat, it's like 750 to 1,000 times harder to get traffic. 27:10 If your website from OpenAI and Anthropic and some of these model providers. 27:16 So users aren't going to websites anymore. 27:20 They're just getting all the answers fed to them within natively within an AI chat interface. 27:27 And AI agents don't look at ads. 27:30 Right. 27:30 And so, you know, for publishers, I'm thinking more news organizations, The current business model of the web doesn't work with the way in which AI works. 27:42 Because typically these news media organizations are monetizing traffic to their website and monetizing that attention and selling ads against it. 27:53 And so, obviously Cloudflare, Microsoft are doing some interesting work around content data marketplaces. 28:02 Publishers create unique niche content. 28:05 AI model providers need data to train their models. 28:10 There was an interesting stat. 28:12 So I think it was, I forget which AI model provider it was. 28:16 So I won't say the name, but for the same amount of data, I believe Reddit got paid, it was something like 5 to 7x times more for their data. 28:28 And the reason for that is, relative to New York Times, sorry. 28:31 And the reason for that is because the New York Times's 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. 28:48 And so, you know, while we haven't, you know, figured out an AI interface for social, yet. 28:54 I think we still, you know, swipe through these 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. 29:06 Like Sora just died last week, right? 29:09 It will be interesting to see how this business model evolves for, for publishers. 29:16 And I think micropayments will be a really big piece of it. 29:22 Anything to add there? 29:22 No. Joe Basser 29:25 Yeah, pretty much done for time. 29:27 If there's any last questions, otherwise we'll wrap it up. 29:32 Thank you. 29:32 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 that protocol, so it's exciting. Speaker B 29:48 Excellent. 29:50 Thank you very much. 29:52 Just want to acknowledge the people on stream. 29:54 There's been a lot of questions. 29:55 There's interesting other cases. 29:57 Hilke's blog post is posted on there. 29:59 So all sorts of action popping up on Stream Play. 30:01 So please check it out.