Chinese Seed Capital Funding Powers Blockchain Threat to YouTube
A new video blockchain technology start-up that aims to contest the digital video market YouTube, created today received a $20 million round of funding from a Chinese seed investment fund.
The Silicon Valley-based firm, Lino, is developing a decentralized, collectively-owned video content distribution system, which promises to compensate content producers more “fairly” than YouTube, San Bruno, Calif.-based video-sharing web site, purchased by Alphabet Inc.’s Google 12 years ago for $1.65 billion.
There’s a lot of competition in the space already, including firms like Flixxo, Streamspace, Stream, and Viuly, all of whom share the same goal of slaying YouTube.
“We want to eliminate the middlemen in video streaming,” said Wilson Wei, CEO of Lino, based in Cupertino, Calif. “We believe that blockchain has enormous potential to empower video creators by decentralizing how their content is distributed and ensuring that their earnings go directly into their pockets.”
In practice, the company indicates, this will mean that, unlike YouTube, Lino, will not serve as a “middleman,” which has power and control over digital film producers and their associates who help create new, online content.
Traditional video distribution platforms, like YouTube and Twitch, demand an up to 60% share of a digital video’s sales revenue, the company notes. By contrast, Lino uses blockchain technology to ensure content value can be “recognized efficiently” and all “contributors can be incentivized directly” to promote long-term economic growth, the company reports. This could boost revenues by three-to-five times for digital content producers, Lino executives are saying.
Lino’s believes it can accomplish that vision with its blockchain infrastructure technology, including technology that furnishes:
* Free sales transactions for producers, who will be paid directly by viewers with digital tokens.
* An incentivized currency system, which incentivizes all community contributions including content creation, content redistribution, and infrastructure.
* Proof of human engagement with new video content, not bot ratings manipulation.
* Proof of content value, which reflects actual viewership of content, and reduces fraudulent ratings.
* A peer-to-peer, auction-based content delivery network (CDN), which Lino states also stores video and live stream playback.
Funding for the venture comes from the sale of digital tokens by ZhenFund, $300 million fund founded in 2011 by Bob Xu and Victor Wang, in collaboration with Sequoia Capital China.
Other investors including FBG Capital, DFund, and INBlockchain participated in the funding round, the company said.
The funding from the investors will be used to refine Lino Blockchain and Lino’s video streaming DApp, both of which will be launching later this year, as well as expand marketing and operations.
Technology and Marketing Factors
There are other economic factors which will be impacting this market in addition to the new blockchain technology – like sheer marketing power. Amazon Studios has been eyeing the space developed by YouTube itself and launched a video service itself in 2016, which allowed Amazon Direct customers to upload their own content, directly, or licensed content. Amazon allows content producers to earn money based on videos published on Amazon Direct and Prime Video.
Initial partners included leading media and fashion companies like Conde Nast, Samuel Goldwyn Films, Machinima, and StyleHau.
New digital programming has been in development on the network too, including a show called “Vanity” starring Denise Richards, former wife of Charlie Sheen. Streaming programmers like Netflix, which once focused on distributing other producers’ content from TV and motion pictures, is heading into film production itself, and, according to the Jan. 25 edition of The Hollywood Reporter, is investing $2 billion this year, up from $1.3 billion last year, to promote its original programming, like the film “Mudbound” and the Will Smith sci-fi thriller, “Bright.” The marketing spending is to go into TV, billboards, and other media. This spending is needed as the company has realized that word of mouth and internal advertising on its own network was simply not enough.