Move over, YouTube and Vimeo. A new blockchain-based startup named Lino wants to build a decentralized video platform that pays its content creators and has raised $20 million in private funding to do that.

The company announced Sunday that the $20 million was secured during a private token sale led by ZhenFund, a seed stage focused venture fund based in Beijing, China.

“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,” said Wilson Wei, chief executive of Lino. “We want to eliminate the middlemen in video streaming.”

Right now, large video platforms cater to content creators and allow them to make money from that content. YouTube dominates the multimedia video platform market currently, with over 78 percent of all visits during 2016, according to Statista, but such sites can take a cut of up to 45 percent of a creator’s income from ads.

This funding round for Lino and the company’s future plans come on the heels of controversies affecting the YouTube content creator userbase.

Recently content maker and video blogger Logan Paul caused a furor when he published a video filming a dead body in Japan’s Aokigahara forest, colloquially known as the “suicide forest.” The controversy triggered led YouTube to a crackdown on content creator misbehavior (as well as promises to punish terms of service violators) but it also led YouTube to extinguish revenue for smaller YouTubers. Content creators who have fewer than 4,000 hours of watch time in the past year and fewer than 1,000 subscribers will now lose out on any ad revenue this February.

“The reason companies like YouTube have enormous power over content creators is that they almost monopolize the means of distribution,” the Lino website says. “YouTube, as a privately owned entity, has its fundamental interest in maximizing profit, which poses an underlying conflict of interest with content creators.”

The solution, Lino said, is a fully decentralized platform that is collectively owned by the content creators and automates content and revenue distribution without going through a privately owned entity as a middleman.

In order to produce a decentralized platform that can pay its creators, Lino intends to build itself on a distributed ledger called a blockchain. Using a blockchain to build infrastructure, Lino will be able to offer a token that can be traded for revenue and reward content creators for producing content that attracts attention and enhances the network.

Lino’s announcement said the blockchain infrastructure will use Lino tokens as an “incentivized model [that] creates a sustainable digital content economy by incentivizing all community contributions including content creation, content redistribution and infrastructure services.”

Properly implemented blockchain technology also makes fraud extremely difficult with tamper-proof infrastructure. Lino calls this “proof of human engagement,” which it would use to prevent bots from manipulating the reward distribution and mitigate potential attacks. The company expects that using a ledger to track engagement will provide a mechanism for proving content value.

However, there is little detail from Lino about how the network would handle these sorts of cultural problems. Large platforms such as YouTube also must concern themselves with copyright protection under the Digital Millennium Copyright Act, but with a decentralized, autonomous network, that could prove to be a challenge for Lino as well.

The company also intends to offer peer-to-peer, auction-based content distribution and will provide video storage and video streaming in a decentralized manner. Each person involved in the network can become a storage service advocate with a proposal for any storage service with pricing and performance details, which could be paid for with residual revenue generated by the network to run itself.

The funding will be used to develop the Lino blockchain and Lino’s video streaming distributed application, both of which are planned to launch later in 2018.

This round was led by ZhenFund and other investors included FBG Capital, DFund and INBlockchain.

Image: Pixabay