# Introducing the402 protocol and platform 

**Published by:** [Hypeshot](https://paragraph.com/@hypeshot/)
**Published on:** 2022-06-19
**URL:** https://paragraph.com/@hypeshot/introducing-the402-protocol-and-platform

## Content

TL;DR of the402 protocol:The402 lets creators monetize their content through 1) sales, 2) consumption. We’re the only protocol that enables each piece of cryptomedia to have its own built-in micro-economy and fan graph. How it works:Creators can set their own monetization terms within the NFT which they can dynamically adjust at any point in time: ie price per stream/view or pay once & stream foreverThey can let content be consumed for free (just like a traditional NFT), but for the first time, they can also charge for experiencing their contentCollectors can share in the upside of the streaming revenue & can consume that content for free alwaysCreators and collectors get paid instantly as content is streamed with no take rates (no protocol fees)Platforms can only surface that content if they comply with the terms set in the smart contractCreators can also set their own royalties for secondary salesTL;DR of the402 platform:The402 platform is an NFT marketplace focused on music and video content with streaming built-in Creators can upload content, setting their own terms with no-codeConsumers can stream content minted using our protocol and also from other NFT marketplacesCollectors can mint, buy, and sell content on our marketplace & secondaries pages (or on traditional NFT Marketplaces)In this article we will outline:Key problems with web2 streaming platformsA deep dive into how our protocol and platform workHow our protocol and platform address the deficiencies of web2 platformsHyperstructures and the “threat of the fee” applied to cryptomediaWhy we need crypto to solve these problemsWhat else our protocol unlocks for the creator economyDetails on our launchThe problems:In web2, creators are largely at the whim of large platforms leading to:High take ratesSpotify: 30%; Youtube: 45%; Twitch: 50%; Udemy: 60%; etc.No pricing power for creatorsSlow / opaque payoutsNo way to capture the upside off of viralityNo ownership over your fan graphThe resultCreatives ironically make money off of anything but their actual contentRelying on ancillary revenue streams to make the bulk of their income (touring, merch, endorsement deals) rather than their actual artSignificant value flows back to the platformsValue transfer is from fan <-> platform <-> creator instead of directly from fan <-> creatorHave risks of being de-platformed and losing their fan graphWeb3 allows creators to flip traditional models around and lets them and their community capture the majority of the value while establishing a direct fan-to-creator relationship. NFTs have created a new way for fans to show direct patronage to their favorite creators, but they can do a lot more. In particular, they can enable an entirely new ecosystem. One in which monetization is determined by the creators rather than the platforms & enforced through smart contracts; One in which creators can own their entire fan-graphIntroducing the402 protocolWhere you can not only monetize your content through NFT sales, but also capture value on consumption. Collectors can share in the upside with instant and transparent paymentsCreators can know exactly who is consuming their contentEach piece of content can have its own built-in micro-economyHow it Works:Creators set:Minting priceNumber of editionsA custom streaming fee - this can be changed in the future & can also be 0Whether users can pay the streaming fee once and be able to stream forever (similar to buying a song on iTunes)A % of the streaming revenue they want to give back to the NFT holdersRoyalty for secondary sales of their NFT contentCreators can publish content by simply uploading their media, adding a cover photo, and setting their desired parameters. No coding is needed.Once published, content is encrypted using threshold cryptography and only becomes decrypted once payment is receivedWe use Lit Protocol for decentralized access controlIf the creator chooses to set a streaming fee for their content, the creator and NFT holder get streamed income in real-time instantly as people view or listen to the contentIf the creator prefers listeners to purchase a song and be able to stream forever, the collector would also participate in that upside and the consumer would only need to pay onceThe protocol logs the wallet address of who streams the content each time a piece of media is streamedCreators also get royalties on NFT salesExample:Creator “XYZ” publishes one of her songs as an NFTXYZ sets a streaming fee of $1.00 per stream and decides to share 10% of that income to the NFT holderIt gets 1,000 streamsXYZ would make $900 in revenue and the NFT holders would collectively make $100No take rates or protocol feesIt’s important to note that the price the creator wants to charge per stream can be $0 and that this can also be changed at a future date. Our protocol gives that choice to the creators.Made possible through Threshold Cryptography: All of this is being powered by threshold cryptography. It’s what allows content to be stored in an immutable and publicly accessible storage system like IPFS while also being gated to just users that have paid the necessary micropayment: the content is stored in an encrypted format, and is only able to be decrypted if the appropriate on-chain authorization is present, namely one of the following conditionsContent is priced as free to streamUser is the creator themselvesUser is an NFT holderUser has paid the streaming feeUser has paid the streaming fee previously and content is pay once, access foreverWhat we’ve built:Music and Video NFT Marketplace with secondary sales included for content utilizing our protocolMinting Page + Dedicated Page for a songMinting Page + Dedicated Page for a videoEasy upload flowsStream music and videosHow our protocol and platform address the 5 key problems in the web2 streaming space:High platform take rates => Monetization is directly between fan & creator with no protocol feesNo pricing power for creators => Creators can choose how much to charge per streamSlow / opaque payouts => Instant payouts that can be verified on-chainNo way to capture the upside off of virality => The ability to dynamically price your content based on demandNo ownership over your fan graph => Access to the wallet addresses of each person who consumes your contentHyperstructures and the “threat of the fee” for cryptomediaHyperstructures“Crypto protocols that can run for free and forever, without maintenance, interruption or intermediaries”Jacob Horne defines the term hyperstructure as something that can “simultaneously be free to use and also extremely valuable to own and govern.” He describes the Zora Protocol as a hyperstructure. The protocol has no protocol fees, but has a switch that can turn a fee on across the protocol. “This creates a dynamic called the "threat of the fee". This means that owners of the Hyperstructure have the right to turn that fee on across the protocol at the base level at any time”. Similarly, content minted using the402 protocol enables this “threat of the fee” to be built into each piece of cryptomedia. Creators can turn on fees for their content at any point in time if they like. However, owning a piece of the creator’s work guarantees that content consumed by the collector will be free forever. The402 protocol makes the NFT even more valuable to own.Cool, so why crypto?Crypto allows creators to:Set their own terms through smart contracts rather than lawyersHave complete transparency on where funds are coming fromGet paid out instantlyBypass middlemenAllow superfans/collectors to share in the upsideWhat else does this unlock?The ability to price your first streams extremely high for the super fanEx. can charge someone $1,000 to be the first person ever (verified on-chain) to listen to your song and in return issue a Soulbound TokenThe ability to have a group of fans with a direct incentive to share your contentDigital versions of concepts such as Wu-Tang Clan’s limited edition albumMore applications are discussed hereLaunch Details:The first-ever launch using this protocol will be on June 20th We’re excited to announce that the first artist to drop on our platform will be TK who will be debuting his unreleased song “Too Much” using this first-of-its-kind primitive. How to follow our journey: You can join our backdrop community here for insider updates or can follow us on our twitter to stay in the loop**UPDATE our first drop sold out:

## Publication Information

- [Hypeshot](https://paragraph.com/@hypeshot/): Publication homepage
- [All Posts](https://paragraph.com/@hypeshot/): More posts from this publication
- [RSS Feed](https://api.paragraph.com/blogs/rss/@hypeshot): Subscribe to updates