The Napster Playbook Is Back (And AI Video Is Next)

What's up growth hackers!

Everyone's debating which AI video startup will dominate the market.

After shutting down Inboundr, I've been working to understand what's actually happening in AI content. Lets get into it!

The “AI‑video market” isn’t one market. It’s three very different games that just happen to use the word video: infrastructure players (Veo, Runway, Luma, Pika, etc) building the models, intelligent application players (HeyGen, Synthesia, etc) with data advantages building the interfaces, and pure wrappers; i.e most of the tools you see on Product Hunt consist of a glossy front end wrapped around someone else’s model and will be priced to zero.

Example: At Inboundr, once upon a time we were successfully charging $79 per month. Eventually landing users at $19 per month started to become a challenge.

The Spotify Precedent

Right now, investors are pouring money into what they think is the next big platform war. HeyGen raised $60 million. Runway closed a $308 million Series D. Synthesia sells to 60% of the Fortune 100.

Today, a 10 second 1080p clip from the leading APIs runs ~$0.05–$0.07 in GPU time once you decode their credit pricing. Nvidia’s Blackwell and AMD’s MI350 families promise 2–3× efficiency jumps over the next 18 months, historically that translates into ~50% cheaper inference at the API level. By 2028, Apple and Qualcomm NPUs are on track to render short clips locally at (or near) real time. When both cloud and device costs converge toward fractions of a cent, per render pricing collapses.

Zero. As in free. As in "why would anyone pay for this?"

When Google dropped Veo 3's quota to three free clips per day for Gemini subscribers last month, they weren't being generous, they were firing a warning shot across the bow of every AI video startup burning venture capital on GPU bills. The race to zero has begun.

So, If you want to see AI video's future, don't look at tech blogs. Look at your Spotify playlist.

In 1999, record labels were printing money selling $18 CDs. Digital music was a curiosity. By 2010, anyone could upload unlimited songs for pennies. Today, Spotify bundles 100 million tracks for $9.99 per month, and despite achieving their first annual profit in 2023, they still pay labels $10 billion yearly. The files became free; the attention became priceless.

Put it this way…

- Then: CD duplication costs dropped to near zero
- Now: GPU inference costs plummeting every 18 months

- Then: Napster flooded the market with infinite music
- Now: Anyone can generate infinite 4K clips

- Then: iTunes and download stores vanished when streaming bundled everything
- Now: Template editors and avatar generators will vanish when OS updates bundle generation

The difference? Music took 15 years to reach commodity status. AI video will do it in three.

The Three-Layers

1) Infrastructure players (Runway, Luma, Pika, Hedra, Veo)
Burning $10–100M per model release to squeeze out incremental quality gains. Past “good enough,” users can’t see the delta. Just like nobody picks Spotify over Apple Music for a better codec.

2) Data‑advantaged applications (Synthesia, HeyGen’s voice bank, Epic/Unreal)
They’re “apps,” but with proprietary corpuses; 50k training scripts, mocap libraries, behavior graphs, etc, that can’t be scraped by other players. When models commoditize, this private data is the only moat left.

3) Pure wrappers / front‑end tools (Pictory, Arcads, the Product Hunt parade)
Nice UIs on rented tech. They live or die on UX and pricing until Canva/Slides/TikTok slap the same button in.

Answer this: now that Canva added a "generate video" button powered by Veo, and Adobe bundles Firefly Video into Creative Cloud, and TikTok integrates ByteDance's Seedance directly into their camera interface, who exactly is paying for standalone AI video tools?

The New Chokepoints (Where Real Money Hides)

1. Feed Control = Infinite Leverage

When every phone can generate perfect 4K clips, the bottleneck shifts to who controls the viewport. TikTok's algorithm already determines which of billions of videos get seen. Soon, it'll determine which of billions of AI generated videos get seen. ByteDance isn't building Seedance to compete with Runway; they're building it to ensure creators never leave TikTok.

2. Authenticity Rails = The New TLS

The EU AI Act's watermarking requirements and SAG-AFTRA's digital likeness clauses are the foundation of the next trillion dollar infrastructure layer. Every generated video will need cryptographic provenance, audit logs, and consent trails. Think Cloudflare, but for proving whether content is human made or synthetic.

3. Vertical Data Monopolies = Unscalable Moats

Synthesia owns tens of thousands of proprietary corporate training scripts and voiceprints that Google can't scrape. Hedra possesses animation reference datasets from film studios that no open model has seen. Epic Games controls mocap libraries from every Unreal Engine project. This private data becomes the only sustainable competitive advantage once models commoditize.

The Coming Extinction Event

Most AI video startups are like MySpace widgets in 2007, unaware that the iPhone just launched.

Wave 1 casualties (2026): Template based editors like Pictory, and Arcads get crushed when Canva and Adobe bundle superior models.

Wave 2 casualties (2027): Avatar only vendors without scale like Colossyan, DeepBrain, Hour One will suffocate as one click talking heads become an OS primitive.

Wave 3 casualties (2028): Even infrastructure darlings will need to adjust strategy: Infra labs (like Runway) only survive if they move up stack: sell pro grade control (multi shot timelines, scene graphs), enterprise trust rails (watermarks, indemnity, SOC2), or vertical data.

If creation is a commodity, the moat isn’t “better video.” It’s: I own the audience. I own the dataset. I sign the provenance.

Could I be wrong? Absolutely. But theres certainly a lot of eerie similarities to the music world.