The thing we've always needed and didn't have is a place to get a user id and password that wasn't owned by a big company and was still as simple for the user as the ones operated by the big companies.
Ponder that for a moment, and imagine what would happen in the app space if each developer could count on say 10MB per user of storage, enough for a lot of pointers into space managed elsewhere. Sort of like what Twitter was planning with annotations, but not owned by Twitter.
And stop there. Identity with a small amount of storage. The API should be DNS. We need to make it easy for people to get their own domain for life. We could even come up with a new TLD for it, somthing like dot-id. davewiner.id. That would be me.
As far as the format for the streams -- that's simple too. It's going to be any of the variants of RSS that people want to use: 0.91, 1.0, 2.0 or Atom 1.0. People who say it has to be one and not the others are dreaming. If we need to add some info, come up with a namespace. You tell me what you want to do and I'll do it.
Now we need to get some money to operate the DNS and storage for this network. For that we're going to look to the VCs. We need to raise an endowment of $25 million which we'll entrust to a consortium of five universities. I'd like to see NYU be one of them, of course. The universities will operate this name and storage system, forever. The consortium will charge users a fee, the same way Verisign does, and thus the identity system will be funded for the indefinite future.
Why universities? Well, we need what they have: Neutrality and longevity. Also, there's a tradition of university consortia doing good work of this kind. The Internet itself was founded in this way. We also need youth and education. If this is created by the generation that's in school now, when they come out in a few years, they'll be ready to kick ass. They'll have something to be proud of.
I've argued with my VC friends for a long time that they need to put back to replace what they take out of the pool of innovation. Now is their chance to do that. The PR will be very good of course, but even better are the opportunities this system will create for new startups. Put it another way, ask some of your entrepreneurs how much innovation is waiting for such a system to exist. I'm sure they will tell you it's enormous.