Social media and digital content-based businesses have been reliant on the classic media buying model since their inception. But new monetization models now exist with the potential to reimagine the industry and rebalance its revenue distributions entirely, writes Jimmy Nguyen, founding president of Bitcoin Association.
Advertising has been the dominant revenue model for digital content providers for as long as they have existed yet inherent in this model is a frequent fundamental disconnect between the people creating content and the monetary value they receive from publishing it. Generally, revenue is assigned to content based on how many engagements an advertisement that has been placed on or near that content is earning. The creator may see a sliver of this, but by and large, the revenue is earned predominantly by the platform owner.
From the content consumer’s point of view, they do not pay anything for the content (or at most, pay with their attention), and are thus, forced to view advertisements as a price-of-entry. The data privacy conversation has brought this idea to the fore. Social media platforms that many believe to be free in reality are not so at all. Users are paying with their data – and the recipients of that data and how they intend to use it remain a mystery to the users who generated it.
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Perhaps most importantly (considering the explosion of social media influencers in recent years), users are not able to directly monetize the content they are creating on social media platforms. Audience members too cannot directly support creators they like without conforming to the requirements of the advertisers – being forced to watch the thirty-second ad at the start of a video, for instance.
It is often assumed that all of this revenue business is the domain of the platform owner itself.
Think about the role a social media influencer currently plays in the business model of a company like Facebook, creating content that produces engagement at a scale of thousands (and potentially hundreds of thousands, or even millions). Facebook profits from the associated advertising, which is, of course, seen or interacted with because of the content produced, contextualized with personal data previously collected and sold. To a degree, the creator is both the seller and the product. Yet they see little of the profits that their activity is generating.
This status quo is self-sustaining: it is like this because it has always been this way. This has perpetuated the idea that social media must be entirely free. But this is a holdover from a time when data hosting was far more expensive, and digital content was poorly understood.
The good news is that things do not need to be this way thanks to blockchain technology. Content creators and influencers are using blockchain-powered content applications to prove that there are alternatives.
How Blockchain Helps Content Creators and Influencers
Understand that a blockchain is simply a digital ledger, for which data transactions are verified and maintained in a distributed manner. This resolves the need to trust a central authority or third-party intermediary (e.g. bank or financial institution) to ensure that the ledger is correct. In this way, blockchain is the great disintermediator – greatly reducing, if not eradicating entirely, the need for intermediaries.
By using blockchain technology, functions like digital payments – which previously were beholden to trusted intermediaries – can be facilitated directly between users without using a payment processor. A massively scaled blockchain, such as Bitcoin SV, also enables micropayments – the ability to send amounts smaller than a single U.S. cent – because users do not have to incur the processing fees charged by traditional payment intermediaries. When combined with the data functions of blockchain, together with features like smart contracts – which can automatically combine data functions with payments – it opens the door to users being able to publish and monetize content on social media with much less input on the part of platform providers or third-party advertisers.
Blockchain has the potential to disrupt an unsustainable and largely uncontested status quo in which content creators are not being adequately rewarded for the traffic they generate for the platform they are patronizing.
And while replacing a near-ubiquitous advertising model sounds like a daunting prospect, developers are already using blockchain technology to reimagine the social media experience – and model.
Social Media Platforms Are Already Using Blockchain
Social media platform Twetch is a prime example. Put simply, Twetch is Twitter but built atop the Bitcoin SV blockchain. Every interaction that takes place on Twetch is pushed directly to the blockchain. Every ‘twetch’ (tweet), ‘branch’ (retweet) and profile, as well as every other kind of engagement with those twetches, branches and profiles, all take place directly on the blockchain. For content creators, the platform pays a couple of cents to post their content, with each like or branch costing the user engaging with the content a couple of cents – the bulk of which goes straight to the content creator.
As an upstart social media platform with a radically different business model, the uptake of Twetch has been solid with a strong growth trajectory both in terms of users and content. Twetch is progressively growing its user base, including celebrities such as actor Danny Trejo and director Eli Roth.
Likewise, PowPing is another Bitcoin social network that allows users to earn micropayments from their posts. It focuses more on-topic channels that users can elect to follow and blog-style content in addition to short messages.
Moving into the realm of pictures, Relica is like Instagram on the blockchain. Users post photos, earn Bitcoin micropayments when other users like or comment on those photos, and maintain ownership of their images. For photographers and social media influencers, this is a way to earn money directly from their image posts – something they cannot do on Instagram.
And advancing to the world of video, there is Streamanity, a “YouTube†on the blockchain. Rather than content creators getting compensated via an opaque system of third-party advertising, the revenue from which somehow sometimes filters back to the user, Streamanity allows video creators to charge viewers directly for watching their videos. This can be a simple fee-per-view or more complex and leverage micropayments for more advanced pricing options. For example, it could be paying 1 cent for every 10 seconds of video viewed, or simply leave their channel open to direct tips via Bitcoin. Creators can earn instantly from their videos, rather than having to first satisfy YouTube threshold requirements for monetization (i.e., 1,000 channel subscribers and 4,000 watch hours in the past year.)
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The world of consumer reviews is also ripe for change. Like with more traditional social media platforms, sites that allow users to review businesses largely generate their revenue from advertising. The revenue earned by content on these sites – which are almost entirely user-generated – passes from the advertiser to the platform without any return to the creators themselves (passionate consumers who take time to review a restaurant, hotel or other experience). True Reviews provides a system for micropayments to users for each positive vote their reviews receive from other users and a slightly reduced amount each time users vote the same way as each other.
Disrupting Digital Marketing Through Blockchain
And blockchain technology can even be used to disrupt digital marketing itself. This is reflected in TonicPow – a peer-to-peer advertising platform that allows users to reserve a spot on their own websites that can be booked by advertisers, who pay the user directly in Bitcoin. Because of the immutability and public nature of blockchain ledgers, the advertising revenue being generated by their website is completely clear to the user, not to mention the additional cost-efficiency facilitated by fast, cheap and automated blockchain transactions.
Changing the Status Quo
Status quos are difficult to refute. And undoubtedly, the largest dampener on enthusiasm for disruptive social media models is the deep entrenchment of the incumbents. It is all well if you can convince your followers to pay you for your content, but what good is that if no one is willing to look beyond the broken status quo in the first place?
The status quo for user-generated digital content is not efficient. Nor is it the best or most sustainable way to encourage users to generate valuable content. It is out of step with our developing notions of data privacy and ownership. It is to the benefit of major online service providers, not the users nor creators themselves.
As these platform users become more conscious of where their data is going, for what purpose and at what cost, the case for content creation on blockchain as a logical alternative makes itself.