A proposed new cryptocurrency could help online publishers improve profitability while providing immediate rewards for content creators and even engaged content users.
The Smart Media Tokens (SMT) protocol is in development by Steemit, a 2016 startup that has already launched Steemit.com , a social media platform where content creators and other subscribers frequently earn hundreds of dollars for a single post.
CoinMarketCap ranks the Steem token 32nd among the 1,358 cryptocurrencies it tracks, with a market capitalization of $475 million. In addition to Steemit.com, Steem powers other sites such as busy.org , utopian.io, d.tube and a growing list of third-party applications.
The rise of the cryptocurrency comes at a time when publishers and content creators are struggling to earn any money at all in online publishing - and new revenue model is thus long overdue. Between 2000 and 2015, print newspaper advertising revenue experienced a shocking evisceration, plummeting from $60 billion to $20 billion, according to The Atlantic .
The problem does not stem from the fact that readers don't appreciate the professional news industry (even if it is widely criticized ) - it's that publishers struggle to monetize online publishing . And while publishers were busy trying to get print advertisers online, Google and Facebook ate their breakfast, lunch and dinner to the tune of a combined 63 percent share of all online advertising. Whatever value might have been left for publishing websites has been further decimated by the popularity of ad blockers.
Meanwhile, the online publishing industry has also become financially problematic for writers and other content creators because many websites like The Huffington Post expect writers to write for exposure in lieu of money .
Steemit is trying to reverse these trends using blockchain and cryptocurrency technology, first with its own social media site and next with Smart Media Tokens. On Steemit.com, content creators post on a Reddit-like site, and they earn cryptocurrency whenever the community responds well to a post.
Currency moves automatically in response to user actions, using Steem's " Proof-of-Brain " algorithm that aligns incentives between application owners and community members to spur growth. For example, when a user "upvotes" a post, a tiny portion of the currency in the "rewards pool" is allocated to the poster's account. The rewards pool receives 75 percent of all new tokens, which mint at a decreasing rate that started at 9.5 percent per year of the total pool in 2016.
Currency travels as Steem Dollars (SBD) or STEEM. Members are incentivized to hold STEEM, because there is a direct correlation between their STEEM holdings (known as "Steem Power") and the weight of their upvotes. Higher "Steem Power" means members have more influence over the allocation of currency when new content is posted.
Members are also rewarded for upvoting, and the timing of their votes is tied to their rewards: The resulting reward is greatest if a member is one of the first upvoters of a subsequently popular post. This incentivizes timely, proactive social media participation.
Because rewards are allocated from the rewards pool and not from members' digital wallets, upvotes cost members nothing and can in fact increase their earnings.
"The mechanics of the cyptocurrency we created basically distribute new tokens to people who are blogging and curating blogs," Steemit CEO Ned Scott recently told "The Crypto Show."
SMTs will run on the Steem blockchain in a similar manner, but they will be customized for any participating website. Each site will create its own currency, rewards pool and token exchange system; and sites can interact with each other to create helpful incentives for readership and participation. Because SMTs are a cryptocurrency , settlement happens instantly without any transaction fees, and publishers will be able to raise money through initial coin offerings (ICOs).