Can the Blockchain Save Social Media Influencers?


June has been a big month for Ryan X. Charles.

The co-founder of Yours , a cryptocurrency-based social media network, Charles went live with an alpha "soft launch" of his service on June 9. The platform was so new earlier this month that he hadn't even yet told his mailing list and he admitted that the alpha was full of money-losing bugs. Don't hold more than $1 in your account just yet, he advised .

Nevertheless, Charles sees this as a key step in rethinking how social influencers get paid.

For several years, content creators have used social media channels to build large followings and monetize their content. They typically work with multi-channel networks (MCNs) that aggregate their content and support them in their dealings with social media companies.

"The problem we really want to solve is the content monetization problem," said Charles. "Ads and subscriptions just don't work for all content types and all kinds of people."

Social Media Pitfalls

Social influencers face several threats to their advertising revenues. The first is ad blocking. Anti-ad-blocking firm PageFair claimed that 615 million devices were blocking ads as of December 2016, representing a year-on-year increase of 142 million. Google has now committed to blocking ads on its web browser Chrome, possibly as a way to control the blocking once and for all .

Secondly, the nature of online advertising is changing. YouTube advertisers are rethinking their relationships with the company as it struggles with ads running alongside inappropriate content. Creators are seeing their pre-boycott earnings plummet .

MCNs are also changing tack. YouTube is moving into bundled TV channels and has pushed many creators into original content deals as part of its Red service. Industry watchers identify successive waves of demonetization and are calling it the Adpocalpyse .

The problem with relying on a single large platform for your monetization is that a single decision from its owner can put you at risk. Decentralization in one form or another seems to be an option.

Blockchain Solution

Charles wanted to create a decentralized form of Reddit while working as a cryptocurrency engineer there. The idea was to create a Reddit app that everyone would run, connected to each other via a peer-to-peer network. To see Reddit content, a user would pay a small amount of bitcoin to peers on the network. Upvotes would also award bitcoin to the author.

Management changes at Reddit shelved not only that idea, but also an alternative approach which would have maintained a centralized Reddit that directly rewarded posters with a cryptocurrency.

These days, Charles is less interested in decentralizing the content and the users. He backed away from a decentralized app with Yours, arguing that it would take too long. The content and identity information is held on a traditional server, but the payments to content authors are eventually settled on a cryptocurrency blockchain.

"We really needed a micropayment solution that works for people," he said. "We needed decentralized payments, but we didn't need everything else to be decentralized."

In focusing on the blockchain for payments alone, Yours is aiming to solve a specific problem facing social media content producers: charging for their content in small increments. The blockchain is the perfect solution for micropayments, said Charles, who calls Yours "Medium with a paywall."

He decided to abandon Bitcoin as a payment mechanism, citing high transaction fees stemming from its historically low block size. Instead, participants will pay each other in Litecoin.

A Network of Decentralized Solutions

Charles isn't the only person hoping to revamp compensation for social media mavens using the blockchain, although others have more ambitious goals, using their own cryptocurrency tokens.

Steem , which launched last year, is a blockchain-based social media platform that rewards people for posting and sharing content. Authors earn Steem dollars (pegged to the U.S. dollar) every time they post content that others value, along with Steem Power, which gives them more influence in voting up content. Readers get similar rewards when they vote on content that turns out to be popular.

Another blockchain-based social network, Akasha , runs on Ethereum and the Interplanetary File System (IPFS). Created by Mihai Alisie (who also founded BTCMedia-owned Bitcoin Magazine ), it uses its own token which authors can use to generate value for their content.

A rival platform, Synereo , will use a proof-of-stake blockchain to operate its decentralized social media network. The initiative raised $2 million in a crowdsale last September, using its AMP tokens, after launching its alpha version in August. One interesting aspect of this system is its intention to move from a centralized, server-based model to a decentralized model over time.

How will these blockchain-based social networks play out? One of their biggest challenges will be inertia in the existing user base. Facebook will hit two billion users this year. YouTube is similarly successful. Conversely, these new social media networks rejoice when they hit four-figure user bases.

Still, it's early days, and most of them are barely out of alpha. There are also promising signs from other, more established networks who are using the blockchain to reward their users. Latin American social network Taringa! distributes ad revenue to content producers in bitcoin under its Creadores program.

Taringa! mixes old and new concepts, marrying blockchain-based payments and ad revenue, but the new generation of social networks wants to take innovation further, searching for entirely new forms of compensation.

The current crop of social media superstars will probably follow their audiences, which leaves the likes of Steemit, Synereo and Akasha with two options. They can try and lure these YouTube natives over to new platforms, or breed a different ecosystem altogether, with new influencers and new readers. Or perhaps, if things pan out, they can create a blended, vibrant mixture of the two.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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