https://www.nasdaq.com/articles/why-decentralized-economics-enable-creators-to-thrive-2020-04-08
By Ankit Bhatia - CEO and Co-Founder of Sapien
The leading publicly traded social and content platforms reaped billions of dollars in revenue and profit last year, yet creators are not getting the windfall one would expect for generating and driving the creative value behind these platforms.
In 2019, mainstream social platforms brought in billions of dollars in both revenue and profit. Meanwhile, only the top 3 percent of YouTubers are able to crack the U.S. poverty line with their video work. Facebook’s creator partner program doesn’t have any public data available at the moment regarding the earnings of streamers on its platform and Instagram is reportedly exploring a revenue-sharing program with IGTV creators, and sources suggest the latter is looking at replicating the model employed by YouTube.
It’s tough for creators on the internet, with a scant few reaching incredible success. What would enable them to find more monetary success en masse is a decentralized platform that connects them directly to relevant audiences who can reward them for their work. Decentralized economics could protect them from bad deals and offer solid paths to monetization.
Creators struggle under the weight of centralized control
Creators face many challenges that are intrinsic to the current ecosystem, most of them owed to the centralized command structures that set the rules. These platforms don’t have the creators’ best interest at heart as their incentives don’t align and creators are often left with little to no recourse.
Countless creators grapple with the looming threat of their posts, channels, and even entire accounts being demonetized or, worse, shut down. When it happens, creators are rarely afforded concrete answers justifying the actions and they can lose thousands of dollars, as well as their account status, with only a shred of hope they can satisfactorily correct the issue with
A glaring example of this problem occurred when 78-year-old filmmaker David Hoffman was demonetized for duplicative content after repurposing video from his career to create new works. It took him nine weeks of ceaseless calls, emails, and physical letters to recover his status, costing him a third of his income during that period.
Professional photographer Dani Diamond also lost his account without being given a reason. Diamond had about 135,000 followers earned through posting high-quality examples of his work, but was suspended from the photo-sharing platform and never given an official answer on how he violated the terms of service. This damaged his ability to market his business and continue building a brand, which led him to suspect his account was revoked because rival photographers reported his account for inappropriate content or some other vague reason.
In cases like Hoffman’s and Diamond’s, it’s lone creators fighting against anonymous algorithms singularly controlled by a massive company worth billions of dollars—hardly a fair fight for someone who didn’t even break the rules, which begs the question: why put energy and time into a platform that won’t have their backs?
These platforms have repeatedly struggled with setting rules and building algorithms that administer those rules correctly - and in the end, it hurts the people bringing so much value. It’s time for a change in how creators are governed.
How to benefit from decentralized economics
Creators would greatly benefit from a change in the way their compensation systems are structured. Instead of one platform funneling ad dollars their way under the condition that they’re lucky enough to be algorithmically confirmed as following set standards, a decentralized system could direct creators to audiences and vice-versa, allowing them to exchange content and value accordingly.
Decentralized platforms typically operate tokens of their own and run on a blockchain. Users on these platforms accrue tokens for some action or behavior, potentially consuming ads, and are free to distribute those tokens to their preferred creators.
In a decentralized social network, this compensation model can thrive even more when creators form and join communities empowered to write their own governance and compensation rules. Creators would be much freer to make the content they want and can more easily cultivate audiences when not governed by algorithms on a profit-maximizing platform. These audiences could then reward creators for ongoing production of high-quality content they enjoy, be it designs, videos, podcasts, or articles, with creators likely to earn a larger share than the percentages offered by platforms now and in the future.
Decentralized communities can each establish their own consensus on compensation, quality control, member behavior, and more. Creators can participate in this rulemaking to ensure their needs are met and their relationship with the audience is sustainable, leading to an ongoing revenue stream from a devoted follower base.
In today’s dysfunctional digital landscape, creators’ current options for monetization are problematic on a good day. Decentralized communities can offer direct relationships with audiences, better compensation terms, and fairer systems of governance than the centrally controlled monoliths with whom they contend today. Creators looking to diversify and explore new streams of revenue should consider exploring decentralized platforms for their next big break.
About: Ankit Bhatia is the CEO and Co-Founder of Sapien. Ankit is a tech entrepreneur who enjoys bringing impactful ideas to life. He graduated with a degree in Electrical Engineering and Computer Science from UC Berkeley and now excels at deriving business value from complex technical ideas. He is passionately committed to building the privacy-focused, democratized web3 infrastructure of the future using distributed technologies like the Blockchain. Programmer, writer, tokenomics strategist, advisor, crypto enthusiast, and investor since 2013. YCombinator SUS’17 graduate.
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