Disclosure: The views and opinions expressed herein are solely those of the author and do not represent the views and opinions of the crypto.news editorial.
It's been 20 years since MySpace was founded, the first social media platform of its kind that brought us the Top 8, MySpace Tom, and profile page music. As we remember MySpace and the subsequent launch of Facebook, Twitter, Instagram and TikTok, among many others, we remember the initial intention behind this technology.
Social media has given both content creators the ability to become viral sensations, and everyday users access those viral sensations with the push of a button. But at what price? For most of us so far, none. But do these platforms have the resources to sustain the continued dissemination and access to this content? Is Elon Musk versus Bob Iger the start of a longer battle between content providers and advertisers? If so, social media platforms must forge a new path, one that meets the needs of their creators and users without interruption.
SocialFi, the convergence of social media and decentralized finance, is a thriving and promising alternative that combines accessibility, monetization, digital ownership and scalability, while inherently protecting influencers and creators under a more sustainable revenue model.
TikTok recently tapped into a well-known concept in sociology known as “third place.” Coined by sociologist Ray Oldenburg, the term describes social environments distinct from our traditional spheres of home (“first place”) and work (“second place”). In a context of inflation and rising costs of living, traditional third places are financially out of reach for many. Along with the forced isolation of COVID-19 and how it changed the way we interact socially, platforms like TikTok and Instagram have become the new “third place” accessible to the average person.
We've seen countless examples of how social media can generate substantial wealth and dramatically alter careers (for better or worse) with its volatility and unpredictability. A good example is Vine, a short-form video hosting platform, which catapulted figures such as King Bach and Jay Versace to fame, but its disappearance in 2017 also marked the end of the prominence of some of its stars. The rise and fall of various platforms has been closely observed, mainly because most of technology/online/social/linktree-creator-report-2023-surprising-reallife-salary-of-influencers/news-story/4f82af129db6d8fdb714733bd22b18e9″ target=”_blank” rel=”noopener”>influential people express concern about unfair compensation for their contributions.
You could post content freely during the infancy of social media and reap its economic benefits and opportunities later. A few years later, advertisers arrived, disrupting and putting an end to the entire content creation model.
To compensate for the lack of revenue from free subscriptions, social networks began to rely more on revenue generated by advertisers and sponsored content. Along with recent developments including TikTok dissolve its creator fund, Bob Iger traction ads from X (formerly Twitter), a noticeable drop in YouTube advertising revenue noticed by users, and the Meta ad to cease By paying for Reel content, creators continue to see a decrease in their income. currents.
Still, content creators continue to top the list of career aspirations for younger generations, with most kids ages 7 to 11 hoping to become YouTubers, influencers or gamers. If that's the case, we need to ensure that we are creating (and maintaining) a sustainable, accessible and lucrative rewards system.
Decentralized social media platforms are revolutionizing traditional compensation models by bringing the inherent benefits of web3 to the industry. Payments are made directly to the creator using cryptocurrency or other digital assets (think nft) instead of fiat currency, thus eliminating middlemen, such as Facebook or TikTok. Decentralized platforms allow creators to set their compensation conditions. Smart contracts automatically distribute payments, ensuring creators receive their fair share without middlemen taking a cut. Blockchain transparency also allows creators to track the revenue they generate, addressing issues of platforms misreporting earnings. By eliminating middlemen, decentralized models give creators verifiable ownership over their financial success.
Some of the major issues for advertisers and marketers using traditional social platforms are data privacy issues, data overflow, and closed ecosystems. Due to the greater transparency and data availability of blockchain technology, analytics can be shared across entire ecosystems and marketers are no longer limited to the company's data center. Smart contracts on SocialFi bring transparency and fairness to revenue distribution, addressing the issue of platforms potentially misreporting earnings.
For advertisers, SocialFi offers enhanced data analytics across the blockchain ecosystem, enabling more targeted and efficient advertising strategies. Although SocialFi has more opportunities to share more available data with advertisers, SocialFi technology provides smart contracts to users to manage how their personal information is shared. This transparency ensures that advertising budgets are used more effectively and directly benefit creators.
The decentralized nature of SocialFi also encourages stronger community engagement and participatory governance, aligning platform development with user interests. Overall, SocialFi promises a more equitable digital ecosystem where creators have more control, advertisers have more accurate information, and users enjoy a richer, more engaged community experience.
SocialFi's promise is that advertiser revenue will go more to creators; the dispersion of payments is inherently transparent. Advertising will always be subject to policy, but the benefit of SocialFi is that advertisers can check where the money is going. Advertising teams have more peace of mind.
The promise of decentralized social networks is clear: more control for creators, better compensation models, and stronger digital communities. However, despite this immense potential, adoption remains slow. To fully harness the power of decentralized platforms, we need intuitive user experiences that seamlessly onboard new users. Education is also essential; Clear explanations of technology and its benefits are critical to driving understanding and enthusiasm.
As we enter the next cryptocurrency bull run, now is the time for investors and venture capitalists to pay more attention to the social media space. Companies that solve for ease of use while communicating the core value of decentralization will lead the pack. The opportunities are amazing if we act today. By relentlessly focusing on simplicity and overall needs, decentralized platforms can transform not just social media but the entire creator economy.
