The Failure of Monetizing Social Media Blockchains

by Mint Dice Bitcoin Casino

Social Media Blockchain Monetization Innovation

There's an old adage that says that if the service is free that you are the product. This saying is frequently touted with the likes of social media where, take for example Facebook, you get the service for free because they blast you with ads and control your personal data in effect making you the product for Big Tech.

Social media, plagued by the above issue and others, gave entrepreneurs and developers an idea to try an experiment to give some of the money and power back to their users through blockchain monetizations and ownership. In theory, this sounded like a brilliant idea. If people created good quality content, they would get higher levels of interactivity. High levels of interactivity are great for any platform and platforms should reward users for providing such types of high quality content on their website. Prior to this invention of monetized social media, all a user could receive were “likes” which really isn't worth much in the real world.

In order to give a real world incentive to have high quality content not just rewarded with likes but also rewarding a user actual currency would be a great way to simultaneously give back to the community and also allow users to control their own data. The idea, at the time, seemed like a massive potential upheaval to social media platforms as it was all owned by Big Tech and could potentially foster in a new era where users could be on social media and also even potentially get paid for doing so. Perhaps a win/win for individuals who shifted to this second generation of social media which could have led to a steady exodus from centralized Big Tech.

However, you can probably tell by the tone of the article that things did not go the way that they anticipated them to. So what went wrong?

Social Media Blockchain Monetization Failures

The biggest problem, by far, ended up being an issue where low quality users, spammers, bots, people gaming the system or any other kind of nefarious user would simply use these monetized blockchain social media platforms in a way to make money. Rather than optimizing for good content and good content being rewarded with the most money, bad content was being rewarded because it could be spammed like there was no tomorrow to earn pennies. And pennies added up can add up to a lot, especially if the costs to the spammers was next to nothing (for example, bots) and/or if the users resided from a country with a very low cost of living.

This spam problem had two major issues. The first was, obviously as mentioned, the content/comments being posted were of exceptionally low quality leading to an extremely poor user experience for people attempting to legitimately use the websites. But furthermore, a lot of the blockchain monetizations were flowing to these users who had zero interest or investment in the platform on any social, economic or intellectual level but would instead instantly withdraw all of their earned cryptocurrencies off of these websites to dump it for their local native fiat. This created a lot of downward economic pressure on these marketplaces that instead needed price momentum going in the exact opposite direction in order to be successful.

The second major issue ended up being centralizations of power. On Facebook, no user necessarily had much more power than the next user. At least, not in any meaningful way. Sure, maybe they had more followers or friends but their like was still not much more powerful than any other user's like. But on these monetized blockchain platforms, some power users can completely displace other users or boost them to god like levels at the complete whim of their owners or censor others into oblivion. And virtually anyone could become a power user if they were an early adopter or had enough capital invested into the website. The power imbalance setup here was more than bad making it unusable for many users in some respects. The idea of these blockchain platforms being more open and democratic than Big Tech was a facade at best with a few whales controlling the entire show.

The Problem, Visualized

It's one thing to hear this problem described to you on an article, it's another thing to even experience it on these monetized social media blockchains, but it's another thing all together to see the actual hard statistics of these problems under the hood facing these monetized blockchain websites. What we're going to do is take a look at many versions of the biggest monetized social media blockchain platforms that have gotten it wrong and one platform that has gotten it correct and why that is the case.

It's also really important to point out before this discussion begins that we're going to be talking about the conceptual difference between nations lower on the socioeconomic scale (developing countries) contrasted with nations that are higher on the social economic scale (developed countries). And importantly in doing so, we aren't making any personalized charater value judgements against the individual people from any of these countries for better or worse. But we are making an assumption that users from poorer countries are by and large using these monetized blockchain social media platforms as a means to an income, mostly posting low quality content and usually dumping the native cryptocurrencies onto the open market for their local fiat monies with a far smaller intention to ever use these platforms legitimately.

And on the same token, even if these same users from poorer countries wanted to use these platforms legitimately, which is presumably relatively rare compared to a user from a developed country, they would have less of an ability on average to add into the ecosystem through the means of economic development, social development or even technical development to improve the overall ecosystem. Effectively, these users mostly just drain resources from these native cryptocurrency systems providing little value back to the community, especially long-term. And it's not to say these users don't deserve a place to live, a job that creates income for them or any other value judgement, it's just that these users are objectively on average parasitic to their blockchain ecosystem when judged from as a whole demographic.

Steemit:

SteemIt was the original first major attempt at a monetized blockchain social platform. Most users have since abandoned the platform for a fork known has Hive and the SteemIt platform is currently rather dead. Regardless, if you look at countries #3-10 which take up an extremely sizable percentage (65%) of total traffic, there is a lot of value being drained out of what is left from SteemIt.

Hive:

Hive was forked away from SteemIt when Justin Sun attempted to purchase the platform. The “new owners” also attempted to adopt new rules to make for a better environment for it's users. Regardless, you can see that a ton of Hive's traffic is coming from extremely poor nations with Venezuela topping the list for SEO traffic. Hive is plastered with low quality content and comments with users chasing financial gain with no solution in sight to the problem. Hive does attempt to moderate some of this with centralized power leading to a separate issue, back to one eerily similar of Big Tech and this is also fundamentally not a permanent and hard solution.

3Speak:

3Speak is a decentralized video app from the Hive network, and similarly, monetizes it's blockchain to users who post video content. This has lead to spammy results and low engagement. You can see that 3Speak has very low usage alongside the fact that many of it's users are from mostly poorer nations with Brazil alone accounting for 58% of it's SEO traffic.

Axie Inifinity:

Axie Infinity is a Play-To-Earn (P2E) game. Skipping over a lot of the technicalities of Axie, ultimately, a lot of users can earn small amounts of money for doing boring tasks within this game. This “task” or “game” has mostly been relegated to very poor countries which is why you see an absolutely gigantic amount of users coming from extremely poor countries who have stepped in to do the dirty work as seen in the chart. This has ultimately led to a gigantic ponzi scheme propped up by a gargantuan economic outflow from the Axie economy and into these countries. This is unlikely to be sustainable long term.

ReadCash:

ReadCash is both a blogging and microblogging social website bound by the Bitcoin Cash blockchain. Users are rewarded for posting content on this website. Unfortunately yet again, with the best of intentions, a lot of the content posted on ReadCash is of low quality and it has been a nightmare for the developers to solve for. You will notice their top four countries dominating the use on this website seem to likely all game ReadCash for it's free rewards.

The blockchain monetization problem extends far from just SteemIt/Hive or P2E gaming on Axie Infinity or blogging on ReadCash. It's pretty much a universal problem the moment that you introduce a mechanism of payment for activity on a website. It's nearly a mathematical guarantee at this point in time that any social system will be gamed by low quality content spammers, bots, blockchain manipulators or any other thing you can think of to earn free money if that option exists in the world.

It's unfortunate because blockchain monetization is a great idea in theory by all of these platforms and it is often innovated with the best of intentions by their developers, but the actual product when released onto the market is of exceedingly poor quality due to the users they attract creating a potentially unsolvable issue.

And it's also frustrating as actual users of these websites to see these websites get worked like this because of the amount of effort that has gone into them by their developers, but it's the honest reality of the world that we live in.

Okay, Is There A Solution To Blockchain Socials?

Yes, there is. And that is simply to cut the head off of the snake. You must completely untether the monetization guarantee part from the social media platforms. This is the only way to ensure quality. Similar to how users presently will only post to Facebook or Twitter if they want to engage on the platform for the sake of engagement with the platform, the same principle has to be applied to a decentralized blockchain social media platform. Users have to want to post there on their own volition regardless of the opportunity to make money or not.

This does create some small tension, however, because users need a very strong incentive to want to leave the legacy centralized Big Tech platforms over to a new decentralized social media platform. Getting paid money would probably be a big incentive to want to do this, however, as we've shown, this simply does not work.

That said, if the centralized Big Tech platforms behave badly enough while the decentralized social media platforms can offer enough innovation and quality/value to their consumers in ways other than direct blockchain payments, there may just be enough incentive for these platforms to grow organically on their own. And it's as obvious to anyone that Big Tech is behaving as badly as ever and will likely to continue to degrade over time as well.

Working Blockchain Social Media

There was a very lengthy post earlier describing how we can fix social media with LBRY on the MintDice Blog. Put shortly, LBRY is a censorship proof publishing blockchain platform and Odysee is the largest front-end display website of the LBRY blockchain.

To further the above point though, there is an argument to be made that not only is the amount of traffic on both Odysee and LBRY very high and growing rapidly, but that it's very high quality traffic that is coming to both platforms which fosters the correct type of sustainable community growth moving forward. As in, it's not a lot of low quality users sucking money out of the ecosystem simply using the network for financial gain and no real purpose of growing the social network only to leave the moment crypto finances dry up. It's actual users engaging with the actual platform because they actually want to be there. This is because with LBRY, the only guarantee with this network is that you must pay LBC to post to the LBRY Blockchain. That's it. There's no monetization guaranteed by the protocol layer for interacting with the network. Therefore, you either want to be on LBRY/Odysee using the LBRY network because it's a social media network that is valuable to you to use, like the Bitcoin network, or you simply aren't going to use it. Parasitic behavior on LBRY is nearly impossible.

Let's take a look at the countries that Odysee has it's users coming from:

You will notice a night and day difference relative to the last batches of blockchain socials that we have looked at. Odysee has a huge amount of overall traffic and countries #1 through #6 are all from developed nations, effectively making developed countries nearly the entirety of the LBRY ecosystem. And this isn't an accident. It's very much by design. As pointed out earlier, the moment these users from poorer countries don't have a mechanism to get money for free from these websites for their low quality spam and to then dump these cryptos into their native fiat – they will vanish. That is a completely unsustainable user adoption model with cryptocurrency ponzinomics for these monetized social blockchains that conveniently isn't an issue for LBRY and Odysee.

This blockchain monetization issue could have been discussed in the last article about LBRY but it deserved it's own article because it's a rather important point to bring up for two main reasons:

#1 – Odysee & LBRY are an undervalued project in blockchain space. Not only do they have outstanding user growth and underlying technologies, but their communities are built on solid ground with intelligent users dedicated to the platform itself on economic, social and intellectual levels and are not just there to make a quick buck. Thus it could be argued that their user growth is far better than it would look to be on first glance to the casual observer.

#2 – If other developers in the world want any chance whatsoever at succeeding at creating a decentralized social media platform with the chance to overthrow Big Tech they will have to follow some model similar to LBRY or else they will meet certain doom for the problems outlined in this article. And importantly, we all as ethical individuals want Big Tech to lose to more democratized technologies in the end, one way or the other, be that with the LBRY protocol and/or other protocol(s).

Decentralized Social Media Take-Aways

It's important to try to divest your attention away from Big Tech and onto decentralized platforms when possible. But it's also important to do it with the correct platforms using the correct technologies and philosophies so that you both enjoy yourself and give your attention to sustainable communities. LBRY/Odysee is one of, if not the only project doing this correctly out there in the wild today. It is a vastly underappreciated and undervalued project relative to how much value it is providing and will continue providing to the world over the coming years.

There is hopefully enough advice in this article to educate you about what is needed for decentralized social media platforms and what red flags to look out for when it comes to both your own user experience but also long-term sustainability.

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Created on May 31st 2022 05:13. Viewed 218 times.

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