The internet has changed the world in extraordinary ways!
It allows for independent content creators to create videos in their homes, and share with millions of people online. This created a new sector of the economy called the “Creator Economy” employing thousands of people.
There is one catch though: you have to bend the knee to the corporation! The corporations (Google/YouTube, Facebook and all the others own the networks. And they sell ads and give a share to the content creators. They don’t own the content. They don’t own the audience. They don’t own the ad revenue.
This blog tells the story of how new technology could take all those profits from big Platforms (YouTube etc) and give those profits to the Creators and Viewers.
Intrigued? I hope so! This is an exciting story, unfolding before our eyes!
Note – I’m attending the Bitcoin 2022 conference in April. This blog is part of a series of exploratory blog posts that seek to prime / prep for this conference. Let me know if you have questions relative to Bitcoin
How much does YouTube Take?
According to YouTube’s Partner Program, you need 4000 public watch hours (last 12 months) and 1000 subs to start monetizing your channel. And according to this Yahoo article YouTube takes 45% of the revenue, and the creator gets 55%. (source)
They take 45%?? That’s Robbery! So Why use YouTube then?
The network effects. That’s where the people are. It’s the same reason I started building apps on the Apple App store. When I first met my business founder and he “pitched me” to join him in making software, I was immediately sold when he said this: “Ok, get this, there are millions of people coming every day looking for apps. You just need 0,0001% of them to have millions of dollars in revenues. The best part? They look for you, you don’t even need to find them!”
I was sold there and then.
OK… So What’s the Problem?
There are many problems. Here is a shortlist:
- It’s expensive – We’ve covered this one already – they take a reallllllly big cut.
- Creators are stuck – The internet ecosystem is a “winner take all” type market. Google dominates search. Facebook dominates social media. And YouTube dominates video content. This leaves the content creator with no choice but to stay.
- Creators don’t own their content – the platforms own and controls the content.
- You are not free – the platforms can censor you or kick you at any time.
Enter the Hero – Open Platforms and Usage Based Payment
The big story of open platforms are not controlled by any single gatekeeper. There is NO MIDDLE PERSON.
In economic terms, the middle people – or intermediaries – charge a lot of money for their service. When you are able to remove a middle person, you can save a lot of money. Further to that. When you go decentralized and open you can reduce those costs to zero.
Consider Wikipedia. This is a decentralized system that has yielded a far better result than Encyclopedia Encarta. Encarta was created by Microsoft, a for profit company, that paid millions to develop. However, the open source system won.
So as we described, the models right now are either advertisement based or subscription based (like Patreon).
So the new models would allow for things like a “usage based payment method”. e.g. I listen for 3 hours, and I pay for 3 hours. This allows for content creators to create the content they want.
Why Isn’t This Happening Now?
From my understanding, we didn’t have the technology for it. I’m currently very interested in the Lightning Network. This is an application on top of Bitcoin. This allows for micropayments.
From my understanding, from a user standpoint, you would log in to a platform (like a YouTube), and basically, you would watch anything you want for free, and the more you watch of something, the more you pay. And it would be very, very small amount. Like 0.1 cent per minute or something.
The content creators are incentivized to make good content to keep you there. They don’t have to cater to a) the platform or b) the advertisers!
Advertisements Optional – This is REALLY Interesting!
So here is what I think is the coolest part. In this model, you could even choose “ads on” or “ads off”.
So before we go to the exciting part, let’s go back to “what sucks currently”. Right now, when you’re on YouTube, the price you pay as a consumer is that you get slammed with ads all the time. Who gets the money? It’s split roughly 50/50 between the platform (YouTube) and the content creator.
Ok, now the new model? What is made possible is that now YOU own something = your attention. So you can toggle “advertisements on”, and if you do, then both you and the content creator can share the ad revenue 50/50. And the platform would maybe keep a small portion (fraction of a %).
So wrapping up. The current situation is that monopolies have a lot of control and they make a lot of money. e.g. I built the network, I keep 50% of the profit. And more important, the companies OWN and CONTROL everything
In a new “open system”, allowed by Lightning Network (or other tech). The “Little guys” OWN and CONTROL everything. And the companies are vying / fighting for your attention and they are fighting to attract the content creators and viewers to them with lower prices and a better user experience.
I’m excited about this new world! You?
Disclaimer – The purpose of this blog is to develop knowledge and wisdom as keys for the human species to be successful. I am not an expert thus I welcome comments/questions/objections.