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Fixing Instagram’s Unsustainable Creator Incentive Model with Web3 Technologies
Author: Toju Ometoruwa
Unsustainable Incentives: Social media platforms, like Instagram, have introduced various creator incentive models, such as the Reels Play bonus. However, these often prove financially unsustainable due to high costs, lack of direct revenue, and operational challenges.
The Rise of Creator-Consumer Economies: The future of content monetization lies in self-sustaining economies where creators can monetize directly from their audience through subscription models and exclusive marketplaces. Traditional technologies, however, pose challenges in building and maintaining these systems.
Web3's Potential: Web3 technologies, based on blockchain, offer solutions like leaner infrastructure, smart contracts, NFT marketplaces, and decentralized security. This allows platforms to create sustainable monetization models, benefiting both creators and platforms.
In the social media landscape, platforms like TikTok and Instagram are in an arms race to attract and retain content creators. These platforms, recognizing the value of user-generated content, have rolled out various incentive models to encourage more content creation. However, as recent events have shown, these models can often be unsustainable in the long run.
The Unsustainability of Current Creator Incentive Models
Platforms like Instagram introduced programs such as the Reels Play bonus to compete with TikTok's dominance. These programs promised creators significant payouts based on metrics like views. While initially successful in driving content creation, these models proved financially unsustainable and have since been removed. The reasons are manifold:
High initial payouts that drain allocated funds.
A lack of direct revenue generation corresponding to the bonuses.
Operational costs associated with managing such programs.
Moreover, these models are reactive, often introduced as a response to competitive pressures rather than a proactive strategy for long-term growth and sustainability.
The Need for Self-Sustaining Creator-Consumer Economies
The future of content monetization on social media lies in creating self-sustaining creator-consumer economies. Instead of platforms acting as the sole monetization channel, they should empower creators to monetize directly from their audience. This can be achieved through:
Subscription Models: Allowing creators to offer exclusive content to subscribers.
Marketplaces: Platforms can facilitate marketplaces where creators offer exclusive content, products, or experiences for sale.
However, building these economies using traditional web2 technology presents challenges. Platforms would need to develop and maintain the entire infrastructure, from payment gateways to content delivery networks. This not only increases operational costs but also slows down innovation.
The Promise of Web3 Technologies
Enter web3 – the next evolution of the internet, built on blockchain technology. Web3 offers solutions to the challenges faced by platforms in building creator-consumer economies:
Leaner Infrastructure: Leveraging blockchains, Instagram could decentralize components like payment processing, content authenticity, access control, and trust systems, eliminating intermediaries and automating processes. This decentralization can lead to cost savings from reduced transaction fees, decreased infrastructure maintenance, and enhanced security.
Smart Contracts: These are self-executing contracts with the terms directly written into code. Instagram could use smart contracts to set up token-gated communities, where access is granted only to subscribers or those holding a specific token.
NFT Marketplaces: Non-Fungible Tokens (NFTs) represent unique digital assets. Creators can tokenize their content as NFTs, which can be bought, sold, and traded. Every transaction can earn both the creator and the platform a fee, creating a new revenue stream.
Sustainable Economics: Creators can directly earn from their fans and benefit from fan transactions. Unlike Instagram's current model, where it solely compensates creators without clear indicators for whether it is underpaying or overpaying, P2P marketplaces let the market dictate the value of payouts instead of relying on unsustainable fixed subsidies.
Decentralized Security: The blockchain operates through a network of nodes that work round the clock, ensuring data integrity and security.
Seamless Integration: By partnering with wallet service providers, platforms can offer users an easy way to set up wallets, enabling them to transact in the world of NFTs and tokenized assets.
While the incentive models of today may be faltering, the future is bright for content creators and platforms alike. By embracing web3 technologies, platforms like Instagram can build sustainable, decentralized creator-consumer economies, ensuring a win-win for all stakeholders. As the digital landscape continues to evolve, it's clear that the platforms that adapt and innovate will be the ones that thrive.
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