MEDIA Protocol – A Conversation about Content Platforms and Business Models

A couple of words about content platform's business models and approaches to monetization. Let's start with figuring out what their key purpose is in the first place? What primary human need they serve? I'd like to put social networks and content generating services (like blogging platforms) in the same category. Essentially they support the same psychological need based on human vanity. The difference is subtle. Someone might argue that the primary purpose of social networks is to stay in touch with people whom we know, maintain friendly connections, and so on. But let's dig a bit deeper. What are human relations and friendships are based on? There are actually a number of factors, but one of them is vanity. I want people to know what a cool idea just came to my mind, or a cool place I visited, or a cool frappé I ordered, and so on. The only difference is that on the social network the circle of victims of my aggrandizement is predetermined and consists of my friends who have really few means to escape. On the blogging platform I reach out to a broader audience, trying to turn complete strangers into my admirers, but the underlying motivation is the same. I think that I'm cool, and I want as many people as possible to learn about that by posting various content. This is the essential driving mechanism of content generating platforms.

Keeping in mind this concept, what could be the key monetization principle of such platform? An inevitable logical conclusion is the following: if the key motivation of platform’s users is vanity, then the platform should make money off that vanity. Or, to be more accurate, to tax an excessive vanity. Ads monetization is kind of a particular example of this approach. Ads are placed by companies and individuals who want their message to be prioritized, delivered to a number of people beyond the scope the normal posting would bring. Ok, while running ads is a pretty simple and straightforward way of making money, the fundamental principle of taxing vanity can be exploited in different ways. For example, in this same category falls content promotion, front page placement, etc.

More subtle and complicated business models emerged within content platforms with a built-in economy of micropayments. Usually, those are blockchain based platforms. Here I'd like to bring as an example the Steemit platform and its business model. First, several brief notes. The Steemit platform uses a platform-specific cryptocurrency, and authors, whose content is upvoted or commented upon, are getting rewarded in crypto-coins. Then there's a baffling moment: Those who vote for the content also get rewards. In other words, it's not a transaction where fans reward their favorite authors by tokens from their pockets; it’s a transaction where both sides have a monetary interest. I vote for somebody's post, and both he and I get some coins. And here it's getting interesting, like, if all the parties of platform's transactions get money then where that money is coming from. To add more confusion to the situation, the Steemit platform doesn't run ads, so at first glance, it seems incomprehensible how it makes money at all, let alone providing monetary incentives to its participants. And here the concepts and ideas I outlined at the very beginning come into play in their most subtle and insidious form. In short, Steemit uses a monetization model, in which part of the project's participants become project's investors. The platform uses so-called Steem Power tokens that allow users to increase their earning power and influence on the platform. Due to regular token emissions, Steem Power tokens' value is gradually depreciating, and this both allows adding more SP tokens into circulation to incentivize more users without upsetting the platform's economic balance and, at the same time, maintains a steady demand for tokens. In fact, token sales serve as the main source of platform's external revenues. SP token buyers, in turn use them to increase potential profits from their content. In fact, the Steemit's business model is based on authors implicitly sponsoring each other.

Speaking of MEDIA Protocol project. Essentially the project offers a similar to Steemit but more straightforward business model based on paid content promotion. Compared to Steemit where content consumption is free, and all the content creators are rewarded from a fund gathered from participants willing to increase their influence and earning capabilities through acquiring and holding Steem Power tokens, MEDIA Protocol project's economic model pushes this concept to the extreme. In fact, MEDIA Protocol pays content consumers using the money from fees paid by content producers willing to promote their content. In some way, it's similar to services where users are paid for watching ads. At the same time, the MEDIA Protocol project's approach is more flexible; it's not a platform for hosting ads. Rather it includes mixed content, part of which can be genuinely interesting to its readers, and in this case, they can encourage content creator by micro-donations through upvotes of his/her content.

In fact, the platform combines a number of different approaches to content monetization, including sponsored content, paywalled content similar to how it's organized on Patreon, user's tips and donations, and affiliate programs. The platform includes three categories of users: content publishers, content consumers, and content promoters. As I mentioned above, content consumers in MEDIA Protocol scheme of operations are in the most advantageous position; they are getting paid for viewing content. Similarly, promoters also get rewards from content distributors whose content they promote. The platform features proof-of-concept dApp CryptoCatnip that aggregates publicly available content. At the same time, CryptoCatnip dApp structure can serve as a prototype for other dApps built on top of the platform's infrastructure.

Roadmap

The niche of blockchain based content platforms is pretty crowded now, but what gives MEDIA Protocol credit is that it has both a carefully thought-through and robust business model and a working prototype. Probably they have a chance.

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Useful links

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Authored by: faragly (@popeye_the_sailor)