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In 2012 the IPO of Facebook brought a cool $104 billion into the coffers of one of the biggest tech corporations. This resounding approval from the finance establishment spoke volumes of the value of social network. Deconstructing its growth raises some interesting food for thought: what does Facebook actually do? How do they do it so differently that hundreds of billions of dollars were invested in them? And how do they make their money?
The simple answer to the above is ads and data. This is pretty disappointing considering it means the largest social network in the world is essentially an ad and market research platform that the users get no monetary benefit from. The industry saying is that if you’re not paying for the product, you are the product. While it might be unfair and not ideal that this is the case, it is worth bearing in mind that until now the technology to allow any other business model was non-existent.
But recently, the development of blockchain technology has made many new business models possible. Included in this are news ways of managing microtransactions and user data that enables a means to redistribute revenues in a more targeted way.
A new blockchain-based project is applying these possibilities to social networks and could completely upend the revenue model of such platforms. Appics is a social media app that aims to do just that. Instead of the user being the product, the user is allowed to monetise their own usage as the product.
Issues with centralised social network business models
As it stands, advertising is the main means of revenue for social networks. The centralised and un-digitized nature of fiat money makes it difficult to easily and precisely allocate resources via things like microtransactions, meaning that the social network landscape is locked in to a situations where people use the platforms for free (without needing to pay or being paid) while payments only run between advertisers and the platform itself.
But if users are the main source of revenue for the platform, it makes no sense that they should not be involved in the economic equation. This might seem like a pretty trivial problem until you realise the amounts of money involved. Online advertising is worth $200 billion a year. Beaty videos on Youtube alone are watched 50 billion times a year. All this advertising runs on data, and the user is the one generating the data.
Freeing up revenue flows with blockchain technology
As anyone who has experience with smart contracts will know, microtransactions and precise payments are one of the strengths of decentralised ledger technology. Now it is possible to securely and transparently make payments automatically based on other events (like platform usage). This is the “digitization of money” that many in the crypto industry refer to:
But now it is possible to directly reward users who create content on social networks. Here is how Appics describe the dynamics:
“Users who are liking content are like the engine of the network. The more active engagement we find on a platform, the higher the value rises of the platform. Currently, the curators of social media networks are overlooked and there are no implementation plans that would reward those who spend their time interacting on social media networks. We want to reward active users who give value to the content creators, by giving them back a proportional share of all payouts and distribute it accordingly.
For example: When user A “likes” a post by user B on the APPICS platform, user A plays a part in contributing, giving the content created by user B value. User B receives a payout for creating the content and user A is also receiving a share of user B’s income for his supportive action. This is a win-win situation, encouraging and incentivizing support and engagement.”
APPICS is thus a way for content creators to earn from their activity while also rewarding users who consume the content. This is all underpinned by the critical component of any crypto platform, a token. Appics uses the XAP token to allocate rewards for users.
This content creator reward system is similar to what is used in Steemit and Patreon, so there is certainly proof of concept for such a system.
APPICS is one of the first Smart Media Tokens (SMT) on the highly popular Steem Blockchain, which has already provided proof of concept for turning likes into currency.a
The XAP token goes on sale in the Appics ICO taking place on March 28th. The presale of $1.5M sold out in 26 minutes on december 26, so there seems to be strong demand for the token.