A lot of attention is being paid to content creation and the potential of this as a viable path for many. There is no doubt that some were able to turn their YouTube channels into a fortune. However, that is only a small percentage of the creators.
For every Mr. Beast, there are tens of thousands who get next to nothing. In fact, according to this article, only 3% of the channels generate anything above the poverty line.
When we dig into the numbers, it is easy to see how this is the case. With YouTube, volume is needed.
.Since YouTube takes a 45% revenue split, that net CPM range equates to a gross CPM of about $1-$9. In other words, each view generates between $0.001-$0.009 in gross ad revenue. Again, creators are only getting about half of that.
That means 1 million views will generate roughly $2,000. What we are dealing with is a diminishing return if we consider the fact that content is going to get easier to create with the quality continually increasing, especially as artificial intelligence factors into the equation.
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Changing Models
Advertising was long established as the payment mechanism. It started with broadcast television and moving into the online world. This is changing as many newspapers went to subscription models. It is no common for that to exceed the advertising revenue. The New York Times, Wall Street Journal, and other publications such as this are in this situation.
It is something that Elon Musk is also looking to do with Twitter (X). He spouted off about the advertisers, telling them to "go eff themselves". Was this a radical move? Yes. However, against the backdrop of what is taking place, it is not that crazy. In fact, it might be a prelude to the future of some of these digital platforms where advertising is going to be a much smaller part of the revenue stream.
Consider the idea of a company like Amazon Prime Video getting professional sports contracts. Broadcasters do this to turn a profit on the advertising. This is the age old model. Amazon has a different approach. It is using this to entire more Prime subscriptions. Hence, turning a profit directly on the broadcast rights is secondary. It can make it up on the subscriptions and what is purchased using it.
This appears to be the new model for platforms.
In short, it is provide a subscription service and keep adding value to it. When charging $10-$20 per month, make sure it includes enough for different people so that it is a "no-brainer". The value far outpaces the cost.
Amazon, to its credit, has perfected this. Most come out ahead of the $100 (or so) yearly fee simply through free shipping. Anyone who purchases a lot from the company would likely spend more than that in a year. Through in music, video, sports, and whatever else they are packing in and we can see how any regular Amazon users is foolish not to go Prime.
Musk is now bringing AI into this. Not only is there the checkmark which provides access to some features, we also see Grok as another inclusion into one of the subscription plans. He keeps building more that can be monetized.
Of course, all of this is focused upon the platforms (or companies behind them). None of this really benefits the content creators.
New Model: Ownership
Here is where Web 3 enters the picture.
My view of the future is where these newer models hold some validity. The difference is in the ownership model that is employed.
With the platforms mentioned, the shareholders are the ones who benefit. Unless a content creator buys the stock, if publicly traded, little is gained financially. Some might get a piece of the ad revenue or subscription, but as we see, it is minimal compared to the overall.
Web3 sets this on its ear.
What if the content creator and owners were impossible to separate? Here is where we can add an additional model. Under this scenario, either (or both) side of the equation is of financial benefit.
For example, does a content creator get paid on the content? This is one avenue. On the traditional platforms, the split is important. With Web3, it suddenly becomes secondary.
The reason for this is the monetization of the platform. If the user has stake, he or she financially benefits from whatever models are employed. Just like the shareholders of Amazon, it is to the benefit of the token holders for the platform to increase its monetization. Shareholders like to see larger ad and subscription revenue because it adds to the overall profitability of the company.
With Web3, we see the same thing. Depending upon how it is structured, this will add to the token value along with potentially paying out more to those staking. Couple this with the ability to get paid via the content creation models and we can see how users can benefit in a number of different ways.
Focusing upon Web 2.0, we see the ownership model missing from the content creator discussion. As always, they are on opposite sides of the fence.
Web3 aligns this. When content creators have stake in the platform, they benefit from all financial increase. This can be captured through various pathways that pay the creators. However, they also benefit directly from the appreciation in token value.
It is something Web 2.0 cannot offer since the existing business models stand in the way. Having shareholders simply precludes this.
Here is the opportunity for Web3 platforms. They can start with a clean sheet design, implementing systems that pay both token holders and content creators, many who are the same.