Why We Shouldn’t Trust “Trusted Third Parties”

Opinion | June 6, 2019 By:

Digital platforms have been under fire over the last 10 years for exploiting users’ data, but there is a different controversy brewing that is underreported.

In the past two decades, content platforms like YouTube have become instrumental in catapulting everyday individuals into fame. Before these platforms existed, the first wave of third parties who influenced mainstream success were record labels or film studios. These media giants managed the content that audiences were exposed to and determined which artists to elevate. This limited diversity because large corporations maintained near-exclusive power over who and what was deemed successful. Fast forward to the genesis of YouTube, which decreased content creators’ dependence on record labels and film studios by allowing individual creators more autonomy to find their audience…with a catch.

The same platforms that diminished the influence of the first wave of gatekeepers have their own unique side effects, and now consumers have become the product. The value of these platforms is derived from collecting data from users, selling it to advertisers, and utilizing opaque reward algorithms to obscure the true value that each creator’s content generates.

Creators get squeezed

Although YouTube has taken modest strides to launch non-ad products, their entire business model remains based on the collection of data to sell to advertisers. One of the key ways creators make money is through Google AdSense, which according to Anna Sraders, writer for The Street, allows “you to start earning money on your videos… In order to qualify, you reportedly now need (as of January 2018) 4,000 watch hours in the past 12 months, plus 1,000 subscribers to join the YouTube Partner Program (which will get you ads and therefore cash from your channel).”

According to this model, a YouTuber will likely make $1-$2 per every 1,000 views. In order to make a steady income off of AdSense, creators must publish content that is ad-friendly and likely to achieve these numbers, which can be stifling to the creative process and doesn’t allow much space for originality.

While content creators are being squeezed financially and creatively, their power is shrinking as well. Many content creators feel dependent on these platforms to reach their audiences and fans, so the switching costs seem high even in light of the creators’ diminishing returns. Even if creators could negotiate with the platforms, the information asymmetry puts them at a huge disadvantage because they do not have visibility into the impact their content has on the overall value of these networks.

Transparency is the solution

In light of growing concerns surrounding the issue of transparency, blockchain technology can form the foundation for alternative digital content ecosystems that value user and creator empowerment. Simply put, creators need to know how their content drives value in all respects. With the formation of a decentralized content network, creators will achieve autonomy over their content where, per Forbes contributor Sherman Lee, “Content creators would have transparency into the impact they are making for brands or social networks and be properly rewarded for it.”

In this scenario, creators would be able to further invest in their content, and audiences would experience higher quality entertainment. Although a fully decentralized Internet is not in the immediate future, blockchain entrepreneurs around the world are currently laying the groundwork for what’s to come.