Another day, another dollar

I was chatting with some colleagues the other day and they were talking about the problems of multilevel marketing and how they offer "hope" to some while driving value to the very few at the top. I mentioned that this is exactly what platforms like Instagram do to their users who try to "monetize" their accounts as if they have a chance to do so. Essentially, the process is the same except for social media cites, the distribution spread is even lower.

In multilevel marketing, participants are encouraged to sell products (annoyingly) to their friends and family as well as recruit sellers who will sell products to their friends and family with each tier getting a referral fee from the one below in what would be considered a pyramid scheme process.

Instagram does much the same thing, except doesn't have to pay each layer, just the top ones. For example, you have a monetized large celebrity account with 100 million followers spruiking products and earning a massive amount, like Ronaldo who earned 3x more from Instagram posts than his highly paid club position as the top footballer in the world. This potential then inspires other users to try an become influencers, with a small number getting a million followers, more getting a hundred thousand and many getting ten thousand followers - with a lot of overlap of followers where most who follow the lowest tier group, also following the top tiers.

This creates a feedback matrix that is highly targetable, and because each is pushing products (even if they buy them themselves in a hope to get recognized) there is the potential for a lot of product spam that is able to be targeted to cross-referenced groups to offer the best potential for sales. A marketing company pays for access to the entire network, the platform only pays a percentage to the top tier accounts, those who inspire others.

When people hear "we are the product" we tend to think it is our data and content that has value, but this is not the case for most. What has value, is the network we possess and the potential to use it for targeted reach and dissemination of information. The network we have gives a platform granular insight into individuals through referencing all of the other connections from a single account and therefore, being able to build a highly accurate model of a user that can be sold for targeted marketing purposes.

The thing is that when it comes to marketing, social proof is a far better attractant and influencer than a billboard on the side of the road, and the social networks have built a system where they can create personalized billboards for every single user, all 4-odd billion of them. With every interaction, we are making their model of us more accurate and their targeting more precise, which means that they will be able to continually trim away the monetized accounts that are not performing as well, until there are only a handful of users who will ever see any return on their work at all - and it is work.

I know that a lot of people think that earning Hive is hard, but if you consider that the highest paid Instagram accounts have generally either been grinding for years or like Ronaldo, have been grinding for years in a career to build a massive following prior to joining, it isn't so hard to get a little Hive.

But as I was saying to my colleagues, the money flows to owners and on the centralized platform, users aren't owners, most don't have any rights to the content they post and if the platform chooses to demonetize, shadowban or delete an account, there is nothing they can do about it. Not only that, the "following" that they have built up over potentially years, doesn't follow them to a new platform.

Instead of empowernig users, the pyramid scheme they have designed allows for the platform to drive all value into their pockets, making them the masters of distribution, setting up for some very bad incentives. For example, if a monetized account is getting too expensive, they can demonetize and still retain the vast majority of the follower list as consumers of other content. This means they can attract, churn and then burn accounts on a continual cycle that maximizes their profits. They encourage users to build an account to monetize it, but have no loyalty whatsoever to that user and will instead use the mechanics to commandeer the followers and lead them to the next "latest and greatest" account, the one that they can pay less for.

This model doesn't work if all accounts are owners though, because owners will be looking for gains themselves - which means they will find ways to maximize, but will have a lot of competition to do so. This results in lower, but much wider spread of value across the network. However, it is also messier and far more organic in practice, as there are so many fingers in the pie and chefs in the kitchen.

And this gets to the crux use case of blockchain in my opinion. It is just a ledger - but what it does is tracks ownership at a scale and with precision and trust that was impossible to do earlier. This empowers us as users to become owners of our experience and rather than be subject to control from centralized platforms and authorities, be able to organize ourselves as a collective owners in a similar way that a small tribe once was, but at a global level with high participation. This means that the value of the network we generate is tied to us as users and has the benefits of the network effect paid back to us as owners. This redefines economies as we know them and with it, the distribution of wealth through the system, as value flows in ways that has never been possible before.

So few at this point recognize the pyramid scheme process of centralized social media because, the vast majority do not have any access to the value on the table, not even scraps. Most are not given the possibility of ownership and their only path is as a consumer that is bled dry, with the flow of value only ever going up, while they dish out valueless digital hearts, stars and thumbs.

If you don't own, you pay - one way, or another.

Taraz
[ Gen1: Hive ]