The Future of Media is Decentralized: A Web3 Blueprint

The media industry has never been in worse shape. Our favorite blogs feel like a shadow of their former selves, news outlets are recycling the same overly exaggerated stories, and it’s becoming harder to find quality content amidst all the noise and incessant paywalls. The situation is worse for journalists and creators as they face job losses, shrinking budgets, and increased pressure to break the headlines.

Businesses from entertainment channels to news outlets are facing a sharp decline in audience engagement and revenue, with prominent websites like The New York Times seeing a 27% drop in website traffic last year, indicative of the industry’s broader challenges.

This downturn has prompted media companies to implement cost-cutting measures. The industry lost a devastating 20,000 jobs last year, adding to the 30,000 lost during the pandemic. 2024 has only worsened the situation, with a wave of layoffs and bankruptcies, as seen in QZ’s timeline of media layoffs.

While these issues are pervasive, not all media companies are experiencing the same fate. Some are adopting more aggressive technologies and exploiting consumer behavior to stay profitable. This article seeks to uncover the underlying reasons behind the industry’s struggles, explore why certain media companies are succeeding where others are failing, and examine the transformative — even disruptive — potential of decentralization in reshaping the media landscape.

The Current State of Monetization in Media

For digital media companies, revenue generation revolves primarily around two fundamental models: advertising and subscriptions. However, the evolving nature of media consumption and technological advancements necessitates a broader exploration of revenue streams beyond these traditional models.

Advertising Revenue:

Historically, advertising has been the cornerstone of revenue for many digital publications, allowing these organizations to offer free or subsidized content. This model involves displaying ads on websites while visitors consume content. However, its effectiveness relies heavily on attracting a large audience to generate revenue through ad impressions, clicks, or conversions. It is usually a business-to-business (B2B) arrangement where ad platforms like Google Admob allow other businesses to bid and purchase ad spaces on websites, television, or other digital media channels.

One of the significant advantages of advertising revenue is its potential to scale. Media companies can reach millions of viewers or readers and consistently generate income from ad partners seeking to promote their products or services. Moreover, advertising revenue offers a level of predictability tied to factors like audience size and other key engagement metrics.

That said, advertising-based models are facing a downturn due to the widespread adoption of ad-blocking software and more stringent data privacy regulations such as GDPR in Europe and CCPA in California that impact advertising practices. Over-reliance on advertising can even compromise the perceived content quality and user experience, as visitors’ screens are littered with ads of various forms and sizes.

Subscription Revenue:

In contrast to the traditional advertising model, subscription-based models offer a more direct and long-term relationship between creators and their audience. By charging users a recurring fee for content access, digital creators and media companies can diversify revenue streams and reduce — or altogether remove — dependence on advertising, just like Netflix does.

Subscription models foster higher engagement and loyalty from users, who are invested in getting their money’s worth. However, it doesn’t come easy. Convincing consumers to pay for content in a digital scene flooded with free alternatives demands compelling value and outstanding content. Media companies that offer subscriptions must continuously innovate and adapt to evolving consumer preferences to sustain revenue growth with this model.

According to a Reuters Institute report, global digital subscription revenues surged 36% in 2020, reaching a staggering $18 billion. While this significant growth underscores the increasing willingness of consumers to pay for high-quality content, most creators and companies still struggle, with only a tiny fraction of users converted to paying consumers across the board.

Alternative Revenue Streams

Beyond the two major streams discussed above, creators can still monetize using several other methods, including:

• Affiliate Marketing
• Hosting Events and Experiences
• Merchandising and E-commerce
• Licensing and Syndication
• Membership Programs
• Crowdfunding and Patronage

The Culture Shift in Traditional Media

Legacy media companies are facing issues with the sustainability of their workforce. On the one hand, there are cost-cutting layoffs; on the other, some of their best employees leave to pursue more extensive prospects. At a time, these media companies were proving grounds for creator talent. But today, seasoned reporters and skilled analysts — frustrated by editorial constraints and the relentless churn of the 24-hour news cycle — are breaking away from legacy outlets in droves. Backed by the credibility and reputation built from traditional newsrooms and publications, voices like Matt Taibi (co-founder of Substack) and Darren Rovell of The Action Network have left traditional media to deliver more nuanced reporting and commentaries.

We’re in the age of expertise, as ​​Jason Calacanis aptly stated in his tweet, highlighting how people gravitate to expert knowledge rather than ‘established’ outlets. Today’s consumers are much quicker to call out BS in reporting, with the purported ‘Gellman Amnesia Effect’ finally wearing off. Audiences are also less tolerant of the bias and misrepresentation traditional media publications would usually get away with. As a result, even established companies have lost the trust and faith of their readership.

Reuter’s 2022 News Report uncovered a “disconnection and disengagement” in people and the news, as you’ll see from some of the comments they received during their survey:

“Truthfully, I don’t like to dwell too much on the mainstream news. I find sometimes it can be repetitive and negative,” and,

“I do sometimes finish reading articles maybe more stressed about a situation, or sometimes just confused.”

Going direct is the apparent new trend, and even newcomers are skipping right over third parties from the get-go, opting instead for personalized and direct content delivery to their niche sub-communities, building far stronger connections than legacy media can afford.

Is Anyone Telling The Truth?

The concept of a single source of “truth” is increasingly called into question. Originally perceived as bastions of impartiality and objectivity, even news media outlets are not immune to biases that can color their reporting and shape public perception.

While some degree of bias or opinion in news reporting is not inherently problematic, the issue arises when these subjective interpretations are packaged and presented as the complete and absolute truth. The authority and credibility afforded to traditional media outlets further amplify this false perception, leading the public to accept their narrative without question.

Disturbingly, as evidenced by the record-setting downturns with associated layoffs and financial struggles within traditional media, news outlets are under significant pressure to prioritize profitability over journalistic integrity.

To put this into perspective, let’s consider the industry average Cost Per Thousand Impressions (CPM), estimated at $6 from Semrush’s study. For digital platforms — covering anything from home, sports, lifestyle, tech, news, or pets — breaking even requires an immense volume of views — roughly 100,000 to 150,000 views per story if you consider overheads and salaries.

Out of options and almost out of money, companies may decide to spice things up with attention-grabbing headlines and controversial hot takes. But these modifications have insidious effects, subtly influencing readers’ perceptions and pre-conditioning them before encountering the facts.

Even worse, there is the potential for news media outlets to be compromised through political affiliations — which poses a severe threat to the authenticity of information presented to the public. In such a situation, the notion of an “official narrative” propagated by traditional media becomes increasingly concerning. Are we hearing the truth? Or just a version tailored to fit a particular agenda, undermining the very foundation of journalism as a watchdog of democracy.

This rot of half-truths and misleading takes spreads beyond news media across the entire industry — sometimes to larger extents.

Social Media is on a Different Trend

Interestingly, not all media companies are struggling. Looking at ad-supported companies, a prime example of this exemption is Facebook, which, as reported by Statista, commanded an industry-leading Annual Revenue Per User (ARPU) of about $68 in the US and Canada. This is double the amount from 2018 and a stark contrast to the ARPU of the leading digital publisher New York Times (~$9).

The continual growth and profitability of social media advertising comes at a price. While traditional media companies rely on established credibility and editorial standards to attract audiences, social media platforms often prioritize virality and trends. Controversy sells, yes. But where do we draw the line?

Moreover, the algorithm-driven nature of social media feeds unavoidably creates echo chambers and filter bubbles, limiting adequate exposure to diverse viewpoints and contributing to misinformation. That’s not to mention numerous user privacy violations and questionable ethical conduct in trying to keep users’ attention for as long as possible.

The Case for Decentralization in Media

One thing is clear: every viewpoint carries a degree of bias. Despite best efforts, the news from traditional media reflects their ideas and stance, or in more sinister situations, a misdirection from the facts as it may be. In a world where information is increasingly weaponized, relying solely on centralized sources for the truth becomes an increasingly dubious proposition. If the established news outlets cannot be trusted, and individual creators and reporters hold subjective opinions, how do we arrive at the truth? Surely, we need something to believe, right?

All things considered, there is only one way to obtain the truth: exploring different points of view, looking at data to back it, and drawing an inference. This principle underscores the importance of decentralization in disseminating information — a concept once dismissed as fringe or conspiratorial is now emerging as a standard of transparency and accountability.

With its hierarchical structures and control mechanisms, the traditional model has to give way to a more democratized approach. Decentralized platforms and emerging technologies democratize information access, empowering individuals to actively participate in the news collection, validation, distribution, and analysis cycle. As David Friedberg of the All-In Podcast pointed out, the industry is moving from Centralized sourcing and Centralized Analysis to Decentralized Sourcing and Distribution.

Web3 In A Nutshell

Web3 is the next evolutionary stage of the internet, emphasizing decentralization, transparency, and self-custody. At its core, Web3 seeks to democratize access to information, data ownership, and digital interactions, challenging the dominance of centralized platforms and institutions. If you’re conversant, here are some of the elementary aspects of Web3 (or terms you might come across in this article):

• Blockchain Technology: A distributed and tamper-proof digital ledger system that records transactions securely and transparently across a network of computers. The blockchain is the very foundation of Web3 and its many applications.
• Decentralization: The distribution of power and control away from a single authority, instead relying on a network of participants. It’s also the core principle behind dApps (Decentralized Applications), DeFi (Decentralized Finance), DAOs (Decentralized Autonomous Organizations), and countless others.
• Smart Contracts: Trustless, self-executing contracts stored on a blockchain. These contracts automatically enforce and execute the terms of the agreement when predefined conditions are met without the need for intermediaries.
• Cryptocurrency: A digital or virtual currency — commonly known as a token — cryptographically encoded on a blockchain and operates independently of a central bank or government. Like regular currency, it’s a means to store and exchange value.
• Staking: The process of locking up cryptocurrency tokens in a network’s protocol to contribute to its security and functionality. In return, stakers can earn rewards in the form of additional tokens.
• Airdrops: A marketing and community-building tactic where individuals or projects distribute cryptocurrency tokens or NFTs to wallet addresses. Airdrops can be used to reward early adopters, incentivize community participation, or increase awareness of a project.

Why Web3 is a Big Deal for Today’s Media

Web3 significantly changes how content is published and shared, offering creators more say in what they make and how they put it in front of their audience, and its underpinning blockchain technology is immutable, transparent, and very secure. These features serve as a bulwark against misinformation and censorship, providing content protection and distribution to creators while empowering media consumers to verify the credibility and provenance of content they come across openly.

Decentralization will empower individuals to publish, share, and monetize their content beyond their borders without needing third-party centralized platforms. The best part is we’re only scratching the surface of its applications. Here are a few reasons why you should be excited about Web3 in media:

Decentralized Content Distribution and Discovery

Currently worth about $250 billion, Goldman Sachs predicts the creator economy will double over the next five years — $480 billion by 2027. An industry this diverse and expansive cannot possibly thrive under the narrow interests of a few large corporations. Especially not when its growth, potential, and success is built on the backs of independent creators, their audiences, and the communities formed around interest groups. These stakeholders should be in control, not trillion-dollar companies demanding a 30% cut on every app sold!

Decentralized platforms democratize access to content, enabling creators to be discovered based on the merit and interest of their work. With Web3, creators would no longer be at the mercy of centralized algorithms, which often prioritize sensationalism and controversy over quality and authenticity. Accordingly, users can explore diverse content, discover new creators, and support their favorite voices based on genuine interest and engagement.

By leveling the playing ground, Web3 also facilitates the rise of diverse creator voices and perspectives, challenging the homogeneity often associated with centralized media. Censorship would be a thing of the past, instead providing opportunities and a platform for underrepresented or marginalized communities to be heard and valued. From anywhere in the world, individuals can publish, share, and consume content freely without being subject to the whims of arbitrary censorship or gatekeeping platforms.

Projects like Theta Network demonstrate the potential of this approach. Its blockchain-based infrastructure incentivizes users to share their bandwidth and storage, forming a distributed content delivery network and bypassing the need for large, centralized platforms like YouTube. Their token, TFUEL, drives the transactions and rewards within the ecosystem.

Ownership and Control

Under traditional models, creators have to surrender control of their work to media companies in exchange for exposure. This lack of ownership is a growing concern, as many creators feel they have little control over content on traditional platforms. Centralized media platforms wield too much power over creators, as stringent editorial guidelines and algorithms to determine what content to put in front of users only stifle growth and limit creator autonomy.

Web3 liberates creators from the shackles of these centralized intermediaries, offering them unprecedented autonomy over their content. Anyone can create — on their terms — and store their creations in perpetuity, accessible wherever and whenever. The growth of the NFT (projected to surpass $2 billion this year) highlights the demand for true digital ownership. Everything created on the blockchain is timestamped and immediately established as a verifiable record of ownership that is never lost or deleted.

Monetization and Incentive Mechanisms

As cited by DeFiLlama, the Total Value Locked (TVL) in DeFi applications has been growing steadily since last year, with an unprecedented 108.3% rise between October 2023 and February 2024, with over $42 billion added in assets over the last few months. As many crypto news analysts agree, there is plenty to be excited about within the space as Decentralized finance applications continue to “prove the doubters wrong.”

A thriving DeFi landscape directly benefits creators looking to adopt token-based monetization and rewards models as people get more invested in the space. And there is indeed reason to be invested, with no shortage in innovation and application areas.

Take Access Protocol, with a unique take on fee generation. Within their ecosystem, creators set up pools where interested users can lock their ACS (the platform’s native token) to gain access to the creator’s content or services. The amount and duration of content access a user gets is proportional to the amount of ACS they stake and how long they choose to stake it. Creators also have the flexibility to set reward structures and offer specific incentives — including airdrops or exclusive benefits — to encourage staking in their pools.

Micropayments and Microcontent

Microcontent caters to the preferences of today’s fast-paced digital audience, offering bite-sized, easily digestible content that can be consumed on the go, while micropayments enable creators to monetize their content on a granular level, charging users small amounts on a per-view or per-interaction basis. It could be for a shot-form post, exhausting article, video reel, or meme.

However, traditional payment systems aren’t well-suited for the small, frequent transactions that micropayments would require. It gets even worse with cross-border payments, where fees can become prohibitive. This is where Layer 2 solutions like the Lightning Network (built on top of Bitcoin) come into play. They are designed for near-instant, low-cost transactions, making micropayments a practical reality for Web3 content. In the case of the Lightning Network, each Bitcoin is split into 100,000,000 sub-units called a satoshi.

Microcontent paired with the micropayments model could enhance accessibility and affordability in production and consumption, lowering the barrier to entry for creators and consumers alike. Creators can monetize their content at price points that are more affordable for consumers, while consumers have the flexibility to pay only for the content they consume.

Community Governance and Engagement

Decentralized governance systems — mainly DAOs — promote transparency and accountability within communities by providing open access to decision-making processes and financial records. A Decentralized Autonomous Organization (DAO) is Web3’s version of a C Corp; where an unlimited number of board members can sit at the table and make decisions. You heard that right; every single vote counts in a DAO. The majority will get their way, but minorities will also get their say.

Typically, community members can purchase or get rewards in governance tokens for contributing to the community’s development by moderating content, making financial contributions, or participating in platform discussions. These tokens grant holders voting rights in governance decisions, allowing them to shape the direction of the platform. A novel concept for most people, but DAO’s already have massive traction. Earlier this year, DeepDAO reported a 40x growth in participating DAO treasuries from $400 million to $16 billion in under a year.

Challenges and Considerations

While Web3 holds incredible promise, there are some fundamental challenges to overcome before its full potential can be realized. Below are some key challenges and considerations it currently faces:

Regulatory Uncertainty: One of the foremost challenges in the Web3 scene as policymakers grapple with rapid technological advancements. Data privacy, intellectual property rights, and consumer protection present complex legal challenges that require careful consideration and navigation. Creators and platforms operating within the Web3 space must stay vigilant and proactive in ensuring compliance with emerging regulations to mitigate legal risk.

Scalability: While decentralization offers benefits, current blockchain infrastructure sometimes struggles with high demand, leading to network congestion and high transaction fees. Some point to Layer 2 solutions, which build upon existing blockchains for faster processing speeds and lower costs, as a crucial part of the answer. However, others believe scaling the core blockchain technology is necessary for widespread adoption.

Education and Awareness: To the uninitiated, Web3 sounds very complex. With concepts like blockchain, smart contracts, and decentralized protocols, the next evolution of the internet might seem daunting to newcomers. As a result, it is necessary to demystify the technologies behind it and empower users to approach its applications more confidently. This is where Web3 pioneers and projects are essential in promoting widespread adoption.

The Future of Web3 In Media

Web3 in media holds many exciting possibilities — from integrating AI and machine learning to cross-chain interoperability. These trends are set to enhance transparency, inclusivity, and innovation in today’s media. With Web 3, creators are given the tools and opportunities to experiment, iterate, and disrupt traditional media paradigms. This is why, within the next few years, we will see new content formats, audience-driven monetization models, and entirely reimagined community interaction experiences.

A Web3-powered media industry embodies the promise of greater transparency, accountability, and democratization in media production and consumption — a vision certainly worth pursuing. However, realizing these ideals demands more than aspiration; it necessitates ongoing collaboration, innovation, and a steadfast commitment from all stakeholders to shape this evolution.