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Can Facebook’s $1 Billion Spend on Content Keep Creators Happy?

User content is very valuable in the media business — so much so that companies are paying people to create more of it. Tech companies, in particular, are investing more dollars into content creation, from livestreaming video and audio to adding short-form video features in hopes that they go viral. Facebook in July said it…

User content is very valuable in the media business — so much so that companies are paying people to create more of it.

Tech companies, in particular, are investing more dollars into content creation, from livestreaming video and audio to adding short-form video features in hopes that they go viral. Facebook in July said it would shell out $1 billion to content creators for bonus programs and incentives that meet the social media giant’s social metrics. 

By the end of 2022, Facebook will invest more than $1 billion into programs aimed at getting creators to monetize on Facebook and Instagram. Some of the funds will go toward its recently released Live Audio Rooms and newsletter tool Bulletin, while some money is part of affiliate reward programs for creators who meet eligibility and metric requirements. It includes in-stream ad bonuses in the next four months to select creators and a Stars program for some gaming creators who can get a monthly bonus for reaching specific metrics over the next three months. The programs on Instagram are invite-only to include bonuses for using IGTV ads and badges in Live and Reels features.

The move follows TikTok’s development of a Creator Fund last year, which will divert more than $2 billion to content creators over the next three years. In May, YouTube said it would put $100 million into its Shorts feature for short-form videos. Alphabet, which owns YouTube, said this is in addition to some $30 billion the company has paid out to creators over the last three years.

Facebook’s plans, however, were short on details into exactly how it would spend $1 billion to boost content creation for its social media apps, which includes WhatsApp, Instagram and Facebook. And many questions remain as to whether the move can ultimately keep creators — from gamers to small businesses — on its platforms to compete with fast-growing newcomers such as TikTok and Clubhouse.

“It’s a drop in the bucket for them,” said Greg Fell, CEO of social media app Display, “and they really put some very strict things in how people can monetize that.”

Fell is referring to the requirement that Facebook places on its invite-only bonus programs. In order to get a payout through video ads, for instance, creators need to have at least 10,000 followers and 600,000 total minutes of view time in the last 60 days. A Facebook spokesperson said there are no details available yet on the programs supporting smaller creators or those just starting out. “Ultimately, we want to help as many creators as possible. We will design bonus programs with aspiring and emerging creators in mind, so no matter where they are in their career, there will be bonuses that are achievable,” the spokesperson said.

Launched in May, Fell’s Connecticut-based company is offering creators a 50% revenue share on ad-supported content — a model that he said is not only profitable, but more closely aligned to the entertainment industry that compensates artists and creators for their work. Display ads pays for all types of content, and there is no criteria to have a certain number of followers. “Everyone monetizes,” he said.

“Facebook’s program is designed for entertainment companies that have long-form content, and can edit their content, not for the 99.99 percent of Facebook, which is why this is such a small number in relation to their revenues,” Fell said in an interview. “The short answer is ‘spin.’ They don’t want to really share their revenues with creators. They will share with large media conglomerates because they have to in order to compete.”

Display

In the last two years, singer Bridget Kelly found herself posting less on some of the larger platforms, including Facebook and Instagram, when she said they started behaving more like corporations. Whether it’s changing their algorithms or cutting out artists to go directly to advertisers and sponsors, platforms like Facebook and Instagram don’t actually work with creators to protect and monetize their content, she added.

“They have started to operate like middlemen that are not really conducive to content creators getting their content out there, in order to promote effectively,” Kelly told TheWrap. “A lot of these apps function like big banks and big corporations now, instead of being on the side of advocacy for content creators. A lot of these larger companies are operating like bullies, just trying to make as much money for themselves without honoring the process and effort that comes with all of this content.”

On Display, Kelly said she can work directly with sponsors and partners to manage her business. On YouTube, where she has 41,300 subscribers, it’s hard to monetize because of the way the platform makes money off of advertising and partnerships. There are side deals struck between the platforms and companies that cut out the creators, while money was being made off their content. Kelly said artists should look for a platform that allows them to directly manage their audience and the monetization.

“(YouTube does) Google ads with a totally separate contract that has nothing to do with anything that we see as revenue on our pages,” Kelly said. “There’s a lot of regurgitation and repurposing happening without our permission as creators and also without being able to benefit from it. … I pulled back pretty drastically from Facebook. You’re a little fish in a big pond; it’s not about the quality of the content, not about the creator. It’s about whoever is going to throw the most money at Facebook.”

Display recently reached 5 million downloads, and Fell said more celebrities are signing up to monetize the content they’re already creating, with music content performing well so far. It also offers a 50-50 split with creators on revenue generated through its other features including e-commerce.“It proves the premise that we’re on the right track that creators need to be compensated,” Fell said. “We see this move by Facebook, frankly, as a defensive one. They’re on track to make almost $100 billion this year. They’re not going to want to give that up to the creators unless they have to.”

Just in terms of video, Facebook pays 55% of profit from video ads to creators and keeps 45%, but the company did not provide viewership or engagement data for its platforms. Facebook’s current bonus program is invite-only, and it is unclear how much businesses and creators have actually made by putting their content on Facebook’s platforms.

What is known, however, is that Facebook, much like the rest of Big Tech, saw a blowout quarter this year thanks to the current digital ad boom. In Q2, Facebook’s ad revenue ($28.6 billion) grew by 55%, and this year it joined Apple, Amazon, Microsoft and Alphabet reaching a $1 trillion valuation.

Yet, when it comes to video engagement on social media, Facebook may still have a ways to go before catching up to YouTube’s growth. A survey by Pew Research Center this year found that eight in 10, or 81%, of Americans say they use YouTube, while usage of Facebook is 69%. There are more than 2 billion users on YouTube, generating 1 billion hours of videos watched daily. Facebook remains one of the largest social networks with 2.9 billion users.

In recent months, social companies began pivoting to longer videos in the aim to attract more engagement. TikTok bumped up its 60-second videos to up to three minutes, while Instagram said it would introduce full-screen features and video recommendations to the app. There are also efforts underway to integrate more e-commerce into their social content.

Another reason why social media companies are vying for creators? Influencer marketing. eMarketer estimated influencer marketing spending to grow more than 30% this year to hit $3 billion and exceed $4 billion next year. But eventually, people may experience “influencer fatigue,” growing weary of influencer ads and promoted products — and instead prefer more user-generated content, said Adam Dornbuschicon, CEO and founder of Oakland-based Entribe. That’s where investing money into creators could help.

“It’s great for the creator community to spur more authentic content,” said Dornbuschicon. “But I also think (Facebook is) doing it out of a need. They’re getting beaten up by TikTok, they’re losing some privacy rules through Apple. So they’re getting hit from both sides there, and people are getting influencer fatigue.”

On EnTribe, a platform for managing creators, creators are rewarded based on the quality of content rather than the amount of followers. Before EnTribe, Dornbuschicon was at GoPro building its community content and rewards program. They found a 30-second video of a dad, who did not have a huge following, throwing his baby into the air. GoPro ended up making that into a Super Bowl commercial, and that creator made some $100,000 out of it.

Now, people are embracing the more authentic, relevant kind of content created by users. It no longer has to be highly produced and professional in order to get traction, said Dornbuschicon. Because of this, social media networks will continue to compete for creators, both small and large, in order to capture engagement and look especially for those opportunities to go viral.

“There’s a lot more competition out there for a lot of these smaller platforms but if you’ve got something that can go viral like TikTok, it can definitely come after Instagram and Facebook. And they’re not going away anytime soon,” Dornbuschicon said.

With so many options today, most creators will post across all the platforms to maximize their reach and profits, but some creators are realizing that apps like Facebook and Instagram do not have their best interests in mind — despite the cash they’re shelling out. But Dornbuschicon and Fell both agree the industry will see more investments for content from big companies like Facebook.

“Entertainment is what these platforms are now becoming, but they’re going to invest more kicking and screaming,” Fell said. “Certainly Facebook is going to have to invest more than the measly amount they came up with if they’re going to compete against the share of your eyeballs with people like Netflix. They’re going to have to up their game, but they’re going to do it slowly.”
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Market Veteran Raoul Pal Predicts Ethereum Comeback Against Bitcoin with Donald Trump’s Victory

Crypto market expert Raoul Pal believes Trump could create a more favorable regulatory environment, which might help Ethereum outperform Bitcoin. Pal compares Ethereum to Microsoft in its early days, saying its reliability and widespread adoption make it a top choice for traditional finance institutions. Pal acknowledges that while Ethereum has strengths…

Crypto market expert Raoul Pal believes Trump could create a more favorable regulatory environment, which might help Ethereum outperform Bitcoin.
Pal compares Ethereum to Microsoft in its early days, saying its reliability and widespread adoption make it a top choice for traditional finance institutions.
Pal acknowledges that while Ethereum has strengths…
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Microsoft’s decision on Bitcoin could trigger shareholder lawsuit

Key Takeaways Microsoft shareholders will vote in December on a proposal driven by the NCPPR regarding Bitcoin investment. NCPPR warns that Microsoft’s decision not to invest in Bitcoin could lead to shareholder litigation if Bitcoin’s value rises. Share this article Microsoft shareholders will vote in December on whether the company should assess investing in Bitcoin

Key Takeaways

  • Microsoft shareholders will vote in December on a proposal driven by the NCPPR regarding Bitcoin investment.
  • NCPPR warns that Microsoft’s decision not to invest in Bitcoin could lead to shareholder litigation if Bitcoin’s value rises.

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Microsoft shareholders will vote in December on whether the company should assess investing in Bitcoin, a proposal driven by the National Center for Public Policy Research (NCPPR).

According to a report by Cointelegraph, the NCPPR warns that Microsoft could face shareholder litigation if it decides against Bitcoin investment and the digital asset’s value subsequently rises.

“If Microsoft publicly decides it’s not in shareholders’ best interest to buy Bitcoin, and then Bitcoin’s value rises, shareholders may have grounds to sue,” Ethan Peck, deputy director of NCPPR’s Free Enterprise Project, told Cointelegraph.

Microsoft’s board has recommended shareholders vote against the proposal, stating they already evaluate a “wide range of investable assets,” including Bitcoin.

In its proposal to Microsoft, the NCPPR highlighted MicroStrategy’s Bitcoin investment strategy, noting that it has outperformed Microsoft by over 300% this year despite conducting a fraction of Microsoft’s business volume.

The research center also highlighted increasing institutional adoption through spot Bitcoin ETFs.

In October alone, BlackRock’s Bitcoin ETF reportedly acquired $4.6 billion in Bitcoin, bringing the ETF’s total valuation to $31 billion, according to data from Farside Investors and Arkham.

Collectively, Bitcoin ETFs now hold over $72 billion in market cap, underscoring the growing interest from institutions.

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With Decentralized AI and Tokenized Ownership, We Can Fight ‘The Six’

Opinion Share Share this article Copy link X icon X (Twitter) LinkedIn Facebook Email With Decentralized AI and Tokenized Ownership, We Can Fight ‘The Six’ Orthodox venture capital will never provide the resources for decentralized AI to take on Microsoft, Alphabet, Apple, et al. The only way is to supplant equity financing with user-owned, token-based

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With Decentralized AI and Tokenized Ownership, We Can Fight ‘The Six’

Orthodox venture capital will never provide the resources for decentralized AI to take on Microsoft, Alphabet, Apple, et al. The only way is to supplant equity financing with user-owned, token-based systems, says Michael J. Casey, Chairman of The Decentralized AI Society.

By Michael J. Casey|Edited by Benjamin Schiller
Updated Nov 1, 2024, 7:20 p.m. Published Nov 1, 2024, 7:16 p.m.
(Pixabay)

The past two days’ share price moves for the six most heavily capitalized companies in the U.S. tell you all you need to know about why we must urgently decentralize the artificial intelligence economy.

The first headlines were that the third-quarter profits and revenue from Microsoft, Alphabet, Apple, Meta and Amazon all beat or met expectations. Yet, with the exception of Amazon’s on Friday, Big Tech’s shares all sold off in response to their earnings announcements, dragging down with them chip-maker Nvidia, the sixth member of the group, whose quarterly reporting is scheduled a month later.

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What spooked investors were some daunting capital expenditure numbers on AI computing power and model development. Alphabet, for one, said it did $13 billion in capex last quarter and expects to do the same in this one while Meta upped its full-year projected spending to $38-40 billion. The giants are in a spending war as each tries to outrace the others toward AI supremacy. Each one of them stands to lose profit margins if it gets out of control.

Let’s be clear: between them, The Six are booking $1.8 trillion in annual revenues, a number that would put their combined inflows in 10th place of global country rankings if we viewed them as a proxy for national GDP – just behind the gross output of Brazil’s 220 million people. Meanwhile, The Six have a combined market capitalization of $15 trillion, capturing an astounding one third of the entire S&P 500 index. Despite – or perhaps because of – this unprecedented scorecard, these companies are relentlessly competing for world domination. Doing what great American companies have always done, they’re unleashing a competitive instinct that, in a normal capitalist economy of diversified goods and services, is the core driver of technological progress.

So, don’t worry about The Six. Worry about us. Because our problem amid the dizzying advance of AI is definitely not one of a shortfall in technological progress. It’s that this particular form of technological progress comes with risks to human autonomy and safety. And to mitigate them, the question of who controls AI’s development and whether their incentives are aligned with the broadest base of humanity is fundamental.

Just as was the case for Alphabet’s Google, Meta’s Facebook and Amazon’s marketplace, the development of these six companies’ large language models (LLMs) and other AI machinery is occurring within closed, black-box systems.They’ve ingested the troves of data we all unwittingly poured into internet sites, and have built highly complex codebases into which no one has visibility. Between them, they dominate all layers of the AI stack: the storage (Amazon Web Services), the chips for computation (Nvidia), the AI models (Microsoft, with its investment in Open AI), the data (Alphabet and Meta) and the devices we use to interact with AI services (Apple). They might be competing with each other, but they form a vertically diversified oligopoly. Or rather, given the undeniable power that their technology can wield over people’s lives, they’re an oligarchy. Indeed, the secrecy around the means by which they exercise that power is characteristic of most oligarchical dictatorships.

Toward the latter phase of the Web2 era, people eventually came to understand Bruce Schneier’s memorable observation that we are not the internet platforms’ customers; we are their products. With that awareness, we’re now also finally opening our eyes to how these companies have long been incentivized to modify people’s behavior in unhealthy ways to maximize shareholder returns. It is no longer controversial to talk of the psychological harm done by the algorithms of Facebook, YouTube, Tik Tok and their ilk, which were blatantly designed to exploit dopamine releases to encourage continued, addictive engagement.

When Frank McCourt and I published Our Biggest Fight in March 2024, we were overwhelmed by parents’ horror stories of the harm social media had done to their kids. And then a Harris Poll coordinated by NYU Professor Johathan Haidt found that young people are just as concerned: nearly half of Gen Z wishes that TikTok and X (Twitter) never existed, even as 83% of the same cohort said they spend four hours a day or more on social media.

So, if we now know of the harms, why on earth would we extend the same oligopolistic control structure into the AI era? AI will put the Web2 oligopoly on steroids.

This is why I believe the creation of distributed, collectively owned open-source AI is a vitally important use case for Web3 and blockchain technology. It’s the only way to avoid the problem of misaligned incentives.

Sure, there are technical challenges, such as the latency that, for now, makes distributed machine learning inefficient, the capacity limits of on-chain data, or the privacy risks inherent to public blockchains. But innovators are already hard at work on outside-the-box solutions to these problems, motivated by the huge economic and reputational payoff promised by overcoming them. And when they do, the inherent information advantages enjoyed by open systems over closed systems will give decentralized AI a fighting chance. Achieve that, and “DeAI” will represent not only the right moral path but also the economic winner.

Here’s the rub: time is not on our side. And the fight is heavily lopsided. As cited above, The Six have an unprecedented $15 trillion war chest. In the 2000s, Facebook and Google learned that their high-value share prices gave them a currency with which to relentlessly acquire startups that could either enhance or threaten their dominance. Now, The Six have even greater capacity to buy up and integrate whatever breakthroughs in AI are coming, be it in independent AI agents or more efficient systems of compute. Their financial clout means that the most important innovations, those that offer the best hope for a more decentralized AI economy, are at risk of being subsumed into their centralized system. Remember, they’re competing with each other and are incentivized to do whatever it takes to win.

To fight their centralized approach, we must flip the paradigm. Orthodox venture capital will never provide anywhere near enough resources for decentralized competitors to take on the big guys. The only way is to supplant equity financing models with full user-owned, token-based systems. In the future, when your home devices provide the compute and deliver your privacy-preserved data into open-source models that are proven to act in your interests, you will earn tokens for that work. And, with that currency, you will pay for all the cool services delivered by your personal AI agent. It’s a new, distributed financing and payments system for a new, decentralized AI economy. It is the only way.

Yet, to succeed, the crypto and blockchain industry has to reimagine itself. If startup founders see DeAI merely as a new source of get-rich-quick token-pump opportunities, or if the leaders of the Layer 1 platforms now turning to the field are fixated more on applications that temporarily drive up the dollar value of their tribe’s cryptocurrency rather than on those that address real, economy-wide problems, this movement will fail. To win this fight, this industry must become more interoperable. It must become more collaborative.

This is not to say we should squash the competitive instincts that are vital to innovation. But it is to acknowledge a need for better cross-industry organization. Through collaborative bodies such as the new Decentralized AI Society, different stakeholders can work with each other to advance common interests around standards, reference architectures, taxonomies, policy objectives and open-source, cross-chain protocols that everyone can use regardless of the token they hold. We’re not building to pump our bags or take our token “to the moon.” We’re building to create a new decentralized AI economy for the benefit of all humanity.

Come join the fight.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.

Note: The views expressed in this column are those of the author and do not necessarily reflect those of CoinDesk, Inc. or its owners and affiliates.

Opinion
Michael J. Casey

Michael J. Casey is Chairman of The Decentralized AI Society, former Chief Content Officer at CoinDesk and co-author of Our Biggest Fight: Reclaiming Liberty, Humanity, and Dignity in the Digital Age. Previously, Casey was the CEO of Streambed Media, a company he cofounded to develop provenance data for digital content. He was also a senior advisor at MIT Media Labs’s Digital Currency Initiative and a senior lecturer at MIT Sloan School of Management. Prior to joining MIT, Casey spent 18 years at The Wall Street Journal, where his last position was as a senior columnist covering global economic affairs.

Casey has authored five books, including “The Age of Cryptocurrency: How Bitcoin and Digital Money are Challenging the Global Economic Order” and “The Truth Machine: The Blockchain and the Future of Everything,” both co-authored with Paul Vigna.

Upon joining CoinDesk full time, Casey resigned from a variety of paid advisory positions. He maintains unpaid posts as an advisor to not-for-profit organizations, including MIT Media Lab’s Digital Currency Initiative and The Deep Trust Alliance. He is a shareholder and non-executive chairman of Streambed Media.

Casey owns bitcoin.

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Michael J. Casey

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Metaplanet Exceeds 1,000 Bitcoin Holdings After Latest Purchase

TLDR Metaplanet purchased 156 additional BTC, bringing total holdings above 1,000 BTC Company stock rose 6.06% following the announcement Metaplanet achieved 116% Bitcoin yield in October 2023 Company raised 10 billion Yen through Stock Acquisition Rights Microsoft considering Bitcoin investment, subject to shareholder approval Metaplanet, Asia’s largest corporate Bitcoin holder…

TLDR Metaplanet purchased 156 additional BTC, bringing total holdings above 1,000 BTC Company stock rose 6.06% following the announcement Metaplanet achieved 116% Bitcoin yield in October 2023 Company raised 10 billion Yen through Stock Acquisition Rights Microsoft considering Bitcoin investment, subject to shareholder approval Metaplanet, Asia’s largest corporate Bitcoin holder…
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