In this post, I'll analyze the success of incumbent social media to explore the viability of decentralized social networks, and propose a growth framework for Decentralized social media (DeSocial) startups to capture the market in this space.
Social media has revolutionized the way we connect and interact with others. However, these platforms have also been criticized for their centralized nature, which gives companies control over user data and the ability to censor content. Decentralized social networks, on the other hand, have been talked about as the new approach that promises greater user control, privacy, and security.
Decentralized social networks are built on blockchain technology, which allows for the creation of decentralized applications that operate independently of a central authority. Instead of relying on a centralized server to store data, decentralized social networks use a distributed network of nodes, where each node stores a copy of the network's data. This makes it much harder for any one entity to control or censor the network.
In theory, DeSocial offers improved privacy and security, as users' data is not stored on a central server that can be hacked or breached. Instead, the network is secured by a distributed network of nodes that work together to validate transactions and protect against fraud. This means that users can have greater confidence in the security of their personal data and the privacy of their communications.
But, are those the features that users care about? Could these unique propositions help decentralized networks achieve mass adoption and shake up the dominance of Facebook/Instagram, Linkedin, TikTok and Twitter?
Historically, the success of social networks come down to ease of use and unique features or functionalities that differentiate them from other platforms. In a crowded market, only a handful can gain a substantial user base to survive.
For Facebook, the social network tapped into people’s drive to connect by building out small and active local communities. Facebook was initially limited to one university, and only after it saturated one community did it begin spreading to others. Its active users are driven by reputation and attention, so it was crucial to focus on local network effects in the beginning where the reputation of individuals matters the most. Eventually, these initial local communities spread ties to other communities in other places, and connections between communities naturally grew, resulting in Facebook’s global success.
On the other hand, Instagram recognizes that visual, fast content is what users are looking for, offering seamless photos and videos sharing without ever being overwhelming. The instagram feed is an infinite stream of beautiful, visual content personalized to each user.
Similarly, TikTok owes its phenomenal success to a host of wise choices: easy-to-use video creation tools that blurred the line between creator and consumer far more than Vine had ever managed, and a vast library of licensed music allowed teens to soundtrack their clips without fear of copyright strikes. The For You page is the default screen new users see when opening the app where you’ll find a never-ending stream of short clips culled from what’s popular across the service and overtime personalized to your liking.
Ultimately, Facebook beat Myspace, Instagram beat Flickr, and TikTok beat Vine out of the market. Their success all share the same theme: they focus on user experience and the human’s need to connect. Facebook allowed people to reveal their true identity on the site and connect with family and friends around the world, emphasizing ties in real social circles. MySpace, on the other hand, let users use nicknames, focused on connecting users through music and didn’t prioritize usability. Similarly, Instagram outperformed Flickr because of the ease of use, and the focus on people’s moments rather than the photographs. Short-form videos were introduced by Vine, but the platform, unlike Tiktok, failed to adapt to its power users - content creators - who demanded longer video, easier editing and better monetization. Without content creators creating quality videos, the platform became stale and discontinued. In contrast, TikTok’s creators could monetize their live streams through Live Gifting, direct sponsorship and TikTok’s own creators’ fund. In return, their creators continue to create content and drive more traffic and revenue to the app.
In order to go mainstream, decentralized social media must address actual human needs, similar to the way incumbent social media companies like Facebook, Youtube, TikTok and Twitter do. Most people join social networks because of their friends on the platform, rather than ideological reasons like decentralization. Therefore, data control and uncensorship should not be the primary selling points. Generally, people prioritize convenience over privacy, and free speech and account ownership become important only after one is de-platformed. Furthermore, people tend to resist switching to a new social network unless there is a clear advantage. Decentralized social networks face an even higher barrier due to their unfamiliarity and cumbersome user experience, not to mention the negative reputation associated with cryptocurrency scams. Mere replication of current social media functionalities and making them decentralized is insufficient to replace current social media giants. Decentralized social networks need to meet current user needs and offer properties that current social media cannot, thus becoming 10x better.
Among the promises offered by decentralized social media, I believe that content monetization is the factor that is most likely to drive success. TikTok is a prime example of a social media platform that has successfully enabled content creators to monetize their content, while Vine failed to do so, leading to its eventual shutdown. Blockchain technology has the potential to take content monetization even further.
While content monetization is possible in both Web2 and Web3, the mechanisms for monetization differ between the two. In Web2 social networks like Facebook and Instagram, content creators can earn money through advertising revenue sharing, sponsored content, and brand deals. However, the social network itself typically controls the monetization and takes a significant cut of the earnings. In contrast, Web3 social networks utilize blockchain technology to enable content creators to monetize their content in a more decentralized way, earning cryptocurrency or tokens directly from their audience through mechanisms like tipping or direct payment for access to exclusive content.
More effective content monetization mechanism means more content creators generating great content that can attract large audiences, making it the most likely key feature for mass adoption of decentralized social media. However, for this to work, there needs to be a carefully designed crypto economics system that discourages low-quality content, which can drive users away, as seen in the case of decentralized social networks Minds and Narrative.
Additionally, DeSocial can claim their dominance by offering various features not found in Web2 social media. By using cutting-edge technologies, DeSocial can differentiate themselves through features such as immersive experience and on-chain activity displays. The integration of technologies such as blockchain, AI, AR, VR, XR, 5G, and edge computing can enable this next stage of social media. It can be very exciting to interact with immersive experiences that stimulate multiple senses, allowing people to meet up with friends and loved ones in any imaginable environment, or see one’s on-chain activities brought to life.
Another significant advantage of decentralized social networks is self-sovereign identity, which empowers users with complete control over their personal data. By leveraging blockchain technology, users can create encrypted credentials stored on the blockchain, allowing them to verify their identity, authenticate their actions, and control who has access to their personal data. Having verifiable identity is crucial in addressing issues such as trust, spam, and fraud that exist when moving from offline to online platforms.
However, self-sovereign identity alone may not be enough to make decentralized networks attractive to users. Instead, I believe it is the combination of self-sovereign identity with protocol-based systems that enable the creation of different applications on the same protocol, enabling data portability, interoperability, and identity fluidity across different platforms. Currently, incumbent social media platforms such as Instagram, Twitter, YouTube, and LinkedIn are completely fragmented, lacking the ability to share or transfer content, contacts, or audiences across platforms.
For DeSocial platforms to achieve expansion, a well-thought-out growth strategy is essential. Here, I outline a sample approach that caters to various user personas, their unique needs, and how to effectively communicate with each group. Knowing whom and when to target at different stages of adoption will be crucial.
1. Crypto natives
Crypto natives are early adopters and are more tolerant of experimental platforms, making them ideal to be the first audience of the platform, allowing testing the product without immediate churn.
How to reach them:
Foster an active and vibrant DeSocial community by providing early access to features, token-based rewards and governance mechanisms.
Engage in partnerships with existing DAOs, Web3 games, DeFi protocols, and Web3 event organizers. These partnerships can provide a gateway to crypto native communities. By offering their users and subscribers a platform tailored to their needs, DeSocial can gain a foothold in this space.
To increase user retention, target crypto natives in clusters. Users are more likely to stay if their entire community is on the platform. Thus, focus your energy on attracting entire communities or groups from Web3 events and organizations instead of individuals.
Examine the challenges that crypto natives encounter on platforms like Twitter, Discord, and Telegram. Identify their unmet needs and the factors hindering users from transitioning to a Web3-native platform, then build your social platform to address these pain points.
2. Content creators
Content creators should be targeted when technologies can abstract away the complex crypto-native features. However, many content creators might be drawn by the potential to make more money on the platform. Content creators will be a major catalyst for wider mainstream adoption.
How to reach them:
Offer innovative monetization options like NFTs, content royalties, and direct peer-to-peer payments, coupled with better content promotion to attract creators from incumbent platforms.
Create a series of blog posts and social media content that guides content creators on how to maximize their earnings and consolidate their fan base across various platforms.
Implement a referral program that encourages content creators to bring their fan base onto the platform. Offer incentives that align with their interests, such as increased visibility and earnings.
3. Mainstream users
Mainstream users should be targeted when technologies can abstract away all crypto-native features. Decentralization and content ownership are nothing but buzzwords to this audience. These users might not prioritize content ownership or interoperability, but can be enticed through social connections and captivating content.
How to reach them:
Develop a content strategy that incorporates compelling storytelling elements, such as one that revolves around the characters featured in the platform's NFTs or sticker packs. A compelling narrative that resonates with users is what motivates them to desire ownership of these collectibles and come to the platform.
Generate shareable content on Web2 platforms that highlights the distinct and enjoyable features of DeSocial, such as multiplayer gaming in chat, voting, and new features that aren't achievable with Web2 platforms. Ideally, the content should be so amusing and relatable that it has the potential to go viral.
Educate mainstream users about the shortcomings of existing Web2 platforms, emphasizing DeSocial's advantages such as user data ownership, platform portability and privacy.
Approach mainstream users in clusters, such as forums, school networks, and clubs, where social connections and group interactions are important. This can lead to organic growth within these groups.
Simplify the onboarding process by giving this group of users a choice to opt for abstracting away complicated Web3 features.
Implement a referral program for mainstream users with rewards that align with their incentives, such as enhanced social connections and community engagement.
4. Developers
Targeting developers as a growth channel is a unique aspect of Web3. DeSocial platforms would benefit from leaning into the interoperability of Web3 capabilities and providing an open API for developers to create plugins and extensions. For instance, by offering an easy-to-integrate open-source chat plugin for DeFi and games, DeSocial could spread its presence across the Web3 ecosystem.
Within DeSocial, there remain several unsolved challenges, such as data storage, higher costs associated with posting on the blockchain, and slower load times associated with decentralized systems. As of 2023, some of these initial challenges might have been addressed with the help of ZK technologies, off-chain data and scaling solutions. However, the same problems of clunky user experience and user retention remain.
While there are promising use cases for decentralized social media, it remains to be seen whether it will be widely adopted by the masses. As the technology continues to evolve and improve, it will be interesting to see how DeSocial develops and whether it can compete with established centralized social media platforms. DeSocial going mainstream could have a significant impact on the adoption of DeFi and self-sovereign identity, which will change the financial system and the internet landscape as we know it.
To achieve mass adoption, I suspect several notable DApps with unique features must be developed, attracting a large number of users. These DApps must be built on the same protocol, allowing users to have more control over their data, including the right to export and reuse their content and audience across platforms. This will be essential to drive the mass adoption of decentralized social media.
Some notable decentralized networks projects:
Social networks/games with immersive experience:
Decentralized social network protocols