4.6 billion people spend an average of 2.5 hours a day on social media.

Those are astounding numbers.

Especially because the number of total internet users is around 5 billion.

That means 92% of total internet users are spending almost a third of their work day on social media.

There are just a handful of companies that have the overwhelming majority of those users.

Meta platforms alone account for the lion share of total social media users.

You may be thinking: “Ok. So what? Why does it matter if a few billionaires control all of social media?”

Well for starters, if you look back throughout history it never ends well when a few people have unbridled power.

This newsletter isn’t long enough to go through all the historical examples.

However, I will go through why we are approaching a tipping point with centralized power in social media and why decentralized social media will be the next frontier of the internet.

The Rise of Social Media

Social media has existed since the birth of the internet.

Messaging services were one of the first applications used on the Internet.

Humans are naturally social so this makes sense.

Social media allowed people all over the world to connect and interact in real time.

The rise of Facebook, Instagram, Youtube and Twitter are well documented.

But it hasn’t been all rainbows and lollipops.

Over the past few years we have seen these companies abuse their power.

• Elon Musk released documents that showed Twitter was shadowbanning users that disagreed with its political views.

• Twitter censored a sitting US President (whether you agree or disagree with that decision isn’t the point. The point is to show how much power these platforms have if they can censor a US President)

• In 2019, the FTC fined Facebook $5 billion over violations of user privacy.

• Zuckerberg appears in a blockbuster congressional antitrust hearing in July 2020 alongside the CEOs of Amazon, Apple, and Alphabet's Google. Lawmakers later conclude that all four companies are monopolies and should be regulated.

• In 2021 documents known as the Facebook Papers were leaked to show that the company knowingly allowed hate speech, agreed to censorship demands from foreign countries and prioritized profits over people’s safety.

If you have any experience in life you are probably not surprised by all of this.

Power corrupts.

So what’s the alternative?

Decentralization is a pillar of Web3 and it's the antidote.

Decentralized Social Media

So why hasn’t social media been decentralized yet?

For starters the user experience is pretty bad compared to Facebook, Instagram, Youtbe and Twitter.

Additionally, blockchains were not built to store so much data. If you wanted to run a social media platform on current blockchains it would be prohibitively expensive (see below).

Imagine paying almost $80 for a tweet!

Obviously this won’t work at those prices.

So who are the major decentralized social media platforms and what are they building?

Let’s dive in.

DeSo

DeSo is a new layer-1 blockchain built from the ground up to decentralize social media, and scale storage-heavy applications to billions of users.

DeSo was founded by crypto veteran Nader Al-Naji and has an interesting and ambitious roadmap.

Since DeSo is a layer-1 blockchain that means developers can build apps on top of it. DeSo already has three apps that are decentralizing social media.

Diamond’s (formerly BitClout) UI looks very similar to Twitter. The key difference is its open source and you control all your data. Another key difference is monetization. There are a few methods that creators can use monetize their content

• Your audience can buy your Creator Coin (social token)

• Crypto tipping

• Selling NFTs

According to the website there are over 1.7 million wallets that have done $1.4 billion in total transaction volume. The project has some heavy hitter VCs behind it and a $200 million treasury to support its mission.

You can claim your username here to start testing it out.

Lens Protocol

Lens Protocol is another project that has garnered a lot of attention lately. It’s in closed beta so it’s too early to make a judgment.

According to the website:

“The Lens Protocol is a Web3 social graph on the Polygon Proof-of-Stake blockchain. It is designed to empower creators to own the links between themselves and their community, forming a fully composable, user-owned social graph. The protocol is built from the ground up with modularity in mind, allowing new features and fixes to be added while ensuring immutable user-owned content and social relationships.”

Mastodon

Mastodon is a decentralized social network made up of independent servers organized around specific themes, topics, or interests.

However it’s not a single website. To use it, you need to make an account with a provider, or server, that lets you connect with other people across Mastodon. There are currently 9,700 servers.

Mastodon has been around since March 2016 but when Elon took over Twitter it grew from 300K to 2.5 million users in two months.

While Mastodon feels a lot like Twitter, is open source, ad-free and there is no algorithm, there are some serious drawbacks as well:

• It’s complicated to set up.

• Security is an issue as you rely on the trustworthiness of whoever is running the server.

• There is currently no way to monetize. And it’s not free. Whoever is hosting the network has to pay for it and there aren’t ads. As of now, this is being done by donors, which could affect the longevity of the network.

Steemit

Steemit was launched in 2016 and is built upon the Steem blockchain using the STEEM token to reward users for their content. By voting on posts and comments, users get to decide the payout of those posts. Users also get so-called "Curation Rewards" for finding and upvoting content that gets upvoted by other users afterwards.

Today Steemit is a shell of its former self. In December 2019 Justin Sun purchased Steemit from one of its founders. Along with purchasing the company, Sun acquired 20 percent of the Steem tokens in circulation. The Steem community was not happy and pushed for a rule change to prevent Sun from having so much power. Sun convinced several cryptocurrency exchanges to use their millions of Steem tokens to sway the vote in his favor and change the platform rules. In response, many users left for other platforms.

Why Decentralized Social Media Will Dominate the Internet

So the current options for decentralized social media are still not great.

The user base is still a gnat flying around the giant elephant that is traditional social media.

We are talking about 2-5 million users of decentralized social media versus the 4.6 billion users of traditional social media - that’s 0.08% of the market.

We are still a long way from the mainstream.

So why am I optimistic?

Zoom out.

Look throughout the history of technology. Once a breakthrough technology emerges, there is no going back.

You can’t put the genie back in the bottle.

The next phase of the internet (Web3) is here and it is already decentralizing money (Bitcoin, Ethereum, Stablecoins).

Social media is next.

But more specifically, here are the reasons why:

Monetization. Most social media companies today share 0% of their revenue with creators (Meta, Twitter). YouTube is the most generous by sharing 55% of ad revenue with creators.

Most Web3 platforms (NFT exchanges, content platforms like Mirror.xyz) only take 2-5% which means creators keep 95% or more.

Mr. Beast made $30 million last year on YouTube. If YouTube was decentralized he likely could have made close to $60 million with that same audience (all else being equal).

The counter to this argument is that the wide majority of users are not producers of content so they don’t care about monetization.

While this is true, if all the creators are flocking to a new platform because it’s more lucrative, users will follow. They are called “Followers” after all.

If there was ever a powerful motivator, it’s profit.

Minimal cost of switching. There is no monetary cost to switch to a different social media platform. I stopped using Facebook a few years ago and it had zero monetary impact on me.

If users see a better alternative, there is very little to stop them from doing so.

Explosion of New Content. The content produced on social media today is dictated by the algorithm. What you see is curated by what the company wants you to see and what makes them the most money. Imagine if we removed that filter and had an explosion of new content. There still needs to be a mechanism for people to find good content, but with less restrictions we could see an emergence of new genres of content and experimentation.

The flipside of this is without a good algo we are just swimming in a bath of white noise. I am confident smarter people will figure this out.

FOMO. In my opinion this could be the differentiator. Fear of missing out (FOMO) has been magnified 100x in a world dominated by social media because we can see what everyone is doing in real-time.

And because of the algorithm and the nature of social media, we think everyone is having more fun than us.

Imagine this: in the next bull market there are a handful of decentralized social media platforms up and running.

Their ecosystems are anchored in their own tokens which people can use for crypto tipping and monetizing.

Content creators earn tokens, the bull market ramps up, those tokens content creators earned are all the sudden worth 10, 20, 50 times more.

You start to see stories in the news about one such content creator who made $100 million from their content on this decentralized social media platform.

Massive FOMO kicks in for every content creator that isn’t making $100 million.

Every content creator on traditional social media assumes they can do the same and the mass exodus begins.

I have no idea if this happens. But if you have been through a crypto bull market you know this is feasible.

Don’t believe me?

Just look at the guy who invested $8,000 in Shiba (a meme coin) which ended up being worth $5.7 billion in a few short months.

That happened because of FOMO.

Reasons It Could Fail

• Bad user experience. So far this has been the achilles heel. Web3 social media needs to create a better user experience than Web2 companies.

• Decentralized platforms move slow. Centralized Web2 companies can move quicker and use incentives to retain users (ie. pay content creators more).

• Issues with scalability or high costs. If the platforms can’t scale and make it affordable, it simply won’t work.

The Future of Social Media

I don’t know when decentralized social media will reach critical mass, but I am optimistic it will.

This newsletter is about winning in Web3.

And I can’t think of a bigger win than social media.

Action Items

• Research the names in this article. Open an account and test it out. Create some content!

• Watch DeSo’s presentation at a recent Messari conference here.

• Read up on Lens Protocol.

• Read this Cointelegraph article about decentralized social media.