YouTube and Facebook Are Losing Creators to Blockchain-Powered Rivals

Some say privacy concerns, censorship, and a coming ban on cryptocurrency ads are driving them away from the big names.
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April 10, 2018, 5:00 PM GMT+8

ILLUSTRATION: JOEL PLOSZ FOR BLOOMBERG BUSINESSWEEK
Peter “Furious Pete” Czerwinski has close to 5 million YouTube followers, but they can’t see most of his new videos there. To get 46 of the 71 weightlifting and competitive-eating videos he’s posted in the past two months, fans have to use DTube. It looks a lot like YouTube, but video creators rely on donations from viewers instead of ad revenue, and the site’s moderators rarely try to censor potentially offensive material. Czerwinski, who made the switch two months ago, has said he felt his material could no longer get the circulation it deserved on YouTube. He didn’t respond to requests for comment.

While YouTube has had to start taking a tougher line on censoring offensive videos that advertisers don’t want to be associated with, a growing swath of creators have fled to sites such as DTube to avoid the constraints. Like other upstart sites, DTube runs on the blockchain network Steem, and users can pay creators and commenters in digital tokens. That’s another point of distinction with YouTube, as well as with Facebook and Twitter. All three advertising-driven sites are phasing out ads for cryptocurrencies, shielding themselves from potential legal liability if the ads are scams or the digital coins are eventually regulated as securities. Video creators with an interest in cryptocurrency say that’s also a factor driving them away from the big names. In the wake of Facebook’s data scandal, privacy is a third. YouTube didn’t respond to a request for comment for this story; Facebook referred to previous statements that the company is working to repair its reputation but hasn’t seen a significant drop in users.

The less centralized platforms keep more power—and potentially, privacy—in the hands of creators and users, says Ned Scott, who runs the Steem-based social network Steemit. In lieu of ads or selling user data, sites such as Scott’s rely on user growth to make their digital tokens ever more valuable. “The whole experience is more transparent,” he says. “There won’t be many single authorities dictating how social media operates.” Two-year-old Steemit has about a million accounts and added some 120,000 last month, according to Scott. Rival LBRY has about 600,000 registered users.

That’s far from Facebook’s 2 billion monthly users, or even the up to 87 million whose data was given to Cambridge Analytica. But Naomi Brockwell, a video creator in New York who specializes in crypto material, says she’s already making an average of $40 a video in Steem tokens, which could take her months on YouTube. Brockwell says she needs to find alternatives to the name-brand social networks as they phase out ads on her videos. “I don’t think this is about protection,” she says. “This is about control.”

Brockwell, like many creators on these newish sites, was initially skeptical that the Steem tokens were worth anything. And it’s something of a pain to exchange them for U.S. dollars: On most cryptocurrency exchange sites, you have to trade them for Bitcoin first, then swap the Bitcoin for cash. Easy enough, Brockwell says, given the upside.

Creators can expect to retain significant control with blockchain sites because there are few barriers if they decide to leave, says LBRY Chief Executive Officer Jeremy Kauffman. Like email, he says, it’s relatively easy to switch to a similar site if you don’t like his. And because of the decentralized nature of blockchain networks, tech-savvy users can find ways to post controversial material, even if he tries to block or ban it.

The flip side, of course, is that such lax rules can make these sites havens for precisely the kinds of hate speech, conspiracy theories, and otherwise undesirable material that YouTube and others are slowly taking action to block. Stemming the spread of those kinds of videos without compromising free speech or creators’ wallets has been a difficult balancing act. Nasim Aghdam, a YouTube creator from San Diego, complained to relatives repeatedly about the company’s compensation practices before she opened fire at YouTube’s headquarters in San Bruno, Calif., on April 3, killing herself and injuring three other people.

If such services as DTube and Steemit are successful enough, their bigger problem may be YouTube’s or Facebook’s cash hoard, says Lance Morginn, CEO of the Blockchain Intelligence Group, which analyzes cryptocurrency transactions. Still, some platform creators say the big names are tarnished enough that there’s an opportunity for new ones. “Until now, I’m not sure people realized just how valuable their personal data is,” says Dan Novaes, co-founder and CEO of Current, a blockchain-based streaming site. “With blockchain, people will finally have the chance to be rewarded for their time, attention, and data. No longer will their valuable data be controlled by a few giant companies.”

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