Welcome to another edition of In Transit. Our band of people exploring the fringes of entertainment and technology continues to grow. 

Thanks for being here. 

PS: Do you have a friend who digs the same topics as we do? In that case, I'd be grateful if you referred them to In Transit. (I even have some fun rewards for referring.)

UGC, Upgraded

Web3 is the perfect upgrade to user-generated content.

Key takeaways:

• UGC drives online platforms, but creators often don't own their content.

• Web3 offers true content ownership for creators.

• Creators could move content and audiences between platforms with Web3.

• Current UGC platforms resist this change to maintain control.

• Future UGC trends may focus on creator profit versus audience size.

On average, we now spend 400 minutes online daily, Which is a lot. The internet continues to become a staple of our lives. The digital part of our lives continues blending with the physical.

The platforms that capture and aggregate most of our attention online have one thing in common. The content that powers them is mainly created by the users of the platforms, not by the platforms themselves.

User-generated content (UGC).

UGC is the fuel of the internet.

Pictures on Instagram. 

Videos on TikTok and YouTube. 

Experiences on Roblox. 

The platforms are merely hubs: distributors, facilitators, aggregators, monetizers. In most cases, the platforms are also the de facto owners of the content. The value captured from monetizing the user-generated content might be shared between the platform and the users. But the platforms' take-rate (percentage of revenue they keep) ranges from 30-100%.

Web3 upgrade

The core innovation of blockchain technology is introducing an ownership layer to the internet. I've previously written about why this is an important innovation.

For UGC and its creators, it offers a significant upgrade. A potential path towards a fairer and more equitable future.

Imagine this:

A creator of internet content retains true ownership of the content she creates. To publish (and monetize) on a platform with an existing audience (Instagram, for instance), the creator agrees to a revenue split with the platform.

Another platform comes along, offering the creator a more favorable revenue split. She exits Instagram. She brings her (owned) content with her and onboards the new platform.

This isn't possible today but would be possible in a future where content is tokenized (on a blockchain) and owned by the creator.

This example could extend beyond the content itself:

• Identity/namespace

• The social graph (followers, following, audience, reputation)

• Content curation and collection

In a future where creators have the power to move between platforms, the power balance shifts significantly. Now, the platforms compete for the best creators, and they compete by way of better revenue splits and compensation. 

The challenge

Existing UGC platforms have little incentive to move in this direction. Having users, content, and creators locked in on the platform is beneficial. It ensures stability and retention. It’s what creates much of the network effect value of these platforms.

It's value-destructive to dilute this network effect and partially transfer it from platform to user. However, a UGC platform is nothing without a healthy balance between creators and consumers.

It only takes one platform to lead the charge and go first. It could make sense to do it, too, capturing a first-mover advantage.

Professional content creators understand the business and value of content. But the average creator-consumer-user doesn't (yet). Across many of these UGC platforms, the long tail of creators plays an essential role in ensuring abundant content. 

These users will eventually learn that their time is valuable. The time they spend consuming; the time they spend creating. Both are valuable for the platforms.

This battle has yet to fully mount, but I'm sure it eventually will. It will be a battle between the value of large existing audiences vs. smaller audiences but higher value capture for the UGC creators.

If the platforms leaning into fairer UGC terms, preferably powered by web3 technology, can grow the audience base over time, it simply becomes a math question for creators:

How much money do I make from my content when the platform takes 60%?

How big an audience do I need to monetize at the same level if the platform only takes 5%? 

Thanks for reading another edition of In Transit. 

Please subscribe if you want to catch future posts early. 

You can follow me on LinkedIn for more frequent, bite-sized content. 

And if you have any feedback or an idea you want to discuss, you can reach me at m[at]in-transit.xyz.