Using Bitcoin’s blockchain, a sophisticated new social network is crowdfunding its plans to save the middle class. The first step? Join a platform where users reward each other for good content
Have you talked to any journalists, musicians or photographers lately? Believe it or not, a lot of people used to make a middle-class living in these occupations just ten or fifteen years ago. But today, a guitarist like David Torn gets $8 from Pandora for 100,000 plays of his song. A journalist can get 20,000 views on a site like the Huffington Post but earn nothing. Photographers? Forget about it. They’re taking snapshots from the drivers’ seat of an Uber vehicle.
Meanwhile, tech companies like Google, Facebook, Instagram and Spotify are worth billions. Why is this so?
If you ask Anderson McCutcheon, one of the co-founders of Synereo, that question, he’ll tell you that the consolidation of power by giant tech companies, what he calls “digital feudalism,” is merely a phase that could soon be disrupted by a less centralized distribution of rewards.
Synereo, the decentralized social network he has developed together with co-founder Dor Konforty, could be the platform for such change, he hopes. The project’s ambition is no less than to reverse our current economic trajectory – as well as the way we interact online.
“If we manage to decentralize a social network, it means that we can decentralize content distribution, decentralize communications. We can decentralize streaming. We pretty much make the existing model obsolete,” McCutcheon tells Geektime.
To do so, Synereo launched a crowd sale on Monday of its Bitcoin currency, selling 18 percent of all current tokens available for $1.2 million dollars, to develop the first fully decentralized social network.
Sound loopy? The explanation is a little complicated, so hold on to your hat.
“Feudalism was a system where everyone would work the land,” McCutcheon says. “The peasants got enough to get by but one big guy on top got a lot more. Now look at a company like Uber. You used to have taxi drivers who were lower middle class and the taxi station manager who was upper middle class. So Uber comes along and says, ‘Okay, go away upper-middle-class guy. All these taxis are now going to work for my mega-billion dollar company, and let’s kick the middle class guy out.”
According to McCutcheon, this pattern is repeating itself in industry after industry, from music and journalism to tax preparation, travel and insurance.
“This is what the destruction of the middle class looks like. You keep the low class and the upper class and you eliminate the middle.”
Yes, but isn’t this the nature of digital disruption? Isn’t it a law of nature, or at least economics?
“You make a good point,” McCutcheon replies. “Once you have a superior model, the earlier one becomes obsolete.”
Thus, McCutcheon argues, before the Internet, Western societies were structured so that they needed a large middle class. Now, the winner-take-all Uber model is on the ascent.
“But should Synereo succeed, once we get to a certain point in terms of our user base, you will no longer need Uber, because Uber is a service that has no reason to be centralized. The same goes for Instagram and WhatsApp: No one will need this central entity anymore. You can provide the same kind of service in a distributed manner. Everyone has enough bandwidth, storage and computational power to power a simple Uber-like application on their own phone and not have this $40 billion company sitting on top of it.”
What is a decentralized social network?
A decentralized social network is one where you own your content and can make money off of it. Your content is encrypted so no one, neither government nor marketers, can spy on you without your knowledge. Others can get paid for distributing your content and if advertisers want to target you, they will have to pay you (rather than Facebook or another social network) for the privilege.
Synereo’s information flow is based on neural networks. There’s no one center of control and all messages are relayed through peers on the network. Its currency is called an AMP. The AMP token is a cryptocurrency deployed as a meta-coin on top of the Bitcoin blockchain, using the Omni-Layer.
Unlike Bitcoin, the AMP’s value is only partially based on speculation, says McCutcheon. Rather, it is a way to pay for user attention. For instance, if others read and like your content, you can get paid in AMPs. While most content will remain free for users, content creators can charge AMPs for special products, such as downloading songs (in place of streaming), getting exclusive content ahead of others, investing in their album, etc.
Advertisers can also pay users in AMPs to consume their content. If their content is high-quality, it will cost them less than if it is boring. Going back to the writer who posts for free on the Huffington Post, if that same writer posts their blog on Synereo and 20,000 people read it, they will make money, or at least, AMPs.
“That’s a dynamic parameter,” says McCutcheon. “It’s related to the whole size of the system and how well it works.” Like Bitcoin, the idea is that AMPs will eventually be exchangeable for goods and services in the real world. For a full explanation of the mathematics of AMP distribution, you can see Synereo’s 60-page white paper on the topic.
Other networks already pay you for content – why will this one succeed more?
Though there has been hype about social networks that pay users for content, such as tsū, these platforms have largely not taken off. When asked what will make Synereo succeed where these efforts have faltered, McCutcheon answers that unlike semi-scammy platforms that largely pay users to watch ads, Synereo will “provide superior user experience because we are not capped by business objectives,” as well as “added value services such as ride sharing, exclusive content, file storage, all powered by decentralized P2P tech. Again, with superior UX unrestricted by business objectives.” He smiles, stating, “If we ever say ‘Join Synereo and get paid,’ it means we failed and I have already left the team.”
Show me the money
On Monday, Synereo launched a crowd sale of its AMP currency, selling 18 percent of all AMPS available for $1.2 million dollars. In the beginning, membership in Synereo will be by invitation only. Those members of the community who buy AMPs will be the first invited to join. McCutcheon says Synereo may consider VC funding in the future to grow the organization beyond its current business plan.
At present, beyond the social network, Synereo has two for-profit arms.
The first is working with advertisers and content creators.
“If, say Tesla would like to launch a campaign and would like to include Synereo in the media mix of its messaging, it doesn’t have to learn what Synereo is, how to execute campaigns. It expects a certain level of account management and hand holding. So this B2B arm will work with high-quality advertisers that commit to content excellence. If your content is not good enough you will just pay ridiculous amount of AMPs to get your content out. “
The second arm, says McCutcheon, will work with other technological apps and get them on the Synereo network, so, for instance, you can have a decentralized Uber that runs on top of Synereo, or a decentralized Instagram-type app.
“That requires a lot of tech hand-holding and that is what we intend to do.”
Yes but how do we know that Synereo won’t become the new Uber?
“We can’t. We’re not. Synereo cannot have a liquidity event. Twitter cannot come to us and say, ‘How about I give you $2 billion to buy it?’ It’s like torrents. If someone comes along and says, ’I want to buy all the torrents,’ that’s impossible. It’s decentralized.”
McCutcheon is not so much hostile to today’s established social networks as feeling that their time is past.
“Without Facebook being the frontrunner for social media networking, I don’t think social media would be what it is today. There’s a concept in marketing called second mover strategy. One company paves the way, establishes a market, gets people used to the idea that a product is necessary and valuable. And then you have the second mover who offers something better – and that’s exactly what we are.”
Featured Image Credit: Synereo