The Monetization Model for A Decentralized Web/dWeb [Deep Dive]

This is a second article in the ‘Decentralized web / dWeb’ series. To get an idea on what the dWeb is please check — this article.

1. Introduction

‘Monetizing’ sounds very business like — capitalistic, but I believe this model is very decent and fair for all participants.

From the very beginning the Decentralized web have to be free!

Then, how do we make money out of dWeb?

This article explores a possible new monetizing model in the context of an operating decentralized web.

Unlike lots of so called ‘white papers’ and other article describing models there are no mathematical formulas

2. Current dominant monetizing models

The traditional way of monetizing from the very beginning of the human society is by making of a product or service than selling it.

In the present time, in the absence of a product or service the dominant current model of monetizing is by getting paid through ad placement.

This is how a variety of content producers — bloggers, video makers, podcast producers, social media ‘viral’ stars make money.

In this way of monetizing essentially there are 4 participants — the platform, the content producer, the advertiser and the user.

The platform owner did invest on creating the platform and then maintaining it so that it can handle the in-flow and out-flow of users visiting and using the platform.

The users go to the platform to get content, preferably for free.

The content producer makes and places content on the platform and gets paid by the platform owner.

And the advertisers are ‘paying the bills’ — allow the platform owner to generate revenue which is then used to pay the content provider and to — update the platform, develop new features and maintaining the infrastructure.

3. Issues of the the current ad placement model

Most often the use of the platform is free for users in exchange for viewing of ads placed together with the content.

Very often the agreement of the users to view ads is not explicit and is taken for granted by default by the platform provider.

This leads to a situation of users placing ad blocking plug-ins in their browsers and/or ignoring ads placed and focusing on the content.

Impressions are counted by the platform provider and reported to the advertisers but these impressions have no impact.

But, what about clicks? A ‘dirty secret’ when it comes to clicks on ads is the existence of ‘click farms’ — businesses in collusion with content providers, usually located in developing countries, dedicated specifically to clicking on ads placed on specific web sites and pages.

On one hand they generate traffic for the content provider, which is then added to the traffic of the platform — making them both appear ‘popular’.

On the other hand ‘click farms’ generate revenue for the content provider, which is then added to the revenue of the platform — making them both profitable.

When the advertisers pay the platform, the platform owner keeps the bulk of the payment and pays a smaller portion to the content producer. Then the content producer keeps the bulk of the payment and pays a smaller portion to the ‘click farm’.

The clear ‘losers’ in this model are both — the user served with ads which they ignore, and the advertiser paying for a service with very little impact.

4. Proposed dWeb ad placement model

In this model there are still platform, the user and the advertiser as participants. There may or may not be the type of a content provider as a participant, as the platform already offers a service valuable for the user.

The current dWeb project will offer a direct peer to peer communication tool as a platform to connect one user to another.

Advertisement placement can be inserted within the flow of communications between users.

Unlike the current ad placement model the dWeb ad placement model will:

- provide control for the user to switch ad flow on or off

- get an attention feedback during viewing

- and, most importantly — reward the user with a payment for viewing of the ad

In this model the user is actually interested in viewing ads and the advertiser (who is paying the bills) is certain that the user did genuinely view their ad.

But, what about the ‘click farms’ ? In current ad placement model the viewer from the click farm can quickly make 20–30 ad clicks per minute.

However, in the dWeb ad placement model the user have the choice to either stop the flow of ads, or watch willingly and interactively (and get paid) the length of time slot of the ad placed. The user can still click on an ad but they are paid per time viewed.

The proposed dWeb ad placement model makes the platform responsible for distribution of payments to all of its ad viewing users..

5. Mechanism of distribution of payments

Current payment systems use either bank transfers or credit card payments. Both come with significant fees — fixed upfront fees for bank transfers and credit cards, together with percentage from the credit card transfer.

As a result they are not suitable for the type of a large scale micro-payments used in the dWeb ad placement model.

The only good choice left is payment with cryptocurrencies as they are accepted worldwide as capable for holding value and easily crossing borders.

However from the list of issued crypto-currencies almost all of them have low transaction count and are no able to handle high volume of transactions.

What choices are then left?

One choice would be EOS, Ripple / XRP and few others which are capable of handling high transaction volume. Both coins are listed on almost all of the crypto-exchanges.

Another possible choice are coins created by crypto-exchanges which sometimes have their own private blockchain. Crypto-exchanges provide liquidity when converting one coin to another and provide a bridge to fiat currency.

A third choice would be widely used ‘stable coins’ like Tether’s USDT and Circle’s USDC. While currently trading around 1:1 to the fiat US dollar there is no firm guarantee of the exchange ratio holding to 1:1 in events of big outflow from crypto to fiat. Still, the ‘stable’ crypto-coins are much less volatile than the previous choices.

And, the last possible choice are corporate and government blockchain based coins like Facebook’s Libra coin or China’s central bank digital currency (CBDC) — both designed specifically for transfer of value. However the coins are not yet available, and/or face political pressure and may not be allowed to operate.

6. Conclusion

One consequence of the current pandemic is the shift from live and in-person communication to a virtual communication.

The current dWeb project offering a direct peer to peer communication tool as a platform to connect one user to another is responding to the urgent need of having such communication tools.

Such tools combined with the proposed above monetizing model are superior to the current model based on web browser and the current ad placement model and hold a big potential to challenge the dominance and ‘eat the lunch’ of Google, Facebook and alikes.

Reference

Decentralized web / dweb — what is it?

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