Can a New Model for Creator Monetization Work? Portal’s Founder is Betting On It. And so is Mark Cuban.
Over the past 18 months, YouTube has gone from the platform creators love to the number one topic creators love to talk trash about. There’s a list of reasons that have led to the company’s declining reputation: it’s made it harder for smaller creators to make money, its run anti LGBTQ ads on LGBTQ content, it’s monetized racist and terrorist driven videos, and its algorithm seems to favor only certain types of videos. This growing list of wrongdoings has led both creators and viewers to take to their keyboards to express their frustrations to anyone who would listen. Unfortunately for YouTube, someone was listening. That someone is Mass Lab Inc, a consumer media technology company that has raised $1.7 million in funding from investors that include billionaire Mark Cuban.
In response to the growing beef between YouTube and its creator community, Mass Labs, co-founded by CEO Jonathan Swerdlin, created an ad-free video and audio hosting app that provides a direct alignment between the person generating content and the person viewing it.
“Advertising is the biggest scam on the internet. It rips off people and culture, and pays rubbish to creators and publishers” said Swerdlin. “We built Portal to transcend this broken system and unleash the power of a peer-to-peer economy that rewards quality. It’s quite early, but we are already seeing some earning 100x more than they would from advertising.”
Instead of relying on ads to generate revenue, creators rely solely on donations from viewers. Users of the app can purchase in-app currency known as coins (which cost about a penny each) in bundles of 100. They can then choose to donate these coins to their favorite creators. The monetization model, which is drastically different from that of Youtube or Facebook, solves several problems that have plagued the YouTube community.
- It takes care of the brand safety issues that have rocked YouTube over the past 12 months. While the Google-owned platform is a great place to be discovered and find an audience, many creators have been wrongfully demonetized for content that the company deems offensive. This has included videos which focus on LGBTQ issues, Right-leaning ideas, or other content that wasn’t properly reviewed and had its advertising pulled as a result.
- No ads mean no buying attention or data mining, which also means no scandals like the
Facebook/Cambridge Analytica situation.
- And because a creator has to rely on donations to make money, there is less opportunity for clickbait-style content to survive, creating an environment that fosters content with actual value.
Though a great start to fixing what seems to be a growing issue for content creators and viewers, Portal still has a few hurdles to jump. The low value of the coins means that creators have to accumulate a considerable amount of the internet currency to be able to make a living off the platform, which may deter many from uploading exclusively to the app, especially given its growing user-base. Like all new platforms, it will face the chicken and the egg scenario of onboarding creators and gaining audience.
One interesting thing to note about the app, which has an user-interface that is strikingly similar to that of Instagram, is that videos on users’ timelines are posted in chronological order and, according to its description in the app store, there is no tricky algorithm that favors certain types of videos over others (though some have been labeled with a “featured” sticker, which likely gives it some advantage in the queue). Additionally, videos don’t have a public view count, instead, they have a coin count that shows how much money the specific piece of content has generated. As of now, most videos on the app have earned anywhere from 10- 4,000 coins.
For now, Mass Labs isn’t generating any revenue off the app. The company doesn’t sell ad-space on the platform, nor does it take a percentage of the cash that users donate to creators. However, in the future, Portal, which has been in a closed beta until the start of last week, may take a small fee on payments. But the company says that if it decides to do so, the decision will be communicated with extensive notice and transparency.