Crypto is too volatile for me!
Just like how Debbie might be too much to handle for some in Dallas, it is interesting to see a "little" volatility in the traditional markets, where Meta (TAFKA Facebook) has taken a little bit of a tumble over the last 24 hours - moving from $323 down to around $237, which is about a 25% drop in capitalization and wiped around 200 billion from the theoretical books.
The chart looks a little crypto-market-ish.
This is the problem that was bound to happen though, isn't it?
What they are citing as a large part of the issue is that Apple employed "App Tracking Technology" that allows users to opt-out of having their activity tracked, meaning that advertising targeting is far less effective. With around 97% of Facebook's Meta's revenue coming through advertising, this is a bit of an issue - especially since new subscriptions have not only plateaued, but regressed - They are losing more users than they are gaining.
Their solution to this is of course, heading into the Metaverse in an attempt to cement themselves as the "go to" platform for digital worlds and services. The problem is though - that world doesn't exist yet - which is a big problem, because investors don't like increasingly top-heavy costs, with dwindling incoming revenue with lowered expectations.
This is an interesting turn of events and I believe that in the coming half decade, we are going to see more such issues arise on the platforms that rely heavily on ad revenue to survive, including the likes of YouTube. On top of this, there will be an increasing pressure to better reward content creators and contributors on these platforms, requiring higher distribution and the only way they will be able to do this due to their business model, is trim from the top rewarded accounts. This lowering of rewards mean there is lowered incentive for the top rewarded, which can drive them to other alternate platforms, driving demand up on those too.
What essentially is happening is that once the ad revenue model reduces in return, investors will start looking for a higher ROI, moving their funding to places that offer more. Those will inevitably be, the ones that do not require all of the high cost management and employee structure, meaning that there will be more Decentralized Autonomous Organizations developed to act as the silent middleman that takes no cut.
THis changes the model for the investor too, as for example, getting ROI on stake to back the project being managed can provide a higher ROI on the investment, whilst not requiring as much incoming revenue. This gives space for spread in ownership across a wider range of products and services, with more contributor seats being rewarded, whilst catering for a larger yet simultaneously more granular consumer base. Throw in that the consumer themselves is going to be incentivized to own and earn on where and how they spend their time and suddenly, giant companies like Meta are going to find themselves competing across every market segment point, against highly motivated niche players.
The behemoth organizations will struggle to offer the granularity of service they demand, let alone be able to reward contributors and consumers accordingly, making them very unattractive very fast.
Meta today is experiencing what is going to become more common in the traditional markets, where it will increasingly be that people will very quickly opt in and opt out of investments if there is underperformance. This means that in order to keep investor attention, they are going to not only have to meet the needs of the investor, but also keep their contributors rewarded and their consumer-based happy - and when they are one and the same person, it is going to get very difficult to maintain all positions simultaneously.
We can see how difficult it can be on Hive already, and this blockchain is designed for it and the userbase is generally knowledgeable about these things. Trying to intertwine all of this into a pre-existing platform will be near impossible, as it would fundamentally change the way the platform works, which is a big part of why Facebook created Meta in the first place, as it gives them the opportunity to not only rebrand, but reculture the immense community it has enjoyed.
But, already they are seeing the difficulty in pivoting, because their investors didn't sign up for this lengthy process filled with uncertainty of entering into and being part of building an entirely new business model, in an entirely new industry. Remember that Facebook IPO'd in 2012, after it had already established itself as the "go to" social platform and at a time where it was gaining massive amounts of users. The investors signed up for some stability, not an experimental startup - let alone one with a massive amount of overheads on top of this.
Based on this news today, their users are also going to be taking an alternate look at the platform they have become accustomed to and some of them will start exploring new avenues. As will the content contributors, who have been moving to other platforms like TikTok for a while, because that is where there is a growing audience, a must have for an attention economy.
But platform jumping is not sustainable either, where a contributor invests a lot of time and energy to build an audience, only to have that audience move to a new shiny platform and they have to follow. However, this is where the potential of Hive comes into play, as many shiny platforms can be built atop the baselayer, whilst maintaining account, resource and investment consistency, for both the contributor and the consumer.
This is massive, as it provides the flexibility for changing consumer needs and wants, with the stability of infrastructure investments with a nice steady return. It is like being invested into an index fund that offers a low-yield ROI, but also benefiting from the more volatile startups that will offer various models of investment stake to support them and, the success of those will increase the yield of the base layer to raise the "lower" yield.
Lower is relative though, isn't it, as taking out the top-heavy management structures and distributing it across owner, contributors means that while more people are earning more as individuals, the entire system is returning everything back into the system of owners and contributors, constantly searching for a natural equilibrium between all parties, rather than the engineered environments that we see in the current economy, where a few people hold all the cards, forcing their hand on others.
The concept of Meta is not bad, but where it fails is that it wants to be the home of everything, it wants to be a monopoly, when what is increasing in demand, is the exact opposite. However, if we use the superpower nations as an example of what is happening in the digital world, how many willingly relinquish control and value to their citizens?
And that is where we are headed - digital nations that aren't gathered by a border of where they are located, but instead by what they do and how they do it. And, these will be owned and governed by those who use and invest into them - the most motivated people to keep them running effectively.
Business is changing. Culture is changing. Investment will follow.
Taraz
[ Gen1: Hive ]
