Can Niche build the next decentralized social platform? Here’s why it matters
Meet Niche, a novel decentralized online marketplace and social networking platform rolled into one.
Unlike almost all other social platforms, the app neither harvests data nor sells advertising for its revenue. But it will require you to sign up for a club membership – in the form of a non-fungible token, of course. And if you make any sales and purchases in these groups, the company takes a small cut.
Here’s the twist: Because Niche is built on a blockchain application called NEAR, the company doesn’t actually own any of the groups or its content. Members will own them, somewhat akin to owning stock in a company. Conversely, current social media platforms own, moderate and monetize their user content; Facebook, TikTok and Twitter generate billions of dollars in ad revenue each quarter.
“The only way that [social media] found to monetize these networks was to basically turn [everyone] into generators,” Christopher Gulczynski, CEO of Niche, told Digiday. “And that’s driving poor content. It’s proving to be detrimental to society, like the morality of it, which inadvertently promotes misinformation and all sorts of stuff.”
Where Niche shares similarity with other social media is in its take on Facebook Groups and Marketplace to build a social media community. Users are grouped by interests, whether that’s home gardening or Star Wars, and there is a short application process to join for free. After launching on Aug. 2, Niche said in the first week about 1,000 people applied for the waitlist, which will be used to curate a handful of groups and subjects based on demand. Niche is also partnering with content creators to lead some groups and drive engagement as the private beta rolls out.
“I think a really big trend in social media is to get a little more intimate, a little smaller in your networks,” Gulczynski said. “We’re focusing it around interests, background things that you garner identity from the groups that you’re in.”
Los Angeles-based Niche was cofounded by Gulczynski and Zaven Nahapetyan, chief technology officer. It’s no coincidence that Niche sports Facebook or Instagram elements: Nahapetyan was a senior engineering manager at Meta, the platform’s renamed parent company. Gulczynski also has a background in social apps, having led product at dating app Bumble and cofounding Tinder (he is a patented co-inventor of its swipe feature).
The duo recently closed a $1.8 million pre-seed funding round, with investments from MetaWeb, Alumni Ventures Group and NEAR Foundation. For now, Niche’s founders said they aren’t concerned about revenue generation in the same way social media giants are chasing growth. But as the platform populates with users and clubs, Niche may generate sales on digital assets, events or memberships transactions happening on the platform.
“There’s an opportunity to generate revenue through taking a small percentage of those transactions,” Nahapetyan said. “If their net worth is going up on the app, they’re going to more events, they’re selling more NFTs to their community that they are owners of, which becomes more exclusive – that’s when we benefit. So we think that’s the right model here.”
Like attracts like
Niche is betting that people will be more engaged and motivated to transact in groups with like-minded people, whether it’s around niche interests like conscious cooking or hardcore gardening. But it is no easy feat breaking into an already saturated market, dominated by Facebook, Instagram and TikTok’s billions of users globally.
Niche’s first hurdle will be building this user base – and creating alternate forms of value from it. The largest platforms are established with their key differentiators – TikTok has shortform entertainment, while Instagram has large communities and commerce. Niche needs to be able to create this type of network effect, said Peter Kennedy, founder of influencer marketing company Tagger Media.
“The network effect is what makes these social networks so valuable,” Kennedy said. “If only 10 people were on Instagram, it would be worthless. In a simplistic model, the value is heavily correlated to the number of users on the network.”
Yet average users probably aren’t too concerned about the benefits of centralized networks versus decentralized. Niche needs to differentiate itself beyond just being a decentralized version of social networking – it needs to offer some content value. “All [people] want to do is scroll to consume their favorite content,” Kennedy said.
Once a user base starts forming, the goal for social networks is turning people into active users. Active users means monetizable activity, but even the biggest platforms see stagnation and competition when it comes to growing their user base. Sean Lynam, director of strategy at New York-based digital agency GLOW, said Niche may also find itself up against other membership and subscription platforms as it taps into creator partnerships.
“It seems as though they’re akin to Patreon or OnlyFans where a lead creator is there to share content and the rest are there as their customers,” Lynam said. “If this is entirely user-owned, then it will need to be user-driven, and that might not get you far enough to have enough content activity to be a thriving space. And so the investment needed to build there might not be worth it or ever break even.”
Niche founders said their platform differs from its competitors. Users typically discover influencers and creators on social media and then go to another platform, such as Patreon or OnlyFans, to support them with a donation on recurring membership. Niche said their users can do the same on one platform by directly paying creators in their groups.
From users to owners
Perhaps another argument for decentralized media is changing the ownership structure for content creators and users. By using a decentralized application, Niche can distribute ownership of these groups and content to the people in them, because activity can be verified on the blockchain. The mechanism is similar to how cryptocurrency uses a network of systems to verify “transactions,” which can be anything from an art file to a subscription fee.
But all of this is happening in the background as users connect and purchase on the platform. Existing services using the NEAR blockchain include Mintbase, a platform for creating NFTs (like event tickets and crypto art), and Paras, a service for exchanging collectible cards.
“That means they have ownership over the content, over who’s showing what and who runs the group. It can’t be shut off by someone waking up one day and saying, ‘We’re going to shut your group down,’ which coincidentally could impact people’s revenue streams,” Gulczynski said.
Experts contend that letting users own the content created on a social platform could shift power back to users, rather than corporate giants. That’s a reason why some are hopeful about a decentralized internet called Web3, an upgrade from our current centralized Web2 with services dominated by tech giants, from Google to Meta to Amazon.
“This means [users] not only have the right to sell the content, but can build in terms beneficial to them as the creator for anytime the content changes hands, thus creating a royalty,” Kennedy said.
And as far as creators and agencies are concerned, more ownership is better. It gives creators and business owners more stability in revenue and control over customers. Decentralized business models are definitely on many agency and talent leaders’ radars, said Victoria Bachan, managing director of Whalar Talent, especially when it comes to how communities on platforms can drive commerce.
“What you ultimately want at the end of the day is to be able to retain more of your IP ownership, which right now is kind of like the big gray area, with a lot of the general content creation and social media platforms,” Bachan said.
Another potential upside to using Niche is lower transaction fees on exchanges and payments. This may be particularly appealing to creators interested in selling their digital content, whether that’s minting a piece of media into an NFT or selling goods and services within the group. Because payments get processed directly on its system, they will be faster and cheaper than traditional payment systems that typically take 2% or 3% in fees. Niche said its exchange fees will be “a fraction of a cent.”
“What I think is going to be interesting about Niche … is it’s going to be a transaction versus this idea of just having millions or billions of users,” Bachan said. “It’s having a highly, highly engaged, maybe smaller user count, but you’re getting more engagement out of them.”
The future of social?
It remains to be seen if that model will work. Others are trying to prove their business model using decentralized platforms, from watch-to-earn streaming platforms to play-to-earn video games. It’s the idea that companies can redefine what is valuable in a social community, by rewarding viewers and gamers with digital assets or currency on those platforms.
“[Niche] could become or be construed as a pay-to-play model as opposed to an ad-supported one,” GLOW’s Lynam said. “Revenue scales as the community scales, which will be Niche’s biggest challenge – scaling large enough to become relevant and more than simply niche. Eventually Niche will need to make money, and guess who it’ll likely come from.”
In Niche’s case, that’s an admissions ticket into exclusive clubs to connect with a like-minded community. And once you’re there, the hope is you stay engaged enough to buy collectibles or participate in events.
While there are certainly a lot of big issues that a decentralized platform could tackle, from misinformation to identity theft, the new platforms can’t exactly escape content moderation. Niche said it anticipates having to develop a content policy in the next year as it approaches the public launch.
But Niche believes its group model actually makes it easier to moderate content and deter bad actors when compared to mainstream social platforms. Because groups are contained on this platform, misinformation and viral content would be harder to spread. Nahapetyan said he thought a lot about content moderation after working on election misinformation in Brazil at Facebook.
“What we saw was everyone connected through six degrees of separation,” Nahapetyan said. “It’s really easy for bad stuff to spread. By siloing off these communities, we actually limit the impact of them. So if there is a really problematic community, that’s just self-contained. Only the people who want to opt into that content will see it. It doesn’t spread outside of that group virally.”
Decentralization could also lead to a more democratized platform, where users can take part in the moderation or other updates on the platform. Without a corporate owner, users can influence changes, rather than be subject to features getting killed or algorithms changing on the mainstream apps, Lynam noted.
“You’ll likely have a say on platform changes, meaning not just decentralization, but social democratization, as well,” Lynam said. “Things like Facebook’s algorithm changes, Instagram’s constant feature updates, or the noise on Twitter could become nonexistent issues on Niche.”
‘Not the future’: European publishers remain steadfast in blocking alternative IDs to third-party cookies
Some European publishers believe alternatives to the third-party cookies, probabilistic or deterministic, will do more harm than good to their ads businesses.
Media Briefing: Why Leaf Group spun off its media arm into a standalone company
World of Good's newly appointed CEO Lindsey Abramo spoke with Digiday about her plans to lean into experiential and embrace niche vs. scale.
Dentsu’s latest ad report shows slowed growth, driven mostly by inflation
The good news in Dentsu's ad forecast is that there's still growth. The bad news: most of the growth is the result of inflation, while real ad pricing actually dropped a bit.
SponsoredWhat the measurement and currency discussion really means to TV advertisers
Ali Mack, head of TV and agency, Experian Major streaming video providers have recently made headlines by adopting new currencies for ad measurement, threatening Nielsen’s long-standing TV ratings monopoly. NBCUniversal, for example, has certified iSpot and VideoAmp as currencies for advanced audiences and formed the Joint Industry Committee with Paramount, TelevisaUnivision and Warner Bros. Discovery. […]
How chef influencer Tue Nguyen works with the BuzzFeed Creator Network
BuzzFeed's Creator Network has been valuable from an audience and production education standpoint, but Nguyen still drives most of her business on her own.
Dentsu’s new Web3 readiness tool shines light on the tech’s potential to complement AI
Dentsu's Innovation Initiative is launching a web3 readiness index next month — at a time when the industry is obsessed with AI. Could the two technologies actually make a good pair?