Monetisation of the messaging market is in full swing, and many apps are starting to use advertising to keep the lights on.
The problem is, Facebook — via Facebook Messenger, WhatsApp, and Instagram — attracts the best advertisers due to its massive scale.
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Instead of battling it out for advertising dollars, messaging provider Kik is moving into the cryptocurrency market, hoping to incentivise developers and content providers to build on Kik and earn digital currency.
Facebook and its collective messaging apps is becoming a powerhouse in the advertising world as it has the massive advantage of offering advertisers placement across these multiple properties (though WhatsApp has so far yet to start down this road).
Competitors like Snapchat are feeling the heat; it continues to disappoint investors in its parent company Snap with lower-than-expected subscriber and revenue growth.
Why? It simply doesn’t have the scale that Facebook has, and Instagram continues to stay in lock step with Snapchat in terms of new features.
Executives at messaging provider Kik understand this problem too, and they have turned to an unusual source for revenue: cryptocurrency.
The app, which primarily appeals to teens, is planning an initial coin offering, launching its own cryptocurrency called Kin.
Kik wants to sell 10 percent of its Kin currency (half to institutional investors and half to retail investors) and keep 30 percent.
The other 60 percent will be overseen by a nonprofit called Kin Foundation that will work to make Kin a popular cryptocurrency.
That foundation will give away 20 percent of its stock in Kin every year to developers and others who help build out the economy for Kin.
In the future, users will be able to earn Kin by providing value to other members of the Kik digital community through curation, content creation, and commerce.
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Kik users will be able to spend Kin on products, services, and other assets offered by merchants, developers, influencers, and other participants.
Kin will sit at the centre of it all, driving demand and fundamental value for the cryptocurrency.
Kik is hoping that Kin’s resulting value will enable the launch of an economic incentive mechanism, the Kin Rewards Engine, to further grow the ecosystem.
This strategy is very unusual for a messaging provider, but a cryptocurrency strategy could create a self-sustaining economy for Kik, and the value of that currency could exceed anything Kik could earn from advertising.
Kik envisions developers and service providers freely innovating and competing for compensation and users benefiting from a diverse digital experience, freedom of choice, and access to a broad range of commercial services.
For example, brands will be able to reward users with small amounts of Kin for completing simple tasks.
This can include answering questions in a survey, creating themed content, or curating content. Users can reward other users for content they like by using Kin.
Already, Kik has been operating an in-app currency that rewards users for performing certain actions such as watching ads or unlocking game achievements.
These points can then be spent within Kik’s ecosystem of apps and chatbots.
This means if one app rewards a user for something, the user can spend it on another. Kik’s in-app points have seen a transaction volume that is three times greater than bitcoin, currently the world’s most widely-used cryptocurrency.