From Web2 to Web3-your conversion rate is my opportunity.
Amazon founder Jeff Bezos once famously said: “Your profit is my opportunity.”
Jeff Bezos was referring to Amazon’s efforts to gain market share by lowering prices and cannibalizing the profits of competitors. What they do in the corporate business field is actually much like what the Internet did in the past. Since the 1990s, lowering prices and redistributing value to users has always been the core economic driving force for the development of the Internet.
In fact, such examples abound in the Internet industry:
- Craigslist has achieved a reduction in prices and redistribution of value to users in the field of classified advertising;
- Google and Facebook have achieved lower prices in the media field and redistributed value to users;
- TripAdvisor and Airbnb have been able to reduce prices and redistribute value to users in the travel sector.
Now, some Web3 start-up companies are also beginning to eat away at the profits of traditional Web2 companies, and this trend continues-as long as the conversion rate of Web2 companies is higher, the opportunities for Web3 companies are greater.
Chris Dixon, general partner of a16z
How does Web3 affect the video game industry?
The video game industry has considerable revenue, with annual sales of up to 120 billion U.S. dollars, a large part of which is virtual merchandise sales, and the conversion rate of most video games can reach 100%. In contrast, Web3 games (in fact, encrypted games) do not have a high conversion rate because they directly return profits to players. For example, Axie Infinity’s total sales in the past year exceeded $1 billion, most of which are Give back to the player users.
For most video games, some people are willing to spend money to get ahead in the game, while others spend a lot of time and energy in the game and use experience to get ahead. The difference of Web3 is that its economic model is P2P: players can profit from each other without having to “feed back” the money and energy invested in the game to game developers as in the past.
How does Web3 affect the streaming media industry?
Today, there are more than 8 million musicians on the market using streaming services, but among them, less than 15,000 have an annual income of more than US$50,000, accounting for less than 0.2%. In fact, most of the revenue in the streaming media industry goes into the pockets of streaming media service providers and music record companies.
Through NFT, musicians can retain more than 90% of the sales of their works. By eliminating the “intermediary layer” (traditional streaming service providers and music record companies), musicians can rely on fans for profit, perhaps only 1,000 real fans You can feed yourself.
How does Web3 affect the social media industry?
Social media platforms such as Twitter, Instagram, and TikTok have a conversion rate of 100%-yet they don’t share any revenue with content creators at all! For these social media platforms, maintaining the status quo is great, but it is terrible for users.
In contrast, the effective conversion rate of Web3 social media platforms such as Rally, Mirror, and BitClout is far below 10%, but these platforms return most of their revenue to users and content creators.
The Web2 platform completely relies on content creators, but they will not give any feedback to content creators at all. This model is unsustainable.
In short, the conversion rate of Web2 will be an opportunity for Web3.
Posted by:CoinYuppie，Reprinted with attribution to:https://coinyuppie.com/a16z-partner-chris-dixon-web2-leap-to-web3-conversion-rate-is-an-opportunity/
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