Web3 Renaissance: The Golden Age of Content

In January 1996 , Bill Gates published an article that would become one of the early Internet classics. In it, he described the characteristics of the Internet, which will lay the foundation for the creator economy. “One of the exciting things about the Internet is that anyone with a personal computer and modem can publish any content they create,” he wrote.

Although Gates’ article is remembered for his foresight about the direction of the Internet, what is less known is that he also issued a warning: “In order for the Internet to flourish, content providers must pay for their work.” He wrote. “The long-term prospects are good, but I expect a lot of disappointments in the short term.”

Gates’ analysis is ahead of the times. Although the Internet does allow almost anyone to publish content online, 25 years after the release of ” content is king “, earning considerable income as a content creator has proven to be difficult to achieve.

The creator’s personal experience tells a story: 90% of the streaming royalties on Spotify go to the top 1.4% of musicians. The top 1% of all streaming revenues account for more than half of Twitch’s total revenue. 1% of podcast anchors account for the majority of podcast advertising revenue. “For me, we are not yet in an expansion period,” a musician told the New York Times when talking about streaming revenue on Spotify. “From a musician’s personal point of view, our labor returns are only declining.” This is not inevitable, nor is it unique to fledgling artists-it affects 99% of creators, including millions of fans Celebrities. When even they try to make a living online, they are hindered artificially.

The Internet should have ushered in the golden age of media-an infinitely rich world, where anyone can create anything they want, and everyone can find anything they are interested in. But, although Gates’ predictions of making money online through content proved correct, most of the money has bypassed the creators who make the content, and has instead fallen into the pockets of the platforms that aggregate it.

This is a story about how the web2 Internet broke the media business model, and how the emergence of web3 marked the destruction of the business model, tilting the scale in favor of creators. Without the native monetization method built into the web2 Internet, the main business model is opaque, advertising-based, and dependent on closed networks, which brings huge advantages to the platform. On the horizon, new business models and technologies are expected to open up economic opportunities and control, bringing a true golden age of creativity for artists and creators.

The original sin of the attention economy and the Internet

The core of the story of how the Internet broke the media business model is the simple fact that the Internet was not established to facilitate the flow of funds. Payment is not built into the infrastructure of the Internet-it is considered too risky. Marc Andreessen called it “the original sin of the Internet.”

The lack of payment infrastructure is the reason why the Internet is monetized through advertising. Instead of asking users to take out a credit card and enter their information into the website, users can profit indirectly without friction, paying not their money, but another asset: their attention. This has prompted a shift in power from the old media gatekeepers who controlled the creation and distribution of content—publishers, record companies, and film studios—to those who gathered the attention of consumers on a large scale.

Ben Thompson of Stratechery has written numerous articles about  how the platform he called an ”  aggregator ” has won the battle for consumer attention by aggregating demand, and has gained huge income and huge influence. YouTube has more than 2 billion monthly active users. Facebook owns nearly 3 billion. Spotify has 365 million, and these huge audiences come with huge advertising revenue. In fact, Google and Facebook alone accounted for more than half of digital advertising revenue in 2020.

The business model of advertising has profoundly affected the way the platform designs products. Views will flow to already popular content and creators, thus successfully creating a power law. Data about user preferences and behavior is the platform’s most valuable asset, so they closed their ecosystem and locked users in their network to accumulate the largest proprietary data corpus.

The advertising-based revenue model also has a huge impact on content creators. Creators are forced to seek the widest possible audience and create content that appeals to advertisers. This business model (or lack of this business model) has a profound impact on the way creators make a living and the content they create (incentivize viral, compelling, and aspiring content, while suppressing niches, deepening Content). The biggest impact of the web2 Internet may be creators who don’t exist and creations that have never been produced, because they don’t have a viable business model.

From attention economy to ownership economy

The platform-centric and advertising-driven economy may have won the web2 era, but its victory is not inevitable or final. We have previously written that in a rapidly evolving legality crisis, creators’ patience with the platform is fading-they are beginning to question whether the platform has the right to impose on their work, their relationship with fans, and how they are rewarded. So much control is for it.

At the same time, a new generation of technology is emerging, which is expected to change the balance of power in the creator’s economy. If the pre-Internet/web1 era favored publishers and the web2 era favored platforms, then the next generation of innovation (collectively referred to as web3) is to tilt the scale of power and ownership to creators and users.

There are four main ways that will happen:

1. By introducing digital scarcity and restoring creators’ pricing power.

2. By making supporting creators an investment behavior, not just altruism.

3. By introducing a new programmable economy model, spread wealth in the entire creator environment.

4. The  most important thing is that by creating ways for creators, you can not only own the content they produce, but also own the platform itself.

To sum up, these four changes are converging into a new era, a new incentive measure to reward new behaviors, giving the Internet the opportunity to collectively press the “reset” button, moving towards a fairer value distribution.

Let us introduce in turn.

The introduction of NFT and digital scarcity

Scarcity has a bad reputation, but it’s not just a lack of consumer choice: it’s about the power of producers—in this case, the ability of creators to earn meaningful income from their creations. In our current world of unlimited content based on platforms, there is no scarcity. On social platforms, content is endlessly commoditized-one video is more or less the same as the next, one song is the same as the next, and the content can be easily copied on the Internet. Creators sometimes approximate scarcity through membership or digital purchases (such as selling e-books, albums, or content subscriptions), but the underlying content can be copied and copied endlessly. The lack of scarcity leads to the problem of illegal copying and distribution of creators’ content-undermining attempts to directly monetize.

One reason NFTs (non-fungible tokens) are so exciting as a technology is that they enable creators to regain control of their content and reintroduce scarce dynamics that help monetize. When marking their work as NFT, the creators created a verifiable chain record of media ownership and provenance. The end result is a unique digital asset that can be traced back to the artist. Fans who are passionate about the creator’s work are willing to pay more for this standardized media, so that the creator can better capture the full willingness of fans to pay. The ultimate impact cannot be underestimated: Content creators no longer need millions of fans to make a living, but can rely on a few enthusiastic contributions to survive.

The booming music NFT market demonstrated this effect in action. On streaming platforms, each stream of a song contributes the same amount of revenue (approximately $0.004 per stream on Spotify), regardless of the fan’s specific affinity for the artist. In contrast, on platforms such as Catalog or Sound, super fans buy NFT music at a price of thousands of dollars per person, while creators can earn income that previously needed to be played tens of millions of times. NFT collector Brett Shear, who owns 45 catalog songs, told Time Magazine: “Just like you buy art that you want to put in an apartment, I want to listen to this music and enjoy it-it’s a different kind of owning it. Feel.”

Purchasing NFT is similar to collecting real-world goods, making fans feel closer to the artist and owning some rare things, similar to “irreplaceable super category”. web2 The digital scarcity and uniqueness that the Internet lacks are realized by the blockchain, which brings a new business model to creators and reduces the economic control of the platform.

The exciting thing is that introducing scarcity through NFT does not mean that access to the underlying media is restricted, just like paywalls or paid digital downloads. The actual media supporting NFT can still be public goods, and anyone can use it for free. Those who think this undermines the scarcity of NFTs (“right-click and save”) have fundamentally missed the point.

Sponsorship+: Supporting creators becomes an investment, not just an altruistic behavior

In 100 True Fans, I described that creators can use the self-interest of fans to profit at a higher price. By providing substantial value and results, creators can make money and make a living with fewer fans more effectively:

This represents a shift from the traditional donation model (users pay for the benefit of creators) to a value model in which users are willing to pay more for things that benefit themselves.

Web3 takes this idea to a new level, because all tokens are investments, which can not only provide funds for creators, but also benefit holders if their value rises. Jesse Walden defines “sponsorship+” as a potentially profitable sponsorship, which is a phenomenon introduced through tokenized ownership. Without an on-chain ownership record like NFT or social tokens (imagine trying to resell TikTok videos downloaded from apps), then this kind of investment element is impossible in web2.

What is an example of sponsorship + action? Earlier this year, Mario Gabriele of The Generalist crowdfunded 20 ETH for a group of analysts to conduct in-depth research on Coinbase and commissioned artwork to accompany this article. Crowdfunders obtained a certain percentage of shares in the presentations and artworks, and all of these shares were minted as NFTs. In total, NFT’s sales revenue was 28.6 ETH, which brought a 43% return to crowdfunders in just a few weeks.

In addition to sponsorship and investment, another benefit is to be a member of a group of like-minded individuals. Many successful crowdfunding and NFT sales in the crypto space are driven by users’ desire to belong to a community, and the community is restricted by token ownership. This echoes the phenomenon I wrote in 100 True Fans: “People are willing to pay high prices for exclusive, differentiated content and access to networks of like-minded people.”

For fans, the possibility of profit will magnify their motivation to support creators. Interestingly, it also introduces a whole new part to the track of creators that never existed in web2: speculators. It is important that all these users-by becoming owners of assets consistent with the creator’s success-are motivated to help expand the creator’s work.

New programmable economy model

One truth of the creator economy is that creation is usually a collaborative act. YouTube creators take the lead in each other’s videos. The musicians draw inspiration and inspiration from each other’s work. TikTok videos usually consist of (usually invisible) works by multiple creators: a soundtrack by one creator, and a choreography by another creator.

Unfortunately, the web2 system is not set up to reward or track this kind of collaboration. In the winner-takes-all world of algorithm platforms, value often flows only to the viral creators, ignoring everyone else who participated in the creation of the work. This has led to strikes and dissatisfaction among creators, who believe that their contributions have not been recognized and recognized.

In web3, the promise of tokenization means that royalties can be established so that the entire attribution chain can profit from collaborative work. Early examples of this include the split function of Mirror and Foundation, which automatically routes revenue to various Ethereum addresses that contribute to the project.

It is conceivable that any digital work can use the elements in the universal media library and automatically consider income distribution and attribution. Nir Kabessa wrote about the “memetic economy” in which the idea of ​​remixing and disseminating on the Internet can become the basis for value creation:

The famous meme GIF is linked to the address of the NFT, so when someone shares the original NFT in their article, they can pull the address on the chain. This is powerful for memes because it allows them to maintain attribution and context on each platform. Therefore, any operation on the meme NFT is accessible, readable and usable on almost all platforms. Each bid, swap, and transaction is added to the metadata of that particular NFT.

Except for memes (like Dogecoins are memes), if each creative work is linked to the on-chain record of its source, the work can be tracked on the Internet, and the creator can profit from the subsequent use of his work .

DAO and community ownership

In this article, we believe that the root cause of inequality in the creator field is that the platform exerts excessive control over creators and their works through the ownership of content production and distribution methods. The most direct way to challenge this control is to change who owns the means of production.

The DAO (Decentralized Autonomous Organization) and other collective ownership mechanisms have created a way to break the platform’s centralized control of the creator pattern by allowing creators to collaborate without external mediators stipulating terms of participation. In the DAO, the governance system is determined by the members, and there is no external shareholder pressure to squeeze profits. On the contrary, in the creator DAO, the owner is the participant: the person who produces the content, distributes the content, consumes and values ​​the content.

An early example of a gradually decentralized creator platform is SuperRare, an NFT market that distributes tokens to its artists and collectors who will manage the curation, DAO vault, and future product direction. Other organizations prioritize the community and tokens: ElektraDAO is a community of 42 musicians, visual artists, developers and strategists who have developed a music-centric interactive choice of your own adventure web3 game . ObscuraDAO provides commissions for photographers to produce their envisioned projects, communities, funding opportunities and educational resources to help them explore NFT photography.

DAO’s commitment is to adjust incentives through stakeholder-first incentives and eliminate the need to extract value. The result is: a democratized, non-intermediary content structure in which creators can control their works, how they are distributed, and how to evaluate the value of their works.

In addition to DAO, the inherent interoperability of web3 makes platform lock-in potentially much smaller than the problem in web2. The atomic unit of web3 is the account. Users control the account through their key pair and can be used across any application or protocol. Since all smart contracts are transparent and publicly checkable, opaque and arbitrary behind-the-scenes transactions are more difficult to achieve. Although in its infancy, the web3 world is moving towards a more open and standards-based philosophy, which benefits creators and users.

Creator’s power and ownership

As long as the Internet exists, thinkers and philosophers have described the utopian vision it may bring-especially in the media field. That utopian vision has not been realized. At least, not yet.

In the past, I referred to ownership as the original system condition, and all other conditions were derived from this condition. Ownership determines incentives. It determines the opportunity. It determines how wealth is created—and for whom. In the past decade, we have lived in a period when ownership was concentrated in the hands of a few centralized technology platforms that had data, end-user relationships, and ways to distribute and monetize content. Although user-generated content creation has exploded during this period, it has also led to the dependence of most creators on a few new gatekeepers, widespread burnout, and economic unsustainability.

Fortunately, the upcoming developments represent a shift in the balance of power to creators. With the key new features enabled by web3—digital scarcity, sponsorship that doubles as an investment, programmable business model, and community ownership—we are on the cusp of a new creative renaissance on the Internet. I believe that web3 has the potential to bring incredible opportunities to everyone who contributes and creates on the Internet: a true golden age of content that we have been looking forward to.

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