Tokenomics: The Best of Web3 Media

I really enjoyed this post, written by Sam Hatem. Web3 is everything I loved about the control of Web1 and the scale of Web2.

These are exciting times.

Paragraphs like this represent my own highlights.

LET’S BEGIN

We hear polarizing responses when we tell people we’re building tools for content creators. Some have said, “There’s definitely something here. Someone’s going to hit this big,” but we’ve also heard, “Everyone and their mother has tried building tools for creators. You want to use blockchain too? Oof! Yeah, good luck with that.” We are going to address the latter group here, explaining our bet on web3 media.

Let’s start with a refresher on the evolution of media on the internet. In the first stage of the web, web1, people needed their own website to share content. Owning a website comes with a lot of control, but setting one up is difficult and it’s hard to interact with others.

Enter web2 and the big social networks. Sites like Facebook and YouTube made it really easy to share content and interact with others, but users gave up their control. Big tech choses who can post, what you can post, and who makes money.

Now there may be an opportunity for web3, the emerging internet centered around user ownership, to combine the control of owning a website with the ease and reach of big social networks.

Media in web3 will be owned by its users, creating a major shift in how users interact. In web2 media largely consists of content creators and consumers. Creators make content and with enough consumers on the other end, advertisers pay them for their reach. User-owned networks change this dynamic, though. Content creators can become community leaders and consumers become members.

Ultimately, our bet is that this is a 10x better model that will siphon major users off web2 platforms in the next few years. Let’s first explain why this is so much better and then we’ll dive into how we see the transition happening.

Media on web3 can offer content creators more control and better incentives. They’ll be able to focus on the quality of their fan base instead of quantity. Passion economy products like Substack and OnlyFans started this transition away from advertising based models. Instead of maximizing reach and advertising revenue, subscription platforms require fewer fans to be just as profitable. Now emerging ownership economy products can take this to another level by providing a suite of benefits to community members.

Soon it will be the norm for creators to offer exclusive content, priority access to merch drops and in-person experiences to their biggest fans. In crypto this is beginning to emerge with social tokens, cryptocurrencies that represent stake in a person or online community.

Consider grammy award winning recording artist RAC’s new community. RAC launched his own $RAC token that gives holders access to a discord server and priority access to merch drops. Outside of crypto, Nelk, a raunchy YouTube channel, recently introduced Send Club, a subscription community with access to unreleased content and private events. We expect that this model is far more lucrative and we anticipate many following RAC and Nelk.

Another benefit is the potential to develop a greater reputation. Right now when someone creates content on YouTube or TikTok, they are limited to being a YouTuber or TikToker. A YouTuber with 10 million subscribers is labelled a YouTuber like someone with only 1000. Their upside is limited by their platforms and the only way they can outgrow it is by leaving. Traditional media companies like Disney or the New York Times were able to develop prestige over time by owning their content and their distribution. Online creators should have the same opportunity.

Web3 also benefits consumers who can now become active members in online communities. Creator’s biggest fans will have direct access to creators through exclusive chats. Instead of just being another voice in the crowd, members will be able to push the direction of the community. Members will also have access to upside in their community by owning a stake in it.

As consumers begin to experience the benefits of being members, we think they’ll start pushing more of the creators they love into joining web3, creating a flywheel effect for adoption of web3.

Next, let’s dive into how we see this transition happening.

The Transition to New Platforms

Our bet is the transition will start with social tokens. Creators will start using Roll or Rally for tokens as a toy to reward their biggest fans.

People love ownership and exclusivity which makes social tokens great for bootstrapping a user-owned community.

Now creators will have brought their fans from multiple platforms together, something that was never possible on siloed web2 platforms.

It will be too early for many to take a leap of faith and leave existing platforms, so the next step will be setting up new tools around their community.

Creators will use Collab.Land for messaging groups, and Zora or Foundation for exclusive drops.

New tools like these will strengthen their existing community by giving more opportunities for fans to interact with creators and support them. By adding more utility to their tokens, creators will drive more demand for them, too. The increased price benefits early holders, strengthening their ties to the community.

Creators that get to this stage will have built a strong community outside of traditional web2 platforms. They will no longer need the large network of web2 platforms because they’ll know they have superfans who will follow them wherever they go.

Creators will now be ready for web3 native platforms. Web3 native platforms will give creators even more control and opportunities. Creators will have all the benefits of owning their own website without actually needing to set one up. Web3 natives platforms will give creators access to tokenized subscriptions, money streaming, and exclusive drops in content to reward their most active fans.

This transition will start with a handful of pioneers willing to try social tokens. More social tokens will lead to better tools. Better tools will allow for better web3 native platforms. Once consumers start using better platforms, they’ll get other creators to move, too. Resultantly, we’ll see a flywheel effect drive network adoption.

For the flywheel effect to ensue, web3 platforms will need a comparable user experience to web2 platforms. We think the tech stack is finally there. Arweave has been an awesome decentralized storage solution which we’re storing all of our content on. For the foreseeable future website and server hosting will still be centralized, but we think that just giving users control over their data is enough for now. In terms of wallets, we’ve found magic to be the best available for anyone new to web3. There’s still a lot to be desired from it, but magic is easy enough that anyone can use it.

Soon we expect the growth in decentralized finance (DeFi) has seen to be replicated in web3 media. Growth in DeFi exploded because it consists of composable financial primitives that could be built on one another. Now the same thing is starting to happen for online communities through community legos. We think web3 networks will be 10x better than their web2 alternatives much sooner than you’d expect.

You can find the full article here: https://outpost-protocol.com/outpost/post/P6pptMZd0ILJ7mf-Cmfru2EwZyWSFZrmPwGaaJuH18E