This piece was originally published on May 28, 2020.
The media companies of tomorrow should look something like the record labels of today.
In the record industry, talent is the driving force behind the business. Talent is the source of the reputation and the end of the line when it comes to driving financial returns. Without great, world-class talent, it doesn’t matter how well you can promote or polish an artist, it will not have the same returns.
When you think about crypto or web3 or [insert fabulous marketing term here], you think about tokens. Tokens have been the foundation of each evolution and cycle of crypto, serving as the floorboards for everything to build on top of. But in this process, we’ve yet to take a breath and ask ourselves whether our attention — and intention — is going to the right place.
In web2, the framing was ‘if the product is free, you (human!) are the product.’ Sure, there is grander access and opportunity than ever before, with services and systems affordable and provable to virtually anyone with an internet connection. In exchange, you gave your attention and data, which was the lifeblood for these platforms and services to drive revenue that fed the experiences you were now so easily able to access and enjoy. For many this is still fine. While many champion and resist against such a violating and intrusive model, most are happy with the exchange especially if it means less money coming out of their pocket. But still, the model is imbalanced, when we realize how this data is leveraged, frequently (mis)used and capitalized on to drive an insane amount of power and wealth to a particular few.
In web3, the framing is that the product is yours, and so is the risk. All held in a token. But this mantra has had the effect of positioning the token (or NFT) as the end in itself, and this has driven misaligned incentives. The thing is the token isn’t the thing. The token is the catalyst. The thing is what happens because of the token. And that as a community is what we need to concentrate on now.
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“There are going to be times when we can't wait for somebody. Now, you're either on the bus or off the bus. If you're on the bus, and you get left behind, then you'll find it again. If you're off the bus in the first place — then it won't make a damn.” -- Ken Kesey
“Seeing the same homies in different cities” -- Alex Zhang
Crypto people talk a lot about cities. We like to talk about how blockchains are like cities. About how tokens and DAOs can improve the governance and economy of cities. And about building new cities in the Metaverse and even in the real world. But recently, in the context of NYC NFT and Solana Lisbon and now Art Basel-Miami, a new urban crypto phenomenon has become clear: the moving city.
press “play” before you begin…
It’s not very helpful to make direct comparisons between the evolution of technologies. Other than broad similarities in the way new inventions evolve and are adopted, the unique way a technology interacts with a culture at a particular moment in history is so specific that such comparisons likely miss more than they predict. But there is something resonant in analogies between the dissemination of the ‘original’ Internet (in, say, the 1990s), the social components of Web2 and the present-day rise of blockchain technologies. The commonality is evident. This is why crypto folks refer to those early Internet days so often. Both represent, in their own ways daunting and inspiring, a radical re-architecture of communications and commerce.
This analogous radical ambition of the early Internet and what we often call Web3 today results in some similar implications for users. Rather than being able to employ existing technologies to participate in the new wave of culture, individuals and organizations are encouraged to learn and adopt new means to coordinate and participate in cultural evolution. In the early 1990s, adventurous internet hobbyists were faced with the challenges of setting up modems, installing socket drivers, and finding and navigating servers with unique and obscure commands. Each of these steps required self motivation and was in itself a hurdle. Each step, offered with minimal support, was a barrier to adoption. Like today, the early internet required a maverick mindset to push beyond the existing comfort zone. Even for those wary of comparisons, this similarity to Web3 is undeniable.
“When you’re young, you look at television and think, There’s a conspiracy. The networks have conspired to dumb us down. But when you get a little older, you realize that’s not true. The networks are in business to give people exactly what they want. That’s a far more depressing thought. Conspiracy is optimistic! You can shoot the bastards! We can have a revolution! But the networks are really in business to give people what they want. It’s the truth.” - Steve Jobs
We do these things…
“…not because they are easy, but because they are hard, because that goal will serve to organize and measure the best of our energies and skills, because that challenge is one that we are willing to accept, one we are unwilling to postpone, and one which we intend to win.” - John F. Kennedy
We are entering the age of living online. An increasing number of people have employment that exists only online. We have meaningful relationships that are primarily or even only online. It should not be surprising that a growing number of us -- especially we who are most intensely online -- are embracing the concept of ‘owning’ online things. A belief in the value of NFTs is a logical extension of the vitality of online experience and existence.
As with the ‘real world,’ the things we own enable important connections to other people. If we own related things, we may share similar personalities, interests or life situations. We may have a common vested interest in preserving or increasing their ongoing value. We may also be engaged in a kind of game with each other, competing to purchase more or more special versions of the item. We are bound together by economic commitments.
The archetypal example in the physical world is real estate. Where we live is a huge part of our identity and, usually, our net worth. By owning property in the same neighborhood, we have committed, at least to some extent, to a shared destiny. When we volunteer, for example, for an event or organization that makes the block a nicer place to live, when we organize or sponsor services that enrich the area, it enhances the value of everyone’s home. As the value of the neighborhood increases, we benefit together, both in terms of status as well as financially. As our relationships and sense of self become more embedded in the neighborhood, we become more attached to the property, deepening the connection and spurring active engagement. In healthy neighborhoods, all residents benefit from this ‘virtuous circle.’ Ownership leads to meaningful engagement which leads to increased desirability..
NFT collections, and especially the latest wave of ‘avatar communities’ aka PFP collections, have the potential to mirror this healthy dynamic. When we own a SupDuck or Cryptoad, we have a motivation to engage in behavior that makes everyone’s ownership more significant. As ‘residents’ of that virtual neighborhood, we all have an interest in broadening the list of ‘stuff you get’ as part of your NFT. And yet, the vast majority of these projects pay only lip service to that potential. The vast majority of projects offer only hand-waving assurances of future amenities. Rather than investing in genuinely valuable services for its community, the focus tends rather to be on shilling and stunts to generate FOMO.
(this post includes a visual Edition of the article by Jack Butcher. all proceeds go to the Mint Fund)
Long Term maximum value requires accepting — even embracing — loss of control.
In the 20th Century, media became an industrial product. This process had started with print, initially in the United Kingdom, and led to the massive successes of the newspaper and publishing industries. This same approach was applied to film, leading to the Hollywood studio system, which consciously employed the same production line framework as Ford's Detroit plants. So too did music become a production-oriented industry. Tin Pan Alley and the famous Brill Building were factories of culture, churning out songs, which would be paired with artists, recorded and pressed for distribution.
The heart of this transformation was the realization that there were economies of scale that, especially when coupled with the protections of copyright, could generate attractive profits for shareholders. The media company would have knowledge of its customer, through the new science of market research. This insight would be used to develop products that the market would desire. The products would be produced as efficiently as possible, pushing talent to create new work on budget and schedule.
Implicit in the name ‘Web3’ is the expectation of replacement. In technology, versions are successors. When the new model comes out, we upgrade and the older one is replaced and forgotten.
Is this what we mean when we refer to Web3? Will it replace the set of principles, technologies and behaviors that we’ve come to know as Web2? (Is this even the way that phases of the Internet works?)
Many blockchain enthusiasts seem to suggest as much. As the term Web2 has become closely associated with centralized social networks like Twitter and Facebook, and as those networks have become increasingly politically powerful -- with arbitrary, capricious or simply incompetent moderation policies not to mention potentially societally harmful business practices -- it is common to hear crypto folks imply that decentralized applications would do a better job. Community-owned networks would be fairer, in that the users who created the content and attracted new members would fully participate, as token holders, in the value they created. The distribution of content could be based on meaningful values like reputation and expertise, rather than gamified outrage and algorithmically rewarded hype. And governance, like moderation policies, would be driven by the entire community, rather than a small club of executives and their handpicked oversight committees made up of insiders looking to maximize their own wealth or security. The attractiveness of this superior model, it is proposed, will lure in key influencers, provide a better user experience, and propel a shift from the old social platforms to the new.
a glick x tal x darkstar jam
If you walk the streets of any American neighborhood or town more than, say, 100 years-old, you’ll see ghosts.
Not the ghosts of previous inhabitants, although that’s also possible. But the ghosts of the civic and religious organizations that were once the core organizing principle of American communal life. You can see them in the fading signs for men’s fraternities and women’s leagues that no longer meet, the labor halls renovated for restaurants and condos, and the community centers for ethnic and immigrant groups that have long since decamped for the suburbs. You can see those ghosts in the statues of beloved (often dubious) heroes that were erected by the regiments (or descendants) of veterans of various wars, the money painstakingly raised through membership subscription. Most of all, you can see them in the old churches, each for a subtly different but vigorous denomination, once the pride of their parishioners, now usually empty.
In the morning, you’re picking crops on the farm. By afternoon, you enter the arena to do battle. This isn’t a remake of the movie Gladiator. It’s one Anon’s day in the world of crypto games. As DeFi, NFTs and other blockchain-based technologies compete for mindshare, the entire crypto world is not only borrowing heavily from game mechanics but increasingly becoming a single massive integrated game itself. This is the inevitable result of user sovereignty. Interoperable protocols provide the freedom to move between thousands of dapps and blockchains, so developers are leaning into gamification in order to put a leash on existing users and keep them coming back for more.
Game designers are, of course, experts in terms of keeping people engaged for long periods of time, even more than social media companies. Where social media companies have a recurring strategy to get someone to engage and then keep them engaged (ie. monetizing their attention through ads), games are different. Games look to draw you in at an initial (often free) engagement, but then encourage you to build status and identity within the experience itself. Mapping all this to crypto is easy. The users make purchases (see: NFTs) that make your social involvement (see: social tokens) unique. The experience blends intrinsic and extrinsic incentives to keep you invested (financially & socially) in the experience itself.
You’ve read a bunch of articles, blog posts, and essays and suddenly see that blinding flash of realization. You’ve formulated an idea that feels new and important and worth writing down and sharing with others. You start pulling together key thoughts, quotes and citations. You organize them into an outline. You write. You edit. You publish.
At the edge of the steppes was a bend in the great river. On one side lived herdsmen, on the other were forest people. The nomads valued the forest-dwellers axes and baskets. The forest-dwellers loved the herder’s hides and wool. As the two sides became more familiar with each other, they began to trade.
Within a few years, there was a temporary camp in that bend of the river. It was a perfect place to meet. The two sides would do business, swap stories and eat together. Soon traders were coming throughout the year. The camp became permanent and then became a town. People lived there all the time, a new community formed of people from both sides, catering to the growing number of visitors bringing goods to sell.
Web2 communities were built on intrinsic incentives. Web3 communities will take the intrinsic mechanisms of Web2 and meld them with extrinsic incentives,
We have in the past discussed how the blockchain concept of a ‘decentralized autonomous organization’ (DAO) might apply to groups of people who want to make stuff. We called this theoretical format a ‘Creator DAO.’ In this paradigm, a team or community interested in making something would implement a smart contract according to which tokens in the project would be granted to contributors, customers or investors, in return for their labor or money.
In 2018, I wrote an article for Token Daily on the web's reputation systems. Three years later, we've hit many of the milestones. Below is an update to the original version that includes some recent advancements.
Reputation, on the Internet, has been warped. We’ve built an information system that rewards recency and relevancy mechanics, with an aim more towards discoverability than integrity. It has become a competition to generate results for result’s sake. We’ve strayed away from the efforts that make something truly reputable and instead over-indexed on the end result, generalizing how we value information on the web today. It doesn’t matter what you put into it as long as what comes out matches the criteria for success. And that’s wrong.
There’s a very simple reason for this behavior: we don’t know what the systems to derive reputation look like on a global scale. It’s not quantifiable, and at a baseline isn’t a definition that is mutually agreed upon by all. Filtering this much content on the web, even in groups powered by large computing systems, is too influenced by outside sociological and political pressures. This filtering pushes towards filter bubbles and separates in an effort to integrate. Not to mention, outside incentives are hindering our ability to deliver anything of absolute true value.
Dark Star, a publication, produces articles. Those articles can be purchased as NFTs, at any point in the ideation -> writing -> editing -> published lifecycle. There are two tiers of access to those articles: As a ‘Reader,’ for $10 bucks a month, I get to read all of the published articles. But as an ‘Investor,’ for $20 bucks a month, I get a share in the sale of the NFTs. As an investor, you have transparency as to what is being created and what the benefits are as a token holder of that NFT.
Can you see that future?
In my last piece, I proposed that the media companies of tomorrow should look like the record labels of today. In the music industry, talent is the driving force behind its business. Talent is the source of the reputation and the end of the line when it comes to driving financial returns. Without world-class talent creating great products, it doesn’t matter how well you promote or polish it — the results will be the same.
The “monetize the individual” disruption in media serves as an opportunity for business reinvention of companies who choose to recognize and react to this newly acknowledged trend forming. It’s not just about enabling and liberating talent, but more importantly about maintaining, supporting and growing that individual’s business better than they’re able to do on their own or elsewhere. The future media business will extend to newfound territory that fortunately for them, is right in its wheelhouse: Talent Management (Artists and Repertoire A&R).
The places and ways to enjoy NFTs, especially for non-owners, essentially do not exist. While this is a problem, it makes sense. The breakthrough idea behind NFTs was that unique digital objects could be owned. So the initial set of applications were those directly involved in buying, selling, and storing. We needed marketplaces to shop and bid and wallets to pay with and hold our purchases. These are experiences that emphasize the private and personal nature of an NFT. But as with owned physical objects, this transactional aspect is only part of appreciating a possession. For any item with utility beyond immediate sustenance and safety, value is created socially. We understand its worth based on what the broader community thinks it’s worth. Right now, the community of people valuing NFTs is only the people making and buying them. For a sense of scale, the top 25 decentralized apps all together, not just those related to NFTs, probably had less than 250,000 transacting wallet/users over the last 24 hours, and nearly half of these were at Dapper’s Top Shots. For NFTs to reach their true potential, we need to build much farther-reaching consumption experiences. And to not repeat the same mistakes of our current digital era, we need these platforms to maintain a decentralized ethos.
As any asset begins to accrue greater recognition and deeper social significance, its value moves beyond being predominantly transactional and towards an expression of the owner’s identity. Its value transcends the actual product and comes to attribute worth to the owners themself. As this value is socialized, the community starts to not only associate the worth with the product but with the person too. This is true in the physical world, where the identification with something you own is different from that of something you rent, lease, or borrow. It is also true with NFTs. But, all of this won’t happen at scale without NFTs reaching and being adopted by the broader community.
Media companies are talent companies. As that becomes increasingly obvious to the media industry at large, there has been an acceleration of development by both challengers and incumbents to position themselves to capture media's most critical natural resource: people.
The creator economy served as a catalyst to disrupt legacy structures by introducing platforms & products that enable individuals to build a business around themselves. There are many reasons why individuals want to go independent which I explain in detail here (Media Companies as Record Labels) and here (Rise of the Renaissance Creator), which introduce a variety of opportunities for both the talent and existing media institutions. The rapid development of platforms and services that empower individuals to build a business around themselves is a major one. Top talent wants more control and ownership over their work, having options to transcend their reputation and financial success from a parent brand.
If media companies are record labels and creators are rock stars then the audience are fans — and that introduces an entirely new business opportunity.
Media, like music, can only thrive when the audience and the creator travel down a path together, giving each other the opportunity to define one another. It’s a two-way street, not a top-down dictum. But what happens when a creator or artist gets so big that their audience starts building products on top of their work?
The media’s status quo is accelerating towards disruption. We’re seeing the development of new media brands (micro-labels) on platforms and services, the prioritization of talent as a core business pillar by media companies and the shifting business models moving from content direct to creator direct.
As each component of creation evolves, there is another evolution happening with the most critical part of the media business’ formula: the consumers. In the media business, business models drive product strategy. And while that’s the driving force behind the product, it’s contingent on consumer interest, participation and loyalty. That means that as the economy shifts, so needs the consumer value. This is an opportunity to build a new business that puts the creator and consumer relationship front and center and introduces the element of ownership. This is the business of fandom and subcultures.