Written by Bonk
Web3, Social Media, and Creator Economy: The Internet’s Original Sin and a New Era of Monetization
The Twitter Fiasco
The Babylon Bee is a satirical media outlet, often labeled as right-wing. The company held a strong presence on Twitter until it was suspended due to "hateful content" in March 2022. After the Babylon Bee was banned from Twitter, Elon Musk approached CEO Seth Dillion to confirm if the claim was true. Soon after, Musk announced his interest in purchasing Twitter. Outrage ensued.
Since the Culture War hit social media, the unspoken truth was, "Who controls the platform, controls the debate." Discussions on race, gender, and equality have dominated the political discourse, and the platforms that hosted discussions on such topics caused much controversy due to their influence on the Culture War.
Inevitably, algorithms and inherent biases from the makers of such algorithms amplify a certain position in the political debate, whether it be left-wing or right-wing. Not only are platforms going to promote certain views, they will censor voices for arbitrary reasons, as exemplified by the suspension of The Babylon Bee.
The Root of All Evil: Attention Economy
But why is this all happening? Occam’s Razor tells us that profit motives are a driving force. Marc Andreessen, co-founder of Andreessen Horowitz, acknowledged "the original sin of the internet", claiming the inability to build payment systems into the browser caused the internet to be based on advertisements. The ad-based economic model combined with advanced data analytics gave birth to the monster we call Big Tech.
The general idea is that the more exposure, the more engagement. Therefore, platforms are incentivized to attract and lock in a large enough audience. Data analysis on user behavior is heavily used in the process to keep the audience engaged, and big tech companies have been chastised for unethical data collection and use.
“Centralized platforms follow a predictable life cycle. When they start out, they do everything they can to recruit users and 3rd-party complements like developers, businesses, and media organizations.” - Chris Dixon
The effect of extensive behavioral analysis was apparent. Viral content became incentivized while niche and in-depth content were pushed aside, creating a tilted playground. This caused creators to adjust their strategy accordingly to seek the broadest audience with the most viral content they could possibly produce.
Herein lies the real problem: fake news. To garner a larger audience, media outlets started to push click-bait news and sometimes blatantly false information. Social media platforms would censor such articles and apply fact-checking mechanisms. However, the validity of such efforts drew criticism as to whether or not they violated the first amendment.
The demand for freedom of speech spawned new platforms like Gab, Gettr, and Truth Social. However, these platforms were far from a solution because humans are inherently biased. A code written by a human is biased. And policies that oversee algorithms are biased.
A Decentralized Social Graph
Sam Bankman-Fried, CEO of FTX, showed interest in creating "Web3 social media" based on blockchain technology. During an interview with Bloomberg, he expressed his wish to talk to Elon Musk about Twitter and social media, further outlining what a Web3 social platform would look like.
The general idea is that a blockchain will host all the data and multiple front-ends will curate content for their own use. Bankman-Fried claimed that in this way, constitutional rights can be preserved while platforms can censor out unwanted content. Users can choose what platform they want to participate in, and the market will eventually pick a winner.
Lens Protocol is already creating something similar to SBF’s vision. It is "a permissionless, composable, and decentralized social graph that makes building a Web3 social platform easy." The protocol adapts NFTs to support its core functions: users will each have NFTs representing their profiles and followings, and publications will be stored on IPFS.
The Lens Protocol proposes to fundamentally change how social platforms are built. Users will own and monetize their data regardless of the platform, meaning that users don’t need to worry about their content being deleted. Users will be able to migrate to other platforms with their data intact, on the blockchain and decentralized storage, in the event they are threatened with censorship.
Tokenization of data opens up new opportunities for developers to innovate in terms of content discovery. With the data and front-end separated, developers can focus on the user experience rather than the network effect. The founder of Lens Protocol, Stani Kulechov, predicted that entities could monetize through value-added activities such as moderation or modules such as pay-to-follow, subscribe-to-follow, and auction-based collections.
Furthermore, he claims that different concepts in Web3 pertaining to digital footprints can create new ways to write algorithms. Developers can create algorithms based on community participation, DAO voting, NFTs in possession, and Defi protocol usage.
The Changing Landscape of Creator Economy
According to Philipp Stauffer of FYRFLY Venture Partners, the emergence of crypto will bring about a "fat tail" economic model where crypto will replicate the benefits of the firm. meaning that individuals will "reject corporate life for a fluid market defined by decentralized mechanisms for distributing talent and resources, rewarding work and gauging merit."
We are already witnessing how crypto is enabling individuals to monetize their work, especially in the NFT scene. It is pushing the ad-based model to shift to an ownership economy as creators are tokenizing their content and creating communities without intermediaries. NFTs enable fans to own a piece of the content they like. It could literally represent a fraction of ownership or a membership that can be traded.
As discussed above, current monetization models incentivize creators to seek the largest audience available since monetization models are designed to do so. Crypto changes the equation so that creators can monetize their work without appealing to the masses. Furthermore, individuals can issue NFTs to fund their operations at scale. Daniel Allan is a prominent case in this regard. Often considered as one of the first "Web3 native" artists, Allan was able to support his music career with the help of NFTs.
Allan’s NFT sales resembled a crowdfunding campaign, yet differentiated in terms of long-term value capture. Current subscription models and crowdfunding mechanisms are mostly geared towards service providers. For example, you don’t "own" a subscription to a cooking show. A subscription is only a type of contract between two parties to exchange goods and services. Enter NFTs. The meaning of a subscription totally changes.
Users can buy a subscription and display it on their social profile or sell the subscription on a secondary market. As the subscription resembles a collectible or a tradable object, the audience can align their economic incentives with the creators as the subscription can appreciate in value.
Furthermore, the programmable aspect of NFTs can also open up new opportunities for creators. Events, giveaways, gated content, and airdrops are only a few examples. When NFTs become more integrated into the current technology stack and allow a smoother user experience, we can expect creators to communicate and monetize their content at scale.
However, the current state of NFTs is far from ideal for regular fans, as NFT sales often create speculative bubbles and backlash from fans. Peter Yang argues that the target audience for NFTs are the "super fans who are willing to pay a lot" according to the creator demand curve.
Lens Protocol just released the beta version of Lenster, a Twitter-esque social platform built on top of Lens Protocol. The platform is showing us a glimpse of tokenized social media powered by blockchain technology. Over 7,000 users joined on the first day to celebrate the birth of the new chapter of the web, including David Hoffman from Bankless, as he demonstrated how to create a NFT profile at the Permissionless conference held in Miami, Florida.
But in contrast to the Miami beaches, crypto winter is here, and as they say, it is time to build. Will we see a tokenized creator economy in the near future? A token-based social media and creator economy backed by blockchain technology can eliminate the middleman and empower the people, forgiving the internet’s original sin. So let’s hope we do.