AAX Web3 Series: Decentralizing the Popular Culture Economy — AAX Academy
During the early days of the internet, people envisioned a future of a borderless peer-to-peer network that fuel unlimited creativity as information would flow freely and instantly.
While the explosion in creativity did happen, the way information flows on the internet is not as borderless and free as many had hoped. We still have gatekeepers and intermediaries that demand their piece of the cultural pie.
In the creative industries, some of these gatekeepers have played vital roles for artists when we still lived in a less connected and integrated world. But that is no longer the case as technology and the way we apply it has created a viable alternative. The shifting power relationships between those that create and those that administer has been changing for decades, and Web 3.0 is set to take it to the next level by fully democratizing the creation of culture.
The evolution of the web
The story starts with Web 1.0, which can be defined as an internet of ideas. It was a meshed network of bulletin boards, mailing lists and forums populated and maintained by individuals that lived comfortably on the edge of culture. Communities were formed around niche topics from counterculture to music, to uprooting the financial system. As an example, take a look at this message posted on February 11 2009 on the P2P Foundation forum where some user talks about developing a new open source P2P e-cash system called bitcoin.
Perhaps the most infamous example of the power of peer-to-peer networks during that time is when Napster broke the music industry.
For decades the industry had a business model that relied on the centralized distribution of content that controlled both artist and consumer. That model broke down when Napster came online and gave people a way to duplicate content and share it globally freely. Napster did eventually crumble under the weight of legal pressure that came from the music industry, but you could argue it also forced a rethinking of the business model for arts which in turn paved the way for iTunes selling individual tracks to Spotify selling subscription-based streaming.
Web 2.0 is a continuation of the evolution during version 1, but now we enter the internet of commerce and user-generated content. As soon as entrepreneurs realized the web could also be a worldwide catalog, the race was on the set-up shop and monetize attention. At the same time, social media networks proliferated as a more mainstream version of the forums Web 1.0 had introduced. Anyone could now film a video and post it on YouTube, write a story and publish it on a blog, snap a picture of a Sunday morning run and boast about it on Facebook, create music and distribute it on Soundcloud, and write thoughtful reviews on Yelp.
The rapid rise of social media platforms resulted in a saturated and problematic market for people’s attention. The platforms became less about communities creating content around shared interests, and more about companies selling stuff. That trend continued relentlessly and today’s internet is controlled by a few tech giants, operating massive servers, deciding what most of us see and do online — whether we are aware of it or not. The traditional role of the gatekeeper has been restored and the once innovative frontier of the web has been reduced to a digital mall where the landlord approves and rejects tenants at will.
But this is not where the story ends.
Restoring the internet with Web 3.0
The next chapter in the evolution of the web dubbed Web 3.0 aims to give individuals back the power of personal sovereignty by decentralizing the internet and reducing the power of gatekeepers. Privacy-preserving protocols are being developed for the free sharing and distribution of content and value where people and their attention are no longer the product tech giants can monetize.
Much like the early days of the internet, this movement is still fringe with rapid experimentation fueling innovation and early adopters shaping the landscape. Already we see some projects where the brand and narrative are owned by the community rather than centralized corporations. The visual assets and messaging have taken a life of their own through a community of builders and enthusiasts similar to the pioneering Bitcoin community that emerged in the first few years.
Of course, this is territory where the crypto community thrives, with an eagerness to create markets for anything that can be defined. The team behind Uniswap experimented with trading a token redeemable for a physical good: socks. The idea of $SOCKS was that the price would fluctuate based on supply and demand within a pre-programmed set of rules. Five hundred $SOCKS tokens were created, each redeemable for a pair of trendy Unisocks. Today that means a pair of socks would go for $1,761, which verges on the ridiculous but the experimentation has led the way for other companies to expand on the idea of pairing crypto-economics to physical goods.
Zora is a decentralized marketplace that builds on the Unisocks model with a wider range of limited-edition goods tied to tokens. Musician RAC launched limited-edition cassette tape version of his new album BOY, tied to the $TAPE token with a maximum supply of 100 tokens. The initial price was set at $20 and today $TAPE and by extension the album is traded at $320. Another example is MetaFactory, which is a decentralized fashion brand owned by a community of stakeholders. Members use cryptocurrencies to vote on product designs and share profits from sales.
We are only at the very beginning of the partnership between a decentralized Web 3.0 and crypto-economics. It’s impossible to tell what the future will look like exactly, but if the DeFi space has taught us anything, we can be certain that innovation will continue to advance at a rapid speed that only a dedicated community with genuine enthusiasm can maintain. Not to mention we’re in store for a couple of rising stars in the token-for-product space.
If it can be defined, it can be traded. If it can be traded, there is a market. If there is a market, it’s on AAX.
Originally published at https://academy.aaxpro.com on November 5, 2020.