Social Token in Web3 Music: Current State of Confusion (Part1/3)
After what seems to be a few years of uncertainty and a bad reputation, the blockchain is finally getting closer to becoming a mainstream tech. Blockchain technology provides a great number of advantages, including an increased level of decentralization, better speed, immutability, cost efficiency, a higher level of control of the individual data, improved security and privacy.
Throughout 2020 and 2021 blockchain has been spreading its wings gradually impacting every digital business. While last year seemed to be heavily focused on Defi, gaming, and NFTs, a trend of 2022 is evolving to be around disintermediation, especially in the areas of media and entertainment.
This will have a significant impact on content creators who will be able to monetize their content and communicate directly with the consumers. Monetization of content by independent creators is in the center of a new kind of economy, a social token economy.
In a series of 3 articles, we will consider challenges faced by the content creators in web2, the advantages of web3, how social token economy fits into the space, and helps to solve these problems. Finally, we will provide a real-life example of a product that ties web3 and social token economy together within the music industry.
The modern version of the Internet, or Web2, has changed how we communicate, create, and consume information. From the perspective of creators in particular, the internet has played a great advantage allowing them to be seen globally. The abundance of online platforms led to a more efficient way in which a large amount of audio and visual content can be shared easily with anyone who has access to the internet.
Despite these technological advances, Web2 faces a lot of criticism. One main pitfall of Web2 is its centralization, which is the umbrella term for all the policies and setups that govern the platforms. While the centralized model of Web2 generates massive profits for the stakeholders, investors, and other major players, it fails to account for the majority of its participants. For example, experimental (and what appears to be unfair) algorithmic promotion that is offered by Spotify is advantageous to those who could accept a cut of their royalties to the platform.
Despite a growing number of listeners and increasing streaming revenues, the streaming giants keep most of the money, leaving the right holders with minuscule payments. For example, on average, Spotify pays its artists $0.004 per stream. Such financial disadvantage is particularly felt by the independent artists who cannot afford to accept reduced payments in exchange for their music being promoted by the platform.
Amongst other problems of mainstream platforms are vague policies and the lack of personalized support that drive both consumers and creators away from major platforms. Furthermore, while major platforms may offer an exposure to a greater audience, they often restrict creative work of the creators due to the internal policies that aim to keep the image being portrayed by the business. Thus, most platforms represent business models created with a core concept of “one size fits all”. Then, in some cases, those creators with bigger following are also more likely to be promoted by the platform as a means of attracting more consumers.
In the end, traditional platforms put less emphasis on the importance of cultivating the relationship between creators and consumers. This is a pitfall that is also overcome by web3 — in our next article, we will cover how creators can be in full control of their interactions with their audience.
