Seizing the Web3 Opportunity
While much of the world’s economy slowed to a crawl last year, the disruptions of the Covid-19 pandemic seemed, if anything, to hasten the rise of Web3 — a new epoch in the evolution of the internet, with the potential to change everything from how we invest to how we create.
And the growth of Web3 is starting to grab mainstream headlines. The art world took notice when a masked man set fire to an original Banksy work and then sold it in digital form for a cool $380,000. The financial community is paying increasing attention to the explosive growth of decentralized finance.
But focusing on terms like Web3 can both obscure complexities and constrict our appreciation of possibilities for transformation. So it’s valuable to zoom out a little to examine precisely what’s behind the rise of Web3, what it means for the internet broadly, and how it stands to transform video streaming in particular.
From desktop to decentralized
Since its birth in 1983, the internet has grown from clunky and charmless — inaccessible to all but a select few — to ubiquitous and vital to all of us. It is easy to forget that in the early days, the internet’s growth — like that of the crypto space decades later — was a roller-coaster ride of volatility, most famously culminating in the 2001 dot-com crash. Many start-ups failed, and others were forced to retrench. Chastened stock market investors retreated to lick their wounds.
But despite the peaks and valleys, the internet continued to grow and evolve like a juggernaut. Its first iteration — with activity confined to desktop browsers — gave way to Web2, a phase defined by the dominance of major players like Google and Apple, the rise of social media, and above all the shift from desktop to the mobile-first format that dominates around the world today.
Web2 ushered in more powerful products and much faster connections — opening up possibilities that were out of reach for the internet’s first iteration. Specifically, streaming audio and video became possible and ubiquitous; whereas in the early days, people sat around their iMacs for hours waiting for a few songs to download, now we could binge entire TV series on our iPads. Creator-driven platforms like YouTube, Vine, and TikTok grew to dominate popular culture.
But perhaps the most important shift in the transition from Web1 to Web2 was when it came to business models. Given the internet’s free and open nature, early companies famously struggled to establish profitability. Yahoo and Google were free to use. So was MySpace. The early internet’s lack of paywalls even threatened the viability of long-established traditional businesses: Napster represented an existential crisis for the recording industry, and the shift away from physical newspapers struck a near-fatal blow against traditional journalism.
Web2 entrepreneurs developed an ingenious solution to this problem. If the internet, in Facebook’s words, is “free and always will be” — then the user must become the product. And as it turned out, people generated a gold mine of data through their internet usage — data that can be used to drive clicks, manipulate sentiment, and above all stimulate the flow of dollars. YouTube ads, Instagram influencers, and Facebook news feeds are all optimized to stimulate, addict, and drive spending.
This business model has been massively successful on its face, creating the world’s first trillion-dollar enterprises. But the wealth and power have accumulated among a small group of executives and monopolistic companies. Creators on YouTube, Instagram, and other platforms face an extractive system in which the rewards of their creativity flow overwhelmingly to corporate owners, entirely on their terms.
It’s been clear for several years that the current Web2 model — particularly as relates to user-generated content — needs to change. And over the past year, the blockchain-based Web3 model has shown that it is ready to step into the breach.
The DNA of decentralization
The concept of blocks of information shackled together in a tamper-resistant way dates back to 1991 — long before Web2 — but it wasn’t until 2009 that the first blockchain was finally born. Now there are many chains on which individuals can share content and economic value without intermediaries. There are also a multitude of new use cases that are driving a shift in how people around the world can use the internet.
Simply put, Web3 is the scaffolding that allows developers to create blockchain-based applications that will facilitate the decentralization and democratization of the internet. It offers an antidote to the centripetal force of the current Web2 landscape. Because transactions are governed by many distributed nodes, users retain control of identity and data. The distributed ledger forms an indelible record of dealings and reduces the chances of hacking or record tampering. And since the distributed internet is in the hands — and on the computers — of the many, it is subject to neither single points of failure nor single points of control.
Toward a decentralized economy
Perhaps most crucially, Web3 offers an entirely new economic model that can finally break the vise grip of a handful of powerful incumbents. The momentum has been building for some time: since 2017 and even earlier, the rise of DAOs, decentralized exchanges, and decentralized finance platforms have offered an exhilarating glimpse of a possible future where money is truly democratic.
This growth will reshape the world of streaming video as well. Demand has never been higher: as a medium for delivering information and entertainment, video is set to continue growing in importance as more and more technological roadblocks fall by the wayside. And now, we have a chance to build an architecture for streaming video that empowers creators — a situation that will benefit people everywhere, and unlock value in new places.
Blockchain technology makes it possible for developers to build apps that directly empower video creators. With a trustless, permissionless architecture underpinned by smart contracts, creators can receive payments automatically, based on the success of their content — success that can be defined in an almost infinite number of ways. And in a Web3 environment where creators can monetize via innovative mechanisms enabled by token-economics, NFTs, and crypto-based micropayments, the pernicious ad-based revenue models based on industrial-scale data harvesting are no longer needed or desirable.
At Livepeer, we’re building the foundation for this world — one that shifts “the balance of power away from governments, financial service providers and Big Technology toward the rest of us,” in the words of Gavin Wood. Already, we’ve helped provide the infrastructure to enable the growth of a number of creator-powered streaming platforms that are seeing increasing success. And we are proud to be recognized as a pillar of the decentralized economy. At Livepeer, we are working hard to build a home for decentralized streaming apps and developers as part of a decentralized Web3 economy that empowers rather than exploits.
