Web 3.0: Don’t/do/maybe believe the hype
Got the impression that ’Web 3.0’ might make it easier for a struggling content creator like yourself to make some sweet coin but have no idea what it is? Let me explain…
If the Metaverse was the (previously esoteric) tech concept that crossed into mainstream consciousness in late 2021, I suspect Web 3.0 will be the one that goes viral circa mid-2022. As is the case with the Metaverse currently, I expect a lot of people to be sounding off about Web 3.0 in the months to come. If you’d like to be one of those people and would prefer to avoid talking out of your arse, you may find the following explainer of some use. And if you’re a content creator with your eye on the main chance, the following information might just give you some revenue-generating ideas.
Web 1.0: Nobody makes money
For around 15 years after it achieved mass penetration, the Internet was about as profitable and exciting as a public library. As readers of a certain age will recall, in ye olden times you only ‘went on the Internet’ if you were looking for specific information, such as a bus timetable or the average annual rainfall in Tasmania.
To use the jargon, those browsing the internet were ‘passive consumers’. A few minor exceptions aside, the idea an Average Joe would create content then put it on the interwebs for general public consumption made about as much sense as a 1950s housewife wanting to develop her own prime time TV show.
Web 2.0: Zuck makes money
In the early years of the new Millennium, enterprising youngsters twigged that the Internet was well suited to people sharing content and not just passively consuming it. The MySpace (est. 2003) founders probably deserve most of the credit for being the first to recognise the potential of Web 2.0. But history is written by the victors, so future historians will probably anoint Mark Zuckerberg as ‘the father of Web 2.0’.
Fun fact: Zuckerberg offered to sell Facebook (est. 2004) to MySpace for US$75 million in 2005 but was knocked back and had to settle for amassing a US$80 billion fortune.
Zuckerberg isn’t the only one who got rich off of Facebook. As detailed at some length in Antonia’s García Martínez superb memoir Chaos Monkeys, plenty of Facebook’s early employees also made bank. But you know who hasn’t – at least directly – gotten rich off Facebook? Any of the three billion Facebook users who’ve spent countless hours uploading exabytes of their personal data to the platform.
The situation is a little more nuanced when it comes to the likes of YouTube (est. 2005), Instagram (est. 2010) and TikTok (est. 2016). Nonetheless, the vast majority of those who’ve uploaded content to these platforms have received diddly squat in return.
As has been well-publicised, a handful of YouTube/Instagram/TikTok stars have done well for themselves. But the deal they have with the platforms that host them would make Colonel Tom Parker blush. First, these platforms take a substantial cut of any revenue generated by content creators. Second, these platforms can – at any time and with no need to explain their actions – move the goalposts, resulting in even the most popular content creators suffering big drops in views and revenue. Third, these platforms can – once again on a whim and with no need to justify their actions – demonetise a particular piece of content or even deplatform a content creator. (Even if they used to be the US President.)
Web 3.0: Everybody makes money?
By the late 1960s, bands such as the Beatles were beginning to wonder why they were only pocketing a cent or two out of every dollar they generated while their record companies, managers, concert promoters, music publishers and even merchandise sellers were making out like bandits.
In the 1970s, musical content creators pushed back and started ensuring they got much better deals. (This is why Starr, Harrison, Lennon and McCartney made vastly more money from the Beatles after the band broke up than they ever did while touring and recording.)
Spotting a gap in the market, some less greedy and/or more patient entrepreneurs have been creating platforms that offer content creators a fairer shake in recent years. Just like ‘enlightened’ record companies and band managers began offering proven hitmakers much fairer revenue-sharing deals in the 1970s.
OnlyFans (est. 2016) takes a 20 per cent cut and Substack (est. 2017) is content with a 10 per cent cut. Patreon (est. 2013) charges a range of different ‘platform fees’ plus a ‘payment-processing fee’ and ends up taking an 8-15 per cent cut.
An argument could be made that these newish platforms are Web 3.0-ish. That’s because they allow content creators to own their content and audience and keep the lion’s share of whatever revenue is generated by monetising their content. But these platforms aren’t really part of the Web3.0 revolution because they don’t leverage blockchain.
Here's where things get complicated
Take it from someone who knows; getting your head around how blockchain and blockchain-enabled technologies such as cryptocurrencies and NFTs (non-fungible tokens) work is hard and tedious yakka. So, allow me to engage in some Christlike parable-ising to convey all you probably need to know about the decentralised, content-creator-friendly nature of Web 3.0.
Imagine you’re living in Neolithic times. One day, the guy in the neighbouring cave offers to make you five flint arrowheads if you daub an image of him heroically slaying a woolly mammoth on his cave wall. This guy doesn’t have the arrowheads right now, but if you bust out the ochre and get painting right away, he promises he’ll create and deliver the weaponry before the next full moon. Being a believer in the free market and an early convert to the theory of comparative advantage, you agree to this deal.
Both you and your customer – and to some extent the tribe you both belong to – now have what might be described as a ledger problem. What happens if you come to believe that your customer has promised to exchange six arrowheads for the cave painting, but his recollection is that he only promised you four? At this point, you’ve both got a problem with each other. Plus, the bartering economy of the tribe might start to break down if other individuals come to believe that contracts that have been entered into may not be honoured.
At this point, the tribal chieftain decrees a new law – he will record the details of any transactions anybody enters into on a sacred papyrus scroll. There are all kinds of issues with this arrangement, such as the tribal chieftain facing an irresistible temptation to charge excessively for his ledger-providing services or refusing to offer those services to cavemen and cavewomen he considers beyond the pale, but they need not concern us here.
That’s because, soon after the chieftain’s decree, a giant spaceship lands and an alien emerges with a containerload of shiny boxes. The alien tells the cavepeople that he has come to liberate them from the tyranny of Big Chiefdom. The alien then explains that whenever anyone touches one of the magic boxes a hologram will appear detailing all the transactions that have ever been entered into by all members of the tribe. Even better, no fuckery from unethical buyers and sellers, or would-be rentiers, or power-hungry tribal chieftains will be possible. The tamperproof hologram will always accurately display the details of all of the tribe’s transactions.
What’s more, this magic ‘distributed ledger’ box will enable transactions that were once unfeasible or outright impossible. For instance, cave painters will now be able to arrange to get a payment of arrowheads not only when they first paint a wall, but also every time someone new takes possession of any cave featuring one of their artworks.
Can blockchain make creative types obscenely rich?
Nerds and crypto bros have been hot and bothered about the “epochally transformative” potential of blockchain for some time. However, creative types and, to a lesser extent, the general public only began paying attention when visual artists started flogging off NFTs, which are essentially glorified JPEGs, for millions of dollars in 2021.
Would you pay US$69 million for this? That’s what it sold for at Christie’s in early 2021.
Non-fungible tokens are different from a garden-variety JPEG in only one significant way. They ‘live’ on a blockchain. That means, while these images are infinitely replicable and the copies are entirely indistinguishable from the original, blockchain technology allows for someone to establish ownership of the original version.
As is often the case with emerging technologies, what everyone is getting most excited about with NFTs is merely a sideshow. Only a tiny fraction of artists will be able to convince people with more money than sense to pay ridiculous amounts of money to own a picture of, for instance, a jaded simian.
Would you pay US$3.4 million for this? That’s what it sold for at Sotheby’s Metaverse auction in late 2021.
Like cryptocurrencies – the original blockchain-enabled technology – NFTs have no intrinsic value. People can collectively decide a work of digital art is worth $10 today, $10 million next month and $0.00001 next year.
Cryptocurrency is interesting because it promises to profoundly change the way the global financial system functions (with all kinds of political and geopolitical consequences). But that’s a complicated story, so the mainstream media typically focuses on how price fluctuations in, say, dogecoin are causing celebrities to make or lose vast sums.
Likewise, in the context of the art world, blockchain is exciting because, among other things, it promises to make it easier to authenticate artworks, for ordinary people to near-frictionlessly pool their money to collectively purchase great artworks and, miracle of miracles, maybe even for artists to receive a cut of the sales proceeds when collectors onsell their art to other collectors or museums. But that’s a complicated story, so the media prefers to focus on how Quentin Tarantino is attempting to cash in by selling NFTs featuring pages from his Pulp Fiction screenplay.
As explained in detail in this article, it’s not just visual artists that stand to benefit hugely from blockchain. Distributed ledgers make it easier for all content creators to protect their copyright and disintermediate commission-trousering middlemen.
Which is something I’ll endeavour to explore further in future Substack missives.