A fad or the start of something much bigger?
Today, millions of users are helping to build and maintain platforms like Youtube, Wikipedia, Facebook and Twitter (among others), either by creating content themselves, or being part of the communities of those who do. Imagine a future where everyday users are allotted ownership of these platforms proportional to how active a part of the networks they are. This is the aspiration of what many call the “ownership economy” of the future. One of the key steps to getting there will be social tokens. What are social tokens? Social tokens are a branch of the cryptosphere that functions as a way of commoditizing membership in online communities.
Social tokens in the future may take many forms that are currently unimagined, but today they are a limited number of access passes to closed communities that can be bought and sold on the open market. Social tokens are currently limited to being used to access discord groups, newsletters, and a few other things, but as they scale and evolve we will rapidly see more dynamic use cases that could give some fuel to a broader economic paradigm shift.
Step one in this process are community based tokens. Currently, creators are held hostage by the centralized platforms that they use to host their content. If creator’s don’t like how a platform is operating, it is very difficult to fully migrate their audience to a different platform. With community tokens creators will “own” their audience and simply direct them to whichever platform they see fit for hosting their content, with the spectrum of their work itself being “decentralized” over several platforms. Soon there will be decentralized platforms that allow for a movement to grow. The movement will be about creators and their fans taking back ownership from middlemen that have been running a con for too long. Artists create 100% of the revenue for record labels but only see a fraction of the income. The users of instagram create 100% of the revenue for the platform but instagram pays out zero dollars even to it’s biggest stars. Again, if all goes well we are about to see an economic revolution and this is all about to change.
The most obvious immediate benefits to social tokens are economic, but over time we will also see innovations centered around tokens that change the game of content and digital networks significantly for the better. In 2020, the main focus is on cutting out (or reducing the role of) radically overcompensated, dictatorial middlemen between creators and consumers. By 2025–2030 that will be a fight that has been won and is when the really fascinating uses of community tokens will likely emerge, when creators have had their shackles removed. It will most likely be such a different landscape by that time that it is hard to give specifics on how use cases will emerge, but we will give it a shot anyways. First we’ll start with the more immediate (but no less impactful) economic benefits.
Soon we will see the decentralized version of platforms like Youtube, Twitter, Facebook, Instagram and more. That means no central organisation with their own motives making the rules. That power will be handed over to the collective of users and be run more like a democracy than a dictatorship. With the innovations that tokenization has brought to the table, this will allow for creators to make the switch from sharing their profits with the middlemen platforms, to sharing it with their audience. There will be many ways in which creators can opt to share revenue with creators, starting with the appreciation in value of access to the community itself. Individual creators will have a decision to make in the same way that publicly traded companies do about revenue sharing by way of dividend payments, but that will be up to the creator and each of their own circumstances.
This all means that an added benefit to early participants in the community is that by taking equity early there is massive upside if over the long term the popularity of the creator skyrockets. For example if you had been given a number of Joe Rogan podcast tokens within the first dozen episodes they would be worth a considerable amount now. This will incentivize early adopters to spread the word of those they believe in. It will also give incentive to users to not spend all their time consuming the content of the big fish in the pond, but to also find those on the fringes who are putting out great work. This will allow for those doing good work to gain traction much faster. Those forming a community around them literally “investing” their time. This may even allow for a much more efficient content market place over the long term.
This model also allows for an easier and more efficient access to capital for creators that are just starting out but have big ideas. Raising capital is hard. But it is easier when you have people that believe in your vision. The problem currently is that if the people in the traditional role of “capital allocators” don’t see what you are capable of, you are pretty much out of luck. There are crowdfunding models like kickstarter, but in most ways that feels like a donation rather than an investment. With raising money through tokens it allows creators to fund bigger projects like companies, movies, or any other creative endeavor through those who already believe in them most, their audience and community. An additional upside to having thousands of people who are already passionate about your work as investors in your project is they then act as sales people for what you are doing. If these people are invested in the project they will be telling friends and family about it, giving the creator incredibly valuable marketing through word of mouth. This will allow creators to scale their business rapidly faster than is possible today.
Another upside to this is a more accurate compensation for true value. Currently if you watch a video put out by your favorite high quality content creator, and then watch a cat video, the ad revenue sent to those two videos will be roughly the same. There is currently no distinction in real value between creators. For example, you could watch a video that has been put out by “Kurzgesagt” (an educational youtube channel) that has clearly taken some serious time to put together, and then you could watch the aforementioned cat video, which took 30 seconds to make, and those two creators would get the exact same ad revenue from youtube even though I’m sure 90% of people would say they derived considerably more value from the video put out by Kurzgegast. Community tokens solve this. Community tokens will allow the markets to determine the real value of access to specific content creators through the price of their token.
So besides economic incentives, what makes it better than the current model? Imagine being able to pay to be in a group chat with the person you follow online who inspires you most. In a lot of ways social tokens don’t seem that interesting until you imagine your favorite creator having one. Depending on what topics you’re interested in, your favorite creator’s best information might be stuff they are not comfortable publicly sharing online via twitter or youtube, but something they could disclose to a tight inner circle of highest tier members. The benefits though are not only limited to the creator themselves, but could actually be exceeded by the network that is created around them. If platforms hosted for the community to communicate like a discord server are maintained to a high enough standard, it could allow for the community to blossom and attain great benefits on it’s own. While currently technology is most likely too limited in latency to blossom into something truly amazing, the coming dawn of virtual reality (and virtual communities) will not be.
A lot of the best use cases for community tokens, that would make them exponentially more valuable, are currently not possible because the infrastructure to make it work does not exist yet. For example, while joining a discord group may not seem that exciting, what about membership to a community in virtual reality with like minded people and fun activities. This is where the true value of community tokens will be exposed. The right token will get you access to an unbelievably high value network and ways to interact with it. Digital communities have already started to form online on venues such as twitter and reddit, but when the intersection of virtual reality and crypto is ready it will be a complete game changer. Virtual communities will blossom and people could end up associating much stronger with their digital communities than physical ones. This could even lead to physical relocation (link) but that is a topic for another day.
There are a lot of routes that social tokens can and will take before we know which exact models will work the best. Make no mistake, social tokens are still in their very early infancy stage. You might have a lot of questions surrounding the vagueness of how some of the models will work, and the reality is now one is fully sure yet. Different models will be tested by different people, some will work and others won’t, and over time the best ones will become apparent. The current use cases can seem underwhelming, but in the future we will look back on the current use cases simply as test nets for the infrastructure.
The efficiency of this model will not be ignored by the rest of the economy for long. One of the reasons the success of social tokens is so important is due to the networks they would educate on the value of an ownership economy. If mainstream creators are giving out equity to their community, and the value of doing so is clear to both the creator and the audience, it would be obvious to those involved that this is something that should be explored with the rest of the economy. It has already begun in crypto, where founding teams realized it is exponentially more valuable to give equity to members of the community, which builds its own network effect, rather than to sell equity and spend it on marketing. The reason social tokens will be able to drive this model is due to the diversity of people it would attract. Currently these ideas don’t spread much outside of the crypto community, but with social tokens there is the possibility for the mainstream to accept them without first understanding the underlying mechanisms. Once this happens and the average person understands the importance of having ownership, then the ball can really start rolling.
