Monetization in Web3

Nowadays, it’s no secret that major companies such as Facebook and Google make a lot of money from the internet. Although their services are free, we provide them with a large amount of data without realizing it.

web 2.0 is a business model where companies take information from the internet and sell it for different purposes. web 3.0 is a new financial model for the internet that is beginning to take over web 2.0.

What is Web 3.0?

This decentralized economic engine for the internet is moving away from the absolute control of Silicon Valley tech monoliths to peer-to-peer networks operating with no third parties at all. Some examples of this system include Apple’s Siri, Wolfram|Alpha, NFTs, and any number of cryptocurrency platforms supported by blockchain protocols like Privi, among many others.

This system helps to keep data private, which gives average users the opportunity to find value and interact with data. It also means that people can make more money from the internet, as there are more opportunities for this.

One in six, or 16 percent of all Americans, now make money online, and that number is expected to grow in the coming years as the internet becomes more widespread.

This article will give you an introduction to the opportunities available.

How to Make Money with Web 3.0

Just a few of the profit models created by this new internet system include the following:

• Make money off your own data. By now it’s widely known that the web 2.0 model, as it stands, means tech giants Facebook and Google make an unbelievable amount of money gathering and selling our data which we have offered up, free of charge, every time we interact with their platforms. What do we get in the deal? Absolutely nothing, save a quick and convenient way to look up a chicken soup recipe, as is the case with Google.

The current system is not going to change because of how powerful web 2.0 is, but web 3.0 offers a chance for average people to make some money off of the data they create online. Blockchain is what makes this possible.

The people who own the platforms that operate blockchain own the blockchain itself. This data is generated by regular people, not tech experts from Silicon Valley. These protocols from web 3.0 bring us closer to being able to collect and sell our own data.

• Mint your own currency. That’s right, minting currency is no longer the sole domain of the Federal Reserve. It’s all made possible through web 3.0 technology, and creating your own personal tokens or cryptocurrency through platforms like Privi. By assigning a dollar amount to these tokens, they can be distributed to your social media following, or via some other networking system. Those produced can then be used to pay the content creator for their product or service.

The overall value of a personal token is based on the quality of the content, the number of people who follow the content, and how many transactions occur. The creator remains in control of the supply, which is similar to company currency. People who own the tokens are incentivized to share the content they purchased in order to increase the value of the tokens.

This text is discussing the idea that in the future, people will be able to buy digital music using a cryptocurrency called Radiohead Bucks, which will be controlled by the band Radiohead. The benefits of this system will not just be for major rock stars, but also for smaller artists and content creators who make digital content. The systems for this are still new, but they are increasing in popularity quickly.

• Democratize ownership of physical properties. No matter what iteration of the internet is most current — from web 3.0 to web 304 — most value will remain locked up in physical assets like real estate, apartments, and condos in the major cities of the world, or even vacation properties in some of the world’s most far flung and desirable destinations.

With web 3.0, property owners can turn their property into a digital asset backed by an NFT. These properties can be bought in small increments, sometimes as small as 1% of their value, using only cryptocurrency. The property would then be managed by a decentralized insurance pool.

There are two ways to make money from this: either you own real estate and want to sell it to people outside of the traditional industry, or you are an average person who wants to get a piece of the action in prosperous areas.

• Revolutionize the credit industry. Most anyone with a basic knowledge of economics understands one important principle: monopolies are bad, competition is good. Because big banks almost exclusively control the credit industry, they set the rules for who does or doesn’t receive credit, shutting many average everyday people out of investment and money making opportunities, and often, for very arbitrary reasons.

Groups of crypto lenders could agree on interest rates for loans, which would be more accessible for people than loans from big banks. This could increase revenue for the lender while also helping people who wouldn’t be able to get loans otherwise.

• Start or Work for Working a Decentralized Autonomous Organization (DAO). Thanks to web3, a DAO or decentralized autonomous organization, sometimes called a decentralized autonomous corporation, may just be the employer of the future, or instead, the solution for contributing money (in this case crypto) to causes and charity work.

DAOs are organizations that exist on the blockchain and are owned by a group of people. They have no central leadership, but instead rely on a set of rules and company policies. These can be updated or revised at any time by the members of the organization.

A DAO could make money through financial transactions by issuing tokens that are then distributed to the membership. Transactions conducted with a DAO, or between the collective and another entity are recorded, visible, and completely verifying on the blockchain. DAO’s are highly democratic, and they can do business or champion specific causes with like-minded folks anywhere in the world, with little bureaucracy, no bosses, and few third-parties. Everything is kept open, honest, and verifiable with the power of the blockchain and web3.

The text covers five ways that web3 will revolutionize the internet and then goes on to say that there are existing business models that could be affected by this change.

1- The current Monetization model in Web2

People are increasingly seeing the internet as a way to make money, rather than just a place to post photos and articles. This shift is especially apparent among GenZs. The internet provides a level playing field for anyone with the drive and ability to build up a following and make money from it.

The two major problems that creators face today are ownership and monetization.

Creators don’t have Ownership because of the ads-driven business model most Web2 social platforms, where creators build their audience, are using. Indeed, in Web2, the process of monetization for platform usually goes something like this:

1. Company launches an app
2. It onboards as many users as possible
3. Then it monetizes its user base

The outdated business model employed by social networking services keeps content within a walled garden. This practice hampers the free flow of information and stifles innovation. The current crop of social networking sites make their money by selling user data to commercial interests. This business model is not sustainable in the long run. It exploits users and content creators. The situation can be improved by opening up social networking data to the public.

The current ads-driven business model leaves creators with little choice but to make their content available to brands who are willing to pay a lot of money for access to it. This model is not sustainable for creators, and we need to give them back ownership of their content and more efficient ways to monetize it.

2 – The first era of monetization in Web3.

There is an essay written by Kevin Kelly called “1,000 True Fans” which predicts that the internet will allow more people to make a living off their creations. Kevin argues that creators only need to engage a modest base of “true fans” who will buy anything that the creators produce. Li Jin argues that creators will eventually need only 100 true fans to make a living off their passion.

I agree with Li Jin that new crypto technologies allow creators to monetize their content more efficiently. In recent months, we have seen more creators become aware of the capabilities of Web3 and experiment with new monetization models. This has led to some of them earning a lot of money.

While there are many ways for creators to leverage the crypto technology , it seems there are two main ways for them to monetize more efficiently their content:

• Creating a Token that gives access to premium content – Fans (or community members) can buy a token and get access to content in advance, access token-gated content such as private channels in a Discord or the “Close Friends” on Instagram. The Token allows to limit access at scale and provide recognition and status for the biggest fans within the community.
• Allowing fans to invest in the Creator through a Token – With the Creator becoming more famous, more people want to buy the Token to get access to exclusive content, and the token increases in value. Fans can redeem coins, treating them as an investment, and creators can eventually use the liquidity to buy new materials, create better quality content and augment its distribution. In this case, the Token serves as a way to crowdfund the creator.

Mainstream creators are today mostly using Non-fungible Tokens to monetize their content as they are allowing many new use-cases. NFTs also come with status, scarcity, and belonging within the community.

According to Jesse Walden, the new tokens (NFTs) that creators can now create easily, gives rise to the concept of ownership for fans and creators. He states that this allows users to earn the majority of the value generated from their contributions, as opposed to the platforms inner circle of founders and investors. This system also allows creators to monetize their content while involving their community and aligning incentives. Fans can purchase tokens which enable creators to not rely solely on the revenue generated by platforms such as Youtube ads. In turn, creators give ownership to fans by sharing with them the upsides of their content.Incentives are everything when it comes to aligning goals.

Blockchain technology can be used to create a token that will make it easier to build a sustainable community. This will help to reduce spam and ensure that community members have a stake in the success of the community. Incentives can be provided to community members to make the community more attractive to others.

Web3 technologies allow creators to generate revenue even without a large audience, making it easier to monetize their content. Users engage with Web3 by buying an NFT, for example, which provides creators with revenue. This helps to move audiences out of Web2 platforms.

Fans who purchase Creator’s Tokens are committing to their favorite creators, and in turn, helping to build positive feedback loops that encourage healthy fan communities built around shared interests. Tokens provide a way for fans to express their loyalty and support, and also help creators by providing initial liquidity.

I believe that creators can not only create NFTs for their communities, but also completely reinvent how they monetize their work. Instead of trying to fit old models into the Web3 space, creators could explore new monetization models that are possible because of Web3.

I think it is possible to create a future where anyone could live from their passion by using fungible tokens and reinventing what it means to be a creator. This would allow people to own 100% of their content and make what they love.

3 – The second era of monetization in Web3.

Web3 is providing a new platform for creators that was not available before. A Web3 creator’s definition could be:

“Anyone pushing ideas, and a vision, through content on the internet and leveraging the new Web3 tools at their disposal.”

A “Creator 2.0,” as defined here, is someone who creates content with the intention of building a community around their vision. Jeff Kauffman Jr. is a great example of a Creator 2.0. While he may not fit the traditional definition of a creator, he has built a thriving community around advertising and marketing in Web3. He shares his ideas and vision through essays and podcasts, gathering a group of people who are passionate about helping him achieve his goals.

Creators 2.0 are not simply trying to take their existing audience and move it to Web3 in order to make more money. They are using Web3 tools to create new communities, while also leveraging their previous following. There is a big difference between having an audience and having a community.

In recent years, there has been a growing trend of successful online communities being led by so-called “Creators 2.0”. For example, Carlos Gomes created Forefront, a community that recently raised over $2 million to build a “port of entry” for Web3 social clubs and digital cities. Another great example is Friends With Benefits, which was created by Trevor McFedries and recently finalized a $10 million fundraising round at a $100 million valuation, with Andreessen Horowitz as the lead investor.

Web2 creators are not monetizing their audiences in the traditional sense. They are building communities around blockchain projects that provide real value, and then monetizing those projects. To do this, they are using Web3 tools such as Coinvise, which allows them to create and manage their tokens, including features like airdrops, quests, and vesting schedules.

To build a startup today, one needs money to support themselves and hire additional staff. They typically raise this funds from a VC firm, however this also means giving away a percentage of the company. The investment creates misaligned incentives, and even if the company is successful, it’ll be a long time before anyone sees a return on the investment.

Projects can be built and incentivized to get fans to invest money or time in it from the start with Social tokens. These tokens work as equities and fans can be rewarded with them for their work. If the project is successful, the tokens can be redeemed for perks in the project’s virtual economy or sold for USD.

Even if the project needs to raise money, it can do so through the community by selling ownership stakes. Those who believe in the project can then use their tokens to vote on future strategic decisions. People who think the project is headed in the wrong direction can signal this by selling their stakes. Purchasers have complete transparency over what is happening as everything is on-chain.

In Web3, community members own a part of the Creator’s content and success story through tokens. They are incentivized to provide help because they directly benefit from the Creator’s growth.

The use of social tokens allows for the alignment of interests, the engagement of a workforce from the start, and the facilitation of collaboration with community members. Additionally, it allows for more efficient monetization.

4 – The problems we still have to overcome.

There are still many improvements that could be made to improve the monetization of tokens in Web 3.0.

When creators monetize through tokens, they have to make their content appeal to fans, not brands. They have to produce much better quality content to delight the fans, as they are the ones spending the money. Monetizing via attention, which is what creators in Web2 are doing, means producing a lot of lower-quality content, prioritizing quantity over quality (more videos > more ads> more revenues). On the other end, monetizing from super fans is a much higher barrier to entry to starting earning as creators always have to be innovative and create better quality content. Marketing for money, not attention, completely changes how creators are producing content.

There are two main problems creators face when attempting to monetize their content. The first is the attention economy, where content is competing with a vast amount of other content for people’s attention. The second problem is the Discoverability Dilemma, where creators have to decide whether they want to make their content discoverable to a larger audience or whether they want to token-gate their content to generate revenue. Web2 platforms will always be the place for casual creators who are looking to monetize the attention they generate because they have a large user-base and control discoverability. To make the tokens a long-term viable way to monetize content, we have to introduce a new way to drive attention for creators without relying on centralized platforms. Building decentralized Social Networks might be a solution to explore. Incentivizing the biggest fans to share the content by rewarding them with Token could be another way to tackle the discoverability dilemma, while it doesn’t have the scale of millions of users’ platforms for now.

To help Creators and community members monetize their tokens without selling them, we need to implement new tools or mechanisms. One potential solution could be to create two tokens, one for paying salaries and rewarding community members, the other for governance power and perks within the community.

Conclusion

So, we can see that Web3 could help the first and second generations of content creators to make money from their work more efficiently. Even though there is no ideal solution yet, an increasing number of creators are taking advantage of crypto technology and are growing successful communities. If we want to enable the next million content creators to earn a living from their passion, we need to work together to develop efficient monetization models. At the moment, it seems that building Web3 tools is the most promising approach.