At the start of the Industrial Revolution in the late 18th century, entrepreneurs seeking wealth started profit-generating endeavors using two new tools: corporations and equity. Capital was scarce, so, as with any rare good, to accumulate it conferred a great deal of power, access, and status. Several generations of entrepreneurs began amassing capital by creating businesses, with value captured by equity. The family names of many of these titans of industry have made it into modern parlance as synonyms of wealth and status—Rockefeller, Carnegie, Vanderbilt.
Nowadays, capital is no longer scarce. Is it limited? Sure. Difficult to access? It can be. But it’s certainly not scarce. Almost a fifth of US dollars ever printed by the Federal Resever was printed in 2020 alone . Stock indices are at all time highs, as are the number of unicorns, IPOs, and fundraising amounts raised by private companies.
Celebrity, of course, is not new, far predating Instagram or YouTube. Hollywood minted the modern star, but it was a status predicated on inaccessibility, reserved for the elite, who more often than not benefited from their race, their gender, powerful connections, and a certain degree of being in the right place at the right time. Not much democracy there. Today, we are up to our necks in content to consume. Whether from the big streamers, and film studios, the media, social networks, or video and gaming platforms, celebrities — or influencers, their modern day analog— are quite literally everywhere we look.
So, what in this equation is scarce if not capital or celebrity? The answer is that attention is the ultimate scarcity: people have only 24 hours worth of it to give per day. And those precious few hours are increasingly monopolized by the digital world, especially since the rise of social media in the early aughts, which begat the democratization of fame and the rise of influencers, allowing anyone, anywhere to access their 15 minutes of digital celebrity.
To return to our historical analogy, creators are the Rockefellers of today. Not because they are the richest or because they have the largest companies (though some of them do), but rather, because they are the ones mining today’s oil: attention. They have been monetizing and refining attention, transforming it into money, to often extremely lucrative ends. Upon closer inspection, however, the tools they have been using to do this are imperfect and often antiquated proxies: royalties, merch, side businesses. Basically the equivalent of using a backhoe and a bucket to mine oil.
Now, with the advent of Web3 and social tokens, a whole suite of shiny new tools are at the disposal of creators and fans alike to monetize this ecosystem and ultimately make it more inclusive and equitable. Social tokens, at their core, are simply a way of connecting creators directly to the consumers of their content. Think of a social token as creative equity. Entrepreneurs have equity in their companies, creators have a stake of their own social token. When designed well, a social token grows in value with the total level of attention invested in a creator. Note that the same level of attention can be achieved by a small group of people giving a lot of attention to a creator, or a large group of people giving a small amount of attention.
Using social tokens, creators, no matter the size of their following, can directly and authentically turn the attention they earn into capital.
Beyond the creators themselves, this social token-first model benefits fans, who become active stakeholders in the community of an artist. By supporting an artist early, and helping them grow by investing their attention, fans are rewarded with units of social tokens in the same way that investors receive shares of a company for their investment in an entrepreneur and their company. To look at it from a Web2 perspective, the value of attention is basically the cumulative revenue generated by social media platforms who mine it and sell it to advertisers. In 2021, that value amounts to more than $50bn so far.
Imagine what this capital could do if it were invested directly in the creators themselves, without the social media and advertising middle men involved. Where today only the top 1% of creators make money, a Web3 approach could usher in the rise of a creative middle class - think SMCs (Small & Medium Creators) - with creators on the long tail of the curve actually able to make money from their talent and their ideas.
Some of you reading this may have already foreseen that this new approach would also very likely necessitate a potential demographic reversal of who owns capital. Kids, let’s say under 21, have the most free attention (aka “investable capital” in the attention economy), and they often have “alpha” by being able to detect the next trends and next artists simply by living and consuming them in the course of their daily lives. Imagine someone following Lil Nas X before he was famous, owning his token from day 1 and what this early investment would be worth today.
Social tokens are not just the new crypto trend. They are signaling a deeper paradigm shift. Artists, creators, and thinkers are the new Rockefellers. With P00LS, they can build their own empires.
Sources: