Community-Owned Culture: How Web3 is changing music, fashion, art, sports, and more

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December 19th, 2021

In 1999, BBC Newsnight taped an iconic interview of David Bowie. During the conversation, the interviewer asked a question about the impact the internet would have on art and content.

David Bowie responded with an incredibly insightful prognosis on how the future of content would play out:

“I don’t think we’ve even seen the tip of the iceberg. I think the potential for what the internet is going to do to society, both good and bad, is unimaginable…

The actual context and state of content [on the internet] is going to be so different to anything we can envisage at the moment, where the interplay between the user and the provider will be so in sympatico it’s going to crush our ideas of what mediums are all about.”

— David Bowie, 1999 BBC Newsnight

David Bowie’s genius extended far beyond music. It’s no surprise he was prescient when it came to the impact of the internet on his own medium.

While David Bowie was able to see his predictions come to light over the next 15 years, unfortunately, he’s no longer with us today. That said, I’m sure if David Bowie was still around he would be saying eerily similar things about the impact the next technological shift will have on content, culture, and society at large. We’re speaking, of course, about the shift taking place as a result of blockchain technology.

Perhaps he would even refer to blockchain and Web3 technology as an “alien life form” in the same vein as the internet.

Web2: Why Content and Culture are Primed for a Paradigm Shift

Web2 Cultural Gatekeepers
Web2 Cultural Gatekeepers

The internet’s impact on creative content and culture since Bowie’s 1999 BBC interview is undeniable. Everywhere we look, we see the radical shift predicted by Bowie bourne out in the Web2 platforms dominating culture today: we consume most of our music through Spotify; we consume most of our movies and TV shows through Netflix; entirely new content mediums are created, memed, and remixed on TikTok, Twitter, YouTube, and Instagram.

The early days of the internet painted a future of borderless, peer-to-peer networks of unlimited creative possibility. As Rex Woodbury best articulates, the promise of the internet was to remove cultural gatekeepers. Facebook and Twitter would obfuscate the newspaper editors, Spotify and Soundcloud the record labels, YouTube and TikTok the studio chiefs.

However, today’s reality is the new, open mediums for cultural exchange enabled by the internet have transitioned to gatekeepers and intermediaries demanding their share of cultural equity. There’s no doubt internet has enabled a more direct relationship between creators and their communities. But by cutting out the middlemen, the big internet platforms became the middlemen. Misaligned incentives are baked into their DNA: the platforms are built for advertisers, not for creators and communities.

Thankfully, the world of cultural gatekeepers we live in today is not the end-state. As innovation continues, we’re beginning to see cracks in the foundation of the Web2 cultural incumbents.

Web3: Innovation Unlocking a New Cultural Paradigm

Web3: Read, Write, and Own
Web3: Read, Write, and Own

Much ink has been spilled on how blockchain technology is unlocking a new universe of technological possibilities, termed Web3. For details on how and why this change is occurring, I’ll refer you to leaders in the space whose thought leadership provided me with the conviction that we are in the early innings of the next platform shift.

But how does this manifest within the cultural mediums we love, like music, fashion, art, sports, and gaming? As we make the shift from Web2’s read-write to Web3’s read-write-own, a new cultural paradigm is unlocked – Community-Owned Culture.

The Web3 movement enabled by blockchain technology is now producing the necessary tools and infrastructure to facilitate next-generation, peer-to-peer creative economies. These economies remove the rent-seeking, the gatekeeping, and the industry-wide 30% marketplace commission that has defined the business model of the web until now.

Instead of being passive consumers of content, we will be active owners, participants, and decision-makers. New Web3 cultural platforms will provide the tools to actually enable content consumers to be invested members of a community and share in the success of content. In many cases, community-owned and operated culture will allow the people who are the consumers to even take part in the production of content and products they enjoy.

Why is this important? The transition from today’s Web2 gatekeepers to decentralized Web3 platforms creates a more direct relationship between content producers and content consumers. As a result, the value will accrue at the edges of the network (producers & consumers) as opposed to centralized intermediaries.

In short, Web3 creates more efficient relationships and incentives amongst the producers and consumers of culture today. All of this suggests our participation in culture is going to look very different in the coming decades than it has in prior years.

Bringing Community-Owned Culture to Life: Five Web3 Projects Disrupting Culture

To illustrate the impact of Web3 on cultural mediums, let’s look at five projects changing the way we experience and participate in culture today.

P00LS: Community-Owned Creator Tokens

DJ Blonde:Ish is one of the first creators to launch a social token the P00LS platform
DJ Blonde:Ish is one of the first creators to launch a social token the P00LS platform

P00LS is one of the early examples of a project changing the dynamic of how people interact with culture. The team at P00LS is building a community-first, decentralized exchange for creator cryptocurrencies.

What are creator cryptocurrencies? Essentially, P00LS partners with creators to launch a proprietary social token, distribute it to their communities, and list it on the P00LS decentralized exchange, where it can be earned and traded on Ethereum. Because the tokens are authenticated using blockchain technologies, owners can’t replicate them— creating scarcity to maintain the token’s perceived value.

Fans don’t purchase the tokens directly. Instead, they earn the tokens by engaging with creators, say by watching videos, listening to a creator’s music, or taking quizzes. Creators can use the token to grant access to exclusive events, bonus content, or sell as trendy virtual merchandise. The team also plans to launch a secondary market in early 2022. P00LS will earn revenue from secondary transactions as well as the sale of its own, yet-unlaunched token, $00.

Referencing Rex Woodburry again – social tokens like those created by P00LS, at their core, are simply another 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 in 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 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.

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 engaging. In the future, instead of measuring a creator’s clout based on her Instagram following, we’ll point to her market cap. Kim Kardashian might launch the $KIM token with 10 million $KIM in circulation, each trading at $100. That gives Kim a market cap of $1 billion. Rally and Coinvise are another two projects innovating on this idea as well.

P00LS debuted its first social token at Miami’s Art Basel convention recently, launching $ISH, a token in collaboration with a Canadian DJ who goes by the name Blond:Ish (a DJ whose sets I’ve been getting into recently). The team recently announced an $18 million seed funding round led by Global Founders Capital, with participation from investors including L2 Ventures, Shift, Maveron, and Kima Ventures.

Royal: Community-Owned Music

Last month, Royal founder and electronic music artist 3LAU gave away 333 limited digital assets (NFTs pictured above) representing 50% streaming royalty ownership in his latest single, ‘Worst Case.’
Last month, Royal founder and electronic music artist 3LAU gave away 333 limited digital assets (NFTs pictured above) representing 50% streaming royalty ownership in his latest single, ‘Worst Case.’

Royal is another project changing the dynamic of how fans interact with their favorite creators. Instead of allowing fans to invest in individual creator tokens like P00LS, Royal allows fans to invest directly into the music content itself. With Royal, anyone can own a piece of their favorite music and earn royalties alongside the creators, shifting power in the music industry from middlemen and labels to artists and their fans.

Royal’s model represents a new era in music royalty ownership, enabled by blockchain technology. Artists can simultaneously empower their fanbase while funding their careers. At the same time, fans get access to royalties that traditionally have only been available to major labels, large investors, and highly-connected individuals.

Limited digital assets, or LDAs, are the backbone of the system. An artist decides how much of his or her royalty share to reserve for LDA-holding fans and how many “official editions” to mint for a given song. Royal then facilitates the sale of those LDA tokens, generating cash for the artist and the possibility of future income from the song owners. A song with 100 “official editions” might entitle each holder to 0.5% of the royalties it generates.

The idea is to take the traditional record industry model, in which the label might keep 80 percent of all future royalties, and flip it to one where the artist keeps 80 percent. Royal produces revenue by taking a cut of primary sales that is under 10 percent (well below industry standard) as well as a cut of secondary sales.

Picture how engaging our interactions with our favorite music will be with Web3 projects like Royal. Rather than the Spotify-like user interface we have today, you’ll be able to look at the up-and-coming artists you love and make a bet on the music and its ability to generate future cash flows.

This is a theme of Web3 at large – producing a financial market around everything and unlocking the power of finance for the individual. You can create meaning by putting financial markets behind everything and enabling folks to be financial participants in the markets they love most. This is really an extension of a theme that began in the Web2 era as the “financialization of everything” (Check out John Luttig’s post on this topic, and CV’s investment in Franshares as an illustration of unlocking new financial markets).

The founders add an extra degree of credibility to Royal’s platform. This is a substantive advantage for any Web3 project radically shifting legacy industries and rallying a community around their efforts. Royal CEO Justin Blau (aka 3LAU) is one of the top five highest-earning artists in electronic dance music, an early crypto adopter, and blockchain advocate who began working with NFTs in 2018. JD Ross, co-founder and President of Royal, previously co-founded Opendoor ($OPEN) and was a General Partner at Atomic, the venture studio that co-founded successful startups including Hims & Hers, Bungalow, Butter, Homebound, Villa, OpenStore, and more.

Last month, Royal achieved some initial validation when 3LAU gave away 333 limited digital assets (Royal’s extended version of an NFT) representing 50% streaming ownership in his latest single, ‘Worst Case.’ Within the first two weeks, the song reached an implied value of over $6m with fans holding half of the value. The tokens have traded over $650k in secondary market volume, demonstrating how an open market values ownership in music royalties.

Royal recently announced that they welcomed a star-studded roster of global artists among their investor list including The Chainsmokers, Nas, Logic, Stefflon Don, Kygo, Joyner Lucas, and Disclosure, while closing a $55M Series A round led by Andreessen Horowitz with participation from CAA and NEA’s Connect Ventures, Crush Music, Coinbase Ventures, Founders Fund, and Paradigm.

Socios: Community-Influenced Sports

Socios Partnership with my hometown Chicago Bulls (who are actually good this year!!)
Socios Partnership with my hometown Chicago Bulls (who are actually good this year!!)

Socios is a platform that’s rapidly changing another one of my favorite cultural subsets – professional sports.

Powered by the digital currency Chiliz ($CHZ), Socios is a fan engagement and rewards platform that allows fans to engage with their favorite teams through digital assets known as fan tokens. Supporters use fan tokens to vote on club decisions such as kit designs, goal celebration music, and where the team might travel for its pre-season tour. Fans can also use these tokens to connect with other supporters around the world in exclusive chat forums, earn VIP rewards, and gain access to exclusive team and sponsor-related promotions.

For teams, the incentive is a 50-50 split of transaction revenue when their tokens are sold or traded. This business model means teams get multi-million-dollar payouts for years as more tokens are issued.

Some of the world's most recognizable sports teams are opening their aperture to the business of fan tokens. The company closed deals with several leading global sports entities including European soccer clubs PSG, Inter, Barcelona, and Arsenal along with 24 teams in the NBA.

As it turns out, fan tokens are in high demand. When Barcelona, for example, launched their initial fan token offering in June last year, they sold out in less than two hours, generating over $1.3 million for the cash-strapped La Liga team.

In 2021 alone, Socios claims its fan tokens have generated close to $200 million in revenue, meaning its team partners are in line for a share of around $100 million, depending on how many they have sold. The platform’s mobile app has taken off quickly, with 1.2m downloads since it launched in 2019, with over 900,000 active users.

Socios founder Alexandre Dreyfus notes that the platform is serving a purpose for an industry where sports franchises have reached a ceiling from a revenue perspective. Teams can’t sell more tickets than they have available, nor can they increase ticket prices exponentially due to a potential backlash, while income from sponsorship and broadcast rights is plateauing in many leagues.

The future of the sports industry, according to Dreyfus, involves a shift from a passive fan to an active fan industry, where fans will have more influence. Of course limited influence (for now), but still influence. And that influence can be monetized.

The platform is starting by empowering fans with relatively trivial decisions like what song gets played in the stadium when a goal is scored. At the same time, one can imagine how the power and influence of blockchain-enabled Web3 tools can expand dramatically. This brings us to our next project…

Krause House DAO: Community-Owned Sports Teams

Krause House NFTs represent a stake in the DAO, drawing inspiration from old-school NBA tickets
Krause House NFTs represent a stake in the DAO, drawing inspiration from old-school NBA tickets

The Krause House DAO is best identified by the community’s Slogan – WAGBAT: We’re All Gonna Buy A Team.

The Krause House is a Decentralized Autonomous Organization (DAO) with a very ambitious goal – buying an NBA team.

Named after the architect of the Chicago Bulls’ manifold championships, Jerry Krause, the Krause House self-identifies as “a community of hoop fanatics that are just crazy enough to buy an NBA team.”

What is a ‘Decentralized Autonomous Organization’, better known as a DAO? A DAO is a decentralized entity that allows individuals to self-organize around a common goal with no central leadership. Decisions get made from the bottom-up, governed by a community, and organized around a specific set of rules enforced through smart contracts. Members of a DAO collectively decide on what they’ll do and how to get there. They have built-in treasuries that are only accessible with the approval of their members, and decisions are made via proposals the group votes on during a specified period.

The group of ~2,000 members recently raised the equivalent of $4 million in the cryptocurrency Ethereum in six days to fund their mission. The crowdfunding, in the form of an NFT sale that resembled tickets to a stadium (pictured above), ended November 25th.

"Krause House is absolutely serious," the founder Lewkowitz said in an interview. "We're used to thinking about a billionaire buying a team as a one-time event. But this will be different. It's about people coming together and taking ownership of something they're really passionate about. Sports should be in the hands of people who care most about it."

Candidly, this idea feels like a bit of a long shot in 2021. For one thing, $4M is nowhere in the universe of what the group would need to place a credible bid on even the least-valuable NBA team (The Memphis Grizzlies, estimated to be valued at around $1.3 billion). The money raised so far will be invested into future projects focused on becoming a serious NBA team bidder one day. The exact plan for all the new cash is light on specifics, however. Second, convincing the NBA to be open to a collectively-controlled crypto investment might not be the easiest sales pitch.

However, The Krause House is an early indication of the power of DAOs and Web3 tools in culture going forward. We're going to see a lot of examples of DAOs buying things. The recent Constitution DAO is another early indicator of this trend. While failing in its attempt to buy the constitution, the DAO successfully raised $46 million from a highly engaged community of Web3 enthusiasts in a matter of days.

The Krause House leadership goes as far as calling their idea inevitable – they claim a professional sports team will be owned by a decentralized organization in the next 10 years. Only time will tell…

MetaFactory: A Community-Managed Fashion House

Products designed and created by the MetaFactory DAO
Products designed and created by the MetaFactory DAO

MetaFactory is upending another cultural medium near and dear to my heart – Fashion.

MetaFactory is a DAO that bills itself as a platform for collectively managed, community-owned fashion brands. Designers create their own brands and style guides, while the community gets to suggest and vote on product designs under the umbrella of the brand.

MetaFactory aims to solve incentive misalignment between fashion designers, labels, and their customers. Apparel pricing is often set by perceived value, driven primarily by emotion, hype, and information asymmetry around material/production costs and product quality. This has contributed to weak retail sales, struggling brands, and dissatisfied customers.

Additionally, consumers are starved for meaningful, authentic relationships with brands — particularly those that reflect their lifestyle and culture. Brands that have focused on building robust, inclusive communities or ‘belonging’ have seen significantly greater brand loyalty and growth in recent years. In fact, more than half (58%) of consumers aged 25 to 34 say they’re likely to spend more money on a brand’s products and services if they are part of meaningful brand communities.

MetaFactory believes it can cultivate more successful brands through higher-engaged communities and direct incentive alignment. This will enable individuals to participate financially in brand success, as well as help to govern future brand product direction.

How does it work? Fashion designers of all types are invited to create products that promote their art, community, project, protocol, token, etc. Once a design is created and approved by the community, the MetaFactory platform abstracts away all the production and logistics with their network of fashion houses and production partners in California and Sweden. This allows creators to focus on their craft while MetaFactory facilitates creation, fulfillment, sales, and support. Any profits are shared between MetaFactory and the community-owned brand (and, ultimately, with the community itself).

Members of the MetaFactory DAO use cryptocurrency to incentivize engagement, vote on new product designs, and share in the profits from sales. $ROBOT is the MetaFactory Governance Token by which community members decide on token mechanics, reward schedules, partnerships, platform features, treasury use, and more. It is also the vehicle by which value is captured, distributed, earned, and shared. Creators receive $ROBOT based on the success of their product(s), buyers are rewarded with $ROBOT for their patronage, and the community earns $ROBOT by helping to curate the marketplace.

MetaFactory is a completely new paradigm for creating fashion enabled by Web3 technology. As the website states, “MetaFactory was born out of a desire to cultivate crypto culture. Its form and function are continuously shaped by its community. It is our place to celebrate all the amazing, funny, insane, stupid, and wonderful things that make crypto...well, crypto.”

Looking Ahead: Participating in Community-Owned Culture

I’m as excited about the potential of Web3 technologies as David Bowie was about the future of the internet. Specific to culture – if these five early projects are any indicator, our participation in cultural mediums is going to look very different in the years to come thanks to the paradigm shift unlocked by blockchain technology.

A prophetic Jeff Bezos quote comes to mind in the context of the current cultural gatekeepers and how far-fetched some of these new Web3 entrants seem today: “Even well-meaning gatekeepers slow innovation. When a platform is self-service, even the improbable ideas can get tried, because there’s no expert gatekeeper ready to say ‘That will never work!’ And guess what—many of those improbable ideas do work, and society is the beneficiary of that diversity.”

The incumbent cultural gatekeepers are primed to be unseated, but these shifts may take time. That said, I also believe we tend to overestimate the impact of technology in the short run while vastly underestimating the impact of technology in the long run.

This post doesn’t even highlight other nascent cultural changes taking shape, such as the new category of art created by NFTs or the shift in the gaming industry enabled by play-to-earn game design. Whether it’s the projects we’re discussing today or new ones yet to be conceived, it’s only a matter of time before these massive, inevitable changes come to fruition.

The early participants in community-owned culture will be rewarded with amazing experiences, engaging online communities, and financial returns. It’s a great time to get involved – go create a crypto wallet, acquire some social tokens, contribute to a DAO, and start experimenting. Personally, I can’t wait.

For anyone who wants to jam on this topic or if you’re building the next generation of cultural innovation, feel free to DM me on Twitter!

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