Just a few weeks ago, Netflix revealed that they lost subscribers for the first time ever. It seems like industry consensus is that this is not only a product of market saturation and subscription price increases but of the content itself. Evidently, quantity does not win over quality, especially in post-pandemic days when the preference seems to be shifting towards binging IRL experiences as opposed to the next docuseries.
I’m writing this after reading a fairly high-profile NYT article, which puts Web3 in its entirety in question by choosing to pick on the Bored Ape Yacht Club. I believe that those who concur with this piece overlook the reason as to why these pieces of made-to-own content, no matter how ridiculous they seem, exist in the first place: Web2 has failed us in some very real ways.
In my opinion, Web2 has fallen short in that it has been far too easy to create and distribute content, and for a bit too long. This has led to two key problems: 1) content is overwhelmingly mediocre and 2) good content (or the kind that you want to see as opposed to what the algorithm wishes upon you) is extremely difficult to discover. Moreover, when there is mass mediocrity on the content side, it’s harder to stand out amongst the noise and bring quality to the right consumers. CACs therefore skyrocket on the discovery side, via a law of diminishing ~content~ returns (it’s not only a cost of privacy issue, I believe).
Here enters Web3, which proposes that each and every piece of content must worth paying for and every community worth joining requires tangible buy-in. The bar for content is significantly higher, as it is made for ownership, and recommendations are good because they’re bought. As we grow comfortable essentially purchasing membership to DAOs or hyper-engaged, exclusive communities (via Bored Ape NFTs, to use the NYT article’s example), the market is signaling that we’re finally ready to have some more control over the kinds of content and experiences that we consume, whether we realize it or not.
So how did we get here, and what are the risks if we don’t lean into the new web?
The advent of Web2 meant the start of UGC as it is familiar to us today, when dissatisfied Amazon customers in the late 90’s didn’t need coding skills to disseminate their opinions on the internet; they were able to say as much as they wanted with only the click of a button. With ease came scale — the kind of scale which is supported by the ~720,000 hours of content uploaded to YouTube daily and the war for consumer attention that we currently find ourselves in from all sides of the spectrum.
But we’ve come a long way since the early 2000s, when KPIs around scale were the ones that tipped the scale, and there was little risk to having no bounds to the democratization of the content landscape. Today, businesses like Soundcloud and YouTube, I’d argue, are experiencing an oversaturation problem. In other words, scale (on the supply side, at least) is not always what we should be after. In UGC-based businesses, the law of diminishing content returns becomes a reality quickly. As user supply naturally shifts from the early adopters (self-identified content creators) to pure experimentalists, the content on-platform changes, or deteriorates, accordingly. This all happens while our time in a day (and patience in sifting through which content to consume next) stays absolutely fixed.
So with the pain point of content overwhelm comes one of two solutions, as I see it: 1) we do nothing and let the content economy re-institutionalize (i.e., revert back to what Web2 initially sought to correct) or 2) we actively decentralize it and welcome Web3 with open arms. Both seem to be two sides of the same coin, which is digging ourselves out of the hole that we’ve ended up in by overvaluing metrics that support quantity as opposed to quality.
If we do nothing, I do think that we’re at major risk of entering a re-institutionalization of the content economy. What I mean by this is that when the UGC landscape starts leaning towards becoming a cesspool of content, we’ll start to look to few for the truth, yet again — Gartner for enterprise tech recommendations, Spotify for music, and Michelin Guide for restaurants, for example.
Apple just announced that they will be cleaning up the App Store yet again to make discovery easier — the problem of discovery is rampant, and it is a problem. When there is a lack of friction on the creation side, users have everywhere to look. And when that is true, they look no where — or they don’t look where they could be best served, engaged, and monetized.
At the current moment, Web2 platforms are already at risk of becoming too institutionalized to bear, and some might argue that they already are. When ~97.5% of creators on YouTube don’t earn enough to reach the U.S. poverty line, only 2.5% are monetizing in a meaningful way and therefore actually reach their target audiences and creator potentials.
If there is not a paradigm shift in the content landscape, we may all become paralyzed by bad tweets and and revert back to what’s safe and comfortable: large corporations and incumbent institutions, who “always knew better,” telling us what to like and what to do. This is all to say that when the alternative is the deterioration of a democratized internet, are some bored-looking apes really that bad? In Web3, the market gets to decide what content is worth existing in the world, and I’m here for it.
So here are my thoughts on evaluating businesses that will be pivotal to the improvement of today’s content landscape, as we lean into Web3:
It should be noted that while the momentum that we’re seeing within Web3 leads me to believe that it holds many of the solutions to the problems within the content landscape that exist today, it also bears many of the same risks that exist within Web2 business models (i.e., the ease of minting NFTs today mirrors the ease of UGC). Web3 may hold even greater risks in terms of content overwhelm, when even entities that mirror corporations can be created more easily than ever in the form of DAOs.
But as long as we recall the ethos of the new web, stop scoffing at (and minting) “ridiculous” a-la-carte content, I’m excited about where we’re headed. After all, when content is made to own, it’s inherently held to a higher quality standard. And when communities require buy-in, recommendations are genuine, and they’re good.