Interviewer: "it's just a tool though isn't it?"

David Bowie: "No, no, it's an alien life form"

That was Bowie in 1999 presciently describing what the internet was going to mean for the music industry. Specifically, how it was going to change the relationship between artists and their audiences. At the time, he saw that humanity was on the cusp of something both exhilarating and terrifying: it was a breakdown of the barriers between creators and their communities. Instead of a piece of art or information being broadcasted one-way to an audience, it was becoming more of a dialogue, where the thing that originates from a creator isn't finished until the audience comes in and add their own interpretation. From there the piece evolves, gets sampled and remixed in ways that the creator couldn't have possibly imagined. Bowie called this area where creators and their communities meet "the gray space in the middle": a powerful new area of engagement where the most interesting things happen, and he predicted that this space is what the 21st century was going to be all about.

Years ahead of his time in exploring the possibility space of the "World Wide Web", Bowie launched his own Internet Service Provider "BowieNet" back in 1998 which, beyond the core services, served as a platform for an early fan community. The service included a personal email address (yourname@davidbowie.com), access to exclusive music from Rolling Stone, exclusive content, and live chats Bowie and his friends.

In 1997, Bowie did his first cybercast for his Earthlings concert in Boston, where fans around the world could experience it live. Though this was before most people had a fast enough internet connection, it was a sign of what was to come…

I watch this Bowie interview and can't help but think about what has been happening with NFTs and community tokens lately. New users are interacting with web3 applications for the first time not because they were allured by the idea of unstoppable money, but by beautiful pieces of art, music, NBA clips, games that earn them money, community ownership, and a general sense of belonging. It feels like we're entering the next evolutionary phase of online communities, where you and others are not just members of the same chat room talking about a shared interest, but are stakeholders of the community itself, in a system with baked-in incentives to reward you for the value you put in. The community is able to evolve a product alongisde the creators. As Bowie observed, the audience was becoming at least as important as the artists. Today, users of a decentralized protocol are at least as important as the person who wrote the code, holders of a community token are at least as important as the figure that issued it.

Let's look at some examples of what is manifesting out of the gray space in the middle in 2020.

Audience-driven price discovery

Zora is a platform that allows creators to drop limited-edition art and goods as a crypto token. 1 token is redeemable for 1 unit of the real world product. What does this mean?

Dropping an item on Zora creates a cryptocurrency that represents it. If you want to drop 100 pairs of sneakers, there will be 100 tokens created which are then ownable and tradable on the internet. This enables the physical product to be dynamically priced based on the supply and demand of the open market.

You start off at a base price for the token, and then the price for subsequent tokens goes up and down as people buy and sell them. This means that before you redeem the token for the actual product, you have a chance to sell it back to the market at a profit or loss, with trading fees going to the original creator.

When someone redeems their token for the real world item, the creator earns that revenue at the current market price. The redeemed token is burned and is forever removed from the market. The person who redeemed the token gets the product shipped to them.

In their introductory blog post Zora posits that this solves what they call "The Yeezy Problem". Yeezys are sold by Kanye x Adidas at $220. But because the product is in such high demand, these sneakers sell on secondary markets like StockX for 10x the price, with none of the revenue going back to the original creator. With platforms like Zora, creators get to create their own markets that enable true price discovery, and are able to capture some value from subsequent market activity.

Andre Anjos, also known as RAC, is a Grammy-winning artist and one of the most vocal advocates of web3 when it comes to innovative new revenue streams for artists and engagement with their communities. He partnered with Zora for his third studio album BOY by and released a limited-edition cassette as $TAPE on a dynamic price curve. $TAPE had a starting price of $20 and quickly went up to the hundreds as people flocked to be a part of this experiment with price discovery for music. Here's an overview of how this all worked.

This is just one demonstration of how creators can create their own markets using crypto today. Note that these are currently constrained to limited edition goods with a known fixed supply. There are still plenty of contexts where fixed pricing would make more sense. In most cases today, the price of a good and the cut of revenue that goes back to the artist is determined by a sea of middlemen, and the audience just has to sort of go along with it. Platforms like Zora and Foundation turns this model on its head and allows us to answer the question: if you only make a limited number of something and open it up to the market, what is that thing worth?

Here is the market for $TAPE on Zora as of 8th October 2020

Here is a snapshot of another market for a PLS&TY's limited-edition EP on Foundation, which operates on the similar idea of redeemable tokenized goods and price curves.

Meanwhile, the creator has a community of Patreon subscribers, Bandcamp supporters, subreddit moderators and fans around the world who spread the word about everything that they do. Surely, these stakeholders at least as important as the companies who put out these records. Yet, they are the only ones left out of the opportunity to capture the value they contribute to an artistic project. How can we do better?

Community ownership of an artistic project

Have you ever supported a band or artist right when they were starting out? Whether it's a YouTuber with a few hundred followers you accidentally discover and are instantly hooked to, or friends that started a high school band and were passing out home-recorded EPs in class. There's a sense of camaraderie and pride that a growing fanbase or community share as the artistic project (YouTube channel, visual art, music) becomes more successful. I still remember the first Smosh video that I watched and embedded on my Piczo site. For an up-and-coming indie creator, platforms like Patreon allow people to support a project. A few of these folks even go above and beyond monetary contributions and put in their time in actively spreading the word. Beyond members-only content and maybe face time with the creator, they really have no incentive to put in that time other than the fact that they value a project and want to see it continue. What happens if there was a system in place for the community of supporters to own a piece of the project's success and reward the most valuable members as well?

The idea behind community tokens is that creators can open the ownership of a project to a variety of people who together then are incentivized to make the project better. Instead of a convoluted network of intermediaries that thrive on the backs of artists and curators, we now have the technology to experiment with mechanics of value transfer and accrual that are more transparent, inclusive, and open.

Now, creators can not only engage but transact with their fans directly: the community can voice their opinions and have a better chance of being heard, the perks can be designed to reward members who add the most value, and the community can benefit through token ownership and redeemable real world rewards. The creator goes from being an aloof entity behind a veil of corporate interests to an active participant in their own community.

It's demystification between the artist and the audience. Most of the prominent social tokens today are ERC-20s on Ethereum, which means they are permissionlessly tradable on the blockchain. Naturally there is a market for these tokens and some play the market without participating in the community itself. But those who are earning the tokens through active involvement are investing not their money but their time and commitment to an idea. For them, holding community/social tokens means opting in to a community that comes with benefits for holding and using the tokens. The tokens are a tool, rather than a financial investment. For example, a tiered membership model would require you to have X amount of tokens in your wallet to gain access to a private Discord channel with exclusive content, giveaway entries or early drops. Because ownership is verifiable on-chain, it's trivial to check if you make the cut.

From RAC, who announced his community token last week:

"Artists have historically been deprived of capturing their value by a sea of intermediaries like corporations and platforms that have a monopoly on creative ownership. I’ve been fascinated with crypto for years and its applications beyond currencies, and believe that it can create a new paradigm for creative ownership directly between artists and their communities. This new paradigm is what I want to pursue with $RAC and I want to put it in the hands of my existing fans and community."

"$RAC is a token built on Ethereum that I want to give to fans who support the RAC project, and who want to build it alongside me. By rewarding my most loyal fans, we can create a community where tokens unlock access to various perks and exclusive content. Crypto enables communities to capture the value they create instead of being monetized by pre-existing platforms and $RAC is an active experiment pushing the envelope on these primitives."

When an artist goes into get a record deal today, the company is essentially making a bet on the artist's success in exchange for a service. By making this bet, they own a piece of the project to make back the principle and many times more. What does a musician's world look like when their community is the record label?

In other words, what happens when the fanbase is able to give the artist an advance to do their work and get exposed the financial upside of the project?  Of course, the creator has to be held accountable for delivering the work. But once the trust is established with the creator, why not own a piece of the project if you enjoy their work? If people can buy stock of a company, why not of an artistic project?

Until a few years ago, a lot of these concepts remained in Theoryland as separate primitives. Today, web3 infrastructure is still far from perfect, but we're at a point where we can start implementing these primitives as code, put them together like building blocks, and run lots of experiments to see if verifiable scarcity, open market dynamics, and digital distribution can remove the social and economic inefficiencies in the legacy system.

Programmable art

Projects like Async Art is stretching the boundaries of digital art ownership and allowing collectors of a digital artwork influence the work itself. The original artists sets a series of parameters that can be altered by owners of various “layers” of an art NFT. So if 5 collectors own 5 different aspects of a picture of a tree. One collector may choose to have its fruit ripen, another might rearrange the branch, one might control the weather… In this sense, the overall work becomes a collective expression of the original creator as well as the group of collectors that care enough about the art to buy a piece of it.

Artist Matt Kane, who leverages algorithms alongside his own human input to produce unique, intricate colors and patterns in his work, allows collectors of his tokenized pieces to log in to a collectors-only area that contains exclusive behind-the-scenes content and artifacts produced along the way to the finished piece. To log in, the collector uses their browser crypto wallet to connect to the site, which then detects if the person owns the NFT or not. If the person decides to sell the artwork, the next owner will automatically gain access to the collector's area. It will be interesting to see how more creators leverage tokenized access to design the parameters of perks for being "along for the ride", over time cultivating and curating an intimate relationship with their fanbase in a way that wholesale-type third-party platforms have never been able to.

Shared Virtual SPaces

I've previously written about the non-fungible tokens and NFT projects that are pushing the envelope today. Let's look back to NFTs as parcels of virtual land for a moment. Today, the ownership model is straightforward, where one person owns the NFT representing a piece of land, and have the rights to build or give build rights on that land, or sell it on the open market.

What happens when a community of people can own virtual land?

Decentralized Autonomous Organizations (DAOs) are collectives of individuals with a common goal, who can make decisions on how to allocate a set of pooled resources. This can make for-profit investments or give grants to mission-aligned projects. It can provide services or curate digital art.

Cryptovoxel parcels are NFTs on the Ethereum blockchain. Today it is home to art galleries, impressive commissioned builds, weekly meetups, and even a sorority house. here's also an in-world "Metalympics" games happening on Nov 5th! 😲

What happens when a collective of artists and curators get together to buy a piece of virtual land, build a gallery, and make curation decisions about what pieces to display or what concept the next exhibit could be built around? Anyone can type in a URL in their browser and walk through, discover, and purchase pieces of on display which can be digital art NFTs or a digital representation of a real-world product that that token can be redeemable for a digital or even physical product.

The first experiment with a community-owned parcel is ZOO Token where $ZOO represents partial ownership of a CV parcel that represents the The Bronx Zoo. $ZOO is also used as a governance token where holders can vote what to do with the community treasury. In a few months, the parcel will go on auction, and $ZOO token holders can claim a pro rata portion of the revenue from the sale. Here's what the Zoo looks like right now…

This topic deserves a series of articles I will save for another day. But if this interests you and you want to see the results of some recent brainstorming on NFTs, check out the Untitled Hackathon which is going on until the end of this month.

David Bowie observed that in the music realm, there wasn't a single "brand name" artist for the 90s the way the Beatles were for the 60s, or Elvis was for the 50s. In the 90s, it more communal with people flocking to different genres: there was hip-hop, grunge, girl power... It was becoming much more about the audience and culture of that genre. At raves, the DJs accompany the audience and responded to what the the crowd was doing rather than it being a static, one-way communication. The experience of being at the rave is shaped by both the audience and the DJ. He deeply understood the link between artists, their fans, and culture. He saw the internet as an arts venue. And was excited to see what the "new construction" between artists and audiences in this gray space in the middle was going to be.

Today, we have more means than ever to explore and amplify different aspects of ourselves. We can be professional on LinkedIn, a foodie on Instagram, a comedian on TikTok, a motivational speaker on Twitter, an anonymous contrarian on Reddit. Similarly, we can connect with strangers who share the same interests and cooperate to achieve a common goal. When it comes to self-expression, the internet has allowed us to co-create a meaningful thing with people we may never meet in real life: whether that's supporting a YouTube channel that grew to millions of subscribers or draw massive attention and funding to a cause. With web3, we can now transact not just information but value in ways that empower us to co-create and evolve creative projects and own a piece of its success.

I’ll be continuing to explore the weird and wonderful things blossoming out of this intersection of creatives and the wider public. If you enjoyed this and previous forays into the future of art, entertainment, and online communities, please consider subscribing! Who knows, it might spark a conversation that stars something in this gray space in the middle.

Buy me a ☕️: nich.eth

And now, I leave you with the man himself..

Further Reading

1. Introducing RAC

2. Foundation: Empowering Creators to Create their own markets using Ethereum

3. The Yeezy Problem

4. David Bowie, the Internet Visionary

5. How David Bowie Foresaw the Future of the Internet

6. David Bowie Wasn’t Just an Incredible Artist, but a Tech Visionary Too

7. The Bull Case for Social Tokens

8. The Democratization of Value

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Cover image of Vishnu R Nair via Unsplash