Jeff Bezos once said “your margin is my opportunity”. He was referring to the business model that focuses on volume of transactions and low margins as opposed to one of fewer transactions and higher margins.

Tech companies offer convenience at low or free prices. They can afford this because they convert services into software and make them accessible to the masses through mobile devices, allowing them to scale effortlessly to millions of transactions with small margins, but still profitable in volume. They also have smaller structures relative to their size and are subsidized by investment funds, which leaves the rest with no chance to compete. We saw it in the way that Amazon dominates the market, bankrupting independent businesses, the same thing happened with Airbnb taking market away from hotels, Twitter from newspapers, Uber from transportation, WhatsApp from telephone companies (SMS), TikTok from television , etc.

The irony is that the same technology companies that took advantage of the high margins to grow, they reached such a size that now they have become vulnerable. For example, YouTube charges 50%, Uber 30%, Spotify 30% and Instagram 100%! Jeff Bezos' phrase is once again relevant in the context of crypto and web3. The higher the commission and the bigger the opportunity, the more vulnerable they are to being replaced by another alternative.

These are the industries that today are abusing power and high margins. At the same time, they are opportunities for crypto entrepreneurs to start taking the market away from them:

Video Games: The video game industry generates 120 Billion in annual sales mostly in virtual objects and these companies take 100% of the sale and rights of these objects.

Decentralized games on web3 drastically reduce this margin. Axie Infinity generated several billions in 2021 and the vast majority of this was distributed among the community, they're keeping only 4.5% of each transaction, which is reasonable.

https://twitter.com/Jihoz_Axie/status/1422772933680762887?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1422772933680762887%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fmirror.xyz%2F0x7E0b0363404751346930AF92C80D1fef932Cc48a%2FrGb0RXYr0TqI60M7L7MPEhRyKOtRYVWGU1YjhWxyymA

Music. Spotify has more than 11 million musicians of which only 0.0016% (17,600) generate a decent salary (50k per year). That's because most of the profits go to the platforms and record labels.

Social: Social platforms like Instagram, Twitter, and TikTok keep 100% of the profits, since they do not distribute anything to their content creators who are the pillars of their businesses.

Conclusion

The crypto industry comes to decentralize these massive networks, democratizing software and turning it into a commodity. Through open source you are creating protocols that any other entrepreneur or programmer can reuse and build upon. This generates high competition and easy replication, so they cannot afford to charge 30-100%, since a competitor can easily appear to attack the margins.

Protocols and decentralized applications such as OpenSea, Mirror or Axie Infinity handle percentages of no more than 5%, something more in line with the economic school of Carl Marx where the value of a product is determined by the human labor associate to it. In the case of software, the cost of replicating is $0, which is why it is more logical and reasonable for margins to be close to 1% and not 50 or 100%.

Apart from this, crypto introduces new ways of monetization and distribution of value. Through NFTs, artists can retain perhaps 99% of sales and consumers retain rights to that purchase. The margins of web2 are the opportunities of web3.

Jeff Bezos once said “your margin is my opportunity”. He was referring to the business model that focuses on volume of transactions and low margins as opposed to one of fewer transactions and higher margins.

Tech companies offer convenience at low or free prices. They can afford this because they convert services into software and make them accessible to the masses through mobile devices, allowing them to scale effortlessly to millions of transactions with small margins, but still profitable in volume. They also have smaller structures relative to their size and are subsidized by investment funds, which leaves the rest with no chance to compete. We saw it in the way that Amazon dominates the market, bankrupting independent businesses, the same thing happened with Airbnb taking market away from hotels, Twitter from newspapers, Uber from transportation, WhatsApp from telephone companies (SMS), TikTok from television , etc.

The irony is that the same technology companies that took advantage of the high margins to grow, they reached such a size that now they have become vulnerable. For example, YouTube charges 50%, Uber 30%, Spotify 30% and Instagram 100%! Jeff Bezos' phrase is once again relevant in the context of crypto and web3. The higher the commission and the bigger the opportunity, the more vulnerable they are to being replaced by another alternative.

These are the industries that today are abusing power and high margins. At the same time, they are opportunities for crypto entrepreneurs to start taking the market away from them:

Video Games: The video game industry generates 120 Billion in annual sales mostly in virtual objects and these companies take 100% of the sale and rights of these objects.

Decentralized games on web3 drastically reduce this margin. Axie Infinity generated several billions in 2021 and the vast majority of this was distributed among the community, they're keeping only 4.5% of each transaction, which is reasonable.

https://twitter.com/Jihoz_Axie/status/1422772933680762887?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1422772933680762887%7Ctwgr%5E%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fmirror.xyz%2F0x7E0b0363404751346930AF92C80D1fef932Cc48a%2FrGb0RXYr0TqI60M7L7MPEhRyKOtRYVWGU1YjhWxyymA

Music. Spotify has more than 11 million musicians of which only 0.0016% (17,600) generate a decent salary (50k per year). That's because most of the profits go to the platforms and record labels.

Social: Social platforms like Instagram, Twitter, and TikTok keep 100% of the profits, since they do not distribute anything to their content creators who are the pillars of their businesses.

Conclusion

The crypto industry comes to decentralize these massive networks, democratizing software and turning it into a commodity. Through open source you are creating protocols that any other entrepreneur or programmer can reuse and build upon. This generates high competition and easy replication, so they cannot afford to charge 30-100%, since a competitor can easily appear to attack the margins.

Protocols and decentralized applications such as OpenSea, Mirror or Axie Infinity handle percentages of no more than 5%, something more in line with the economic school of Carl Marx where the value of a product is determined by the human labor associate to it. In the case of software, the cost of replicating is $0, which is why it is more logical and reasonable for margins to be close to 1% and not 50 or 100%.

Apart from this, crypto introduces new ways of monetization and distribution of value. Through NFTs, artists can retain perhaps 99% of sales and consumers retain rights to that purchase. The margins of web2 are the opportunities of web3.