Dear Reader,
Summer is fading out bittersweetly here in New York, and what a few months it’s been. I’ve been busy visiting family, creating in various forms, and taking classes both IRL and online to learn stuff while unwinding with the absolute psychological thriller that is the reality tv game show, The Traitors! How about you?
Here are a few highlights:
working with Celo to launch part two of the first ever paid iridescent wave remix contest! Huge congrats to our winner, saltï, whose unapologetically queer take on my track is just Pride perfection. Check out the drop here, and make sure you collect both my version and saltï’s version of the track via our audio-visual NFTs, the first to hit the Celosphere!
getting some structured education and inspiration on generative AI for visual artists in the Hug x Stability AI lab!
co-hosting SheFi Karaoke Night in the Lower East Side of courrrrse! Spice Girls classics WERE sung as a group.
And what about Read Write Own? Is it already obsolete or still showing us the way on all things blockchain future? Let’s dive into Part 3 and find out!
Your pal,
Celia
Welcome to iridescent wave: the deep cut, a place for subscribers only! This week, we’re back to recapping Read Write Own by Chris Dixon with a sprinkling of insights & commentary from what’s happening around present day web3 — my fave. :P
Dixon is laser focused on what he sees as corporate networks’ great weak spot, and blockchain’s great opportunity: take rates. Let’s get into it.
Part 3: A New Era.
A new era of remixable, composable internet! Welcome to Part 3, where we get in some particularly juicy weeds around take rates and the tokenomics that make web3 unique (and also something of a throwback to developers’ open source movement of the 1990s).
Dixon really loves the idea of composability, which he argues leads to a form of community-created software. A lot of the big corporate media companies don’t endorse the open-source way; outside developers can’t just tap into Youtube to build an app on top of it because that competition would be a threat to Youtube.
Web3, however, is open-source all day! So building on blockchains offers unique benefits: first, blockchain networks have the ability to cover their own hosting costs by distributing their tokens (aka crypto coins) to the validators who keep the network hosted, and the builders who take the time to contribute their work to the chain. That means Developer Jane can spend her time building stuff on Arbitrum, for example, and enjoy token incentives for it — aka, get paid.
Second, blockchain networks run on code that enshrines its rules, including prices enshrined in their tokenomics plans; once the code drops, the blockchain can basically run itself, and no corporate overlord will be coming in to make big, sweeping, profit-squeezing changes down the line.
Take Rates
This brings us to take rates, which are sure to fire you up, reader!
Has a small business in your neighborhood ever expressed that they prefer customers pay with cash? That’s because of take rates, or the percentage credit card companies take (2-3%) on every charge. It’s the percentage that ebay or etsy will take when you sell something using their services.
Dixon takes a look at the largest social networks’ take rates. In this context, take rates are the fee they charge for network activities like commerce or advertising. Remember now that WE the people create the content for these social media companies. That revenue they gain, though, goes… overwhelmingly not to us.
Youtube leads the way -- meaning, it has the lowest take rate, by splitting revenue 45/55 with creators. The others, however, still take about 99% (Facebook, TikTok, Twitter as of when this book came out) and create sus creator funds with strict rules instead to make up for it. And what are you gonna do, leave them? They are so widespread, it’s kind of tough to just go it alone without them; how will you reach your audience?
So yeah, as you’ve probably seen, creators are left to work harder and compete with each other more fiercely for the less than 1% of revenue on these platforms while the companies themselves do whatever the hell they like. How does this play out?
Well, ever hear from social media marketers that it’s important to stay on top of new announcements and updates from the platform? This is because they will constantly change their algorithms [when creators get too good at cracking it]. In other words, if your content is performing well and your reach is awesome, the platform will find a way to bring you back down and force you to eventually pay up in ad money to maintain those high reach numbers from before.
But yeah! Imagine a world where the dominant social media apps can't have astronomical take rates. Can you? It sure is difficult with the way social media has been dominated by the same companies for so long, but Dixon seems to think web3 is our key to getting to that place!
Phew — I’m going to break here since we’ve already covered so much! This ‘part’ is a probably the longest in the book.
Celia's Conclusions
I’ve been trying to hold up real world examples to Dixon’s mostly conceptual, theoretical book — hence my focus on decentralized social apps like Farcaster and Lens in my last Read Write Own post. It's been a minute -- how are those apps holding up nowadays? Well, they’re still here, though my feeling is that they only thrive when there are injections of cash to give away, and that seems to always come from the traditional financial world (VC money), not brilliant blockchain tokenomics plans. And then that runs out, and web3-hip artists/creators run to the next lucrative opportunity.
Airdrops and flash-in-the-pan cash giveaways are still the inconsistent norm in web3 from my creator vantage point. There’s also the side note of the founders of these promising apps somehow managing to suck absolutely. Maybe it would be easier to get behind these apps for the long run if the people running them weren’t second rate carbon copies of the billionaire trolls of tech who got us here in the first place.
xo C
