Collectively Owned Content

History

As technology develops, the platforms we use to access content shape the way we consume it and their business models:

Matthew Ball, How Technology Shapes Content and Business Models (Or Audio’s Opportunity)

Subsequently, when a new technology emerges, it takes time to figure out how to adapt content and a suitable business model:

Printing press:

• It initially led to the mass printing of the Bible as a standard text relevant to the masses.
• Today, many books, newspapers and magazines serve content niches.

Television:

• First, television shows were broadcast from in-person events such as Coronations or World Trade Fair, and it took years for made-for-television shows to emerge.
• Today, we have reality TV, dramas, documentaries and tailored broadcasts for live sporting events featuring commentary, alternative views, replays, etc.

Internet:

• Initially used as a way for government researchers to share information,
• Today, we have virtual games, UGC-driven platforms and social media

To circumvent this problem, significant early players have bootstrapped the adoption of new technology with manual, heavy lifting involved in bringing content to the latest technology platform.

For example, Google’s ScanOps team in the 2000s was responsible for digitising the world’s books to provide content to search online and was part of the Google Books initiative.

Why should we put content onchain?

Content will come onchain via two methods:

1. Onboarding existing IP/commerce/payments data on chain akin to the Google ScanOps team
2. Radically new content media emerge onchain uniquely suited to the properties of blockchains.

Once some level of a critical mass of content emerges onchain, the secondary benefits of the blockchain, such as technical distribution and monetisation, will come to fruition. Leveraging these secondary benefits has been where most building attention has focused to date.

By understanding which onchain experiences evoke strong emotions today and what drives participation, we can extrapolate to identify what behaviours and distribution channels will become the foundation of the “killer consumer app”.

An early onchain content form: Generative Art

Generative art emerged in the early 1960s with artists such as Vera Molnar and Harold Cohen, considered essential forebears to the upcoming generation of digital artists. Alongside the revolution in personal computing came a new generation of artists well-known today: John Maeda, Casey Reas, and Ben Fry.

Generative art onchain has garnered over $1.3bn in sales on the Artblocks platform alone, with several iconic long-form collections which are cornerstones to the art movement today: Autoglyphs, Fidenzas, Ringers, CryptoPunks and others. Pieces from these collections and others generated over $8m in the Sotheby’s 2023 Grails auction of Starry Night Capital’s collection.

It is also an art form increasingly recognised by the traditional art world. Refik Anadol’s piece “Unsupervised” has recently become part of the permanent MoMA collection. The work uses an ML model trained on the publicly available data of MoMA’s collection. It incorporates site-specific input such as changes in light, movement, acoustics, and the weather outside — to affect the continuously shifting imagery and sound.

Why should generative art live onchain?

Generative scripts allow one string of code to have multiple outputs. Artists run the script to create a series of unique artworks + pick their favourites.

Long-form (onchain) collections are when a collector purchases a work via a smart contract. The algorithm is triggered to generate a work of art previously unseen by the artist and collector; here, the interaction of the blockchain’s hash and the system creates an element of randomness.

Fxhash’s params feature extends this basic premise by allowing minters to edit pieces based on parameters previously enabled by the artist, giving collectors a deeper co-creation role in the work. Digital collectables uniquely influenced by the purchaser’s wallet to generate features can extend the purchaser’s co-creation position.

Open Questions

Whilst generative art has found some product market fit onchain, we’re excited for further media formats to have their onchain “lightbulb” moment.

• How does this consumption format expand to other media formats beyond art?
• Where/How is this media consumed? Physically via prints or TV screens? On social media? In virtual worlds?
• Can a new behaviour be unlocked from media created by generative systems + interactive minting? Akin to internet-native primitives such as liking/commenting
• What is the new distribution channel enabled by generative art?

Hyperpersonalisation onchain: 1/1/X Media + Commerce

There is a broader trend towards the hyper-personalisation of how we interact with social media and commerce. Social media enabled brands to reach out directly, target, and interact with their customers, creating direct relationships between brands and consumers. E-commerce allows brands to leverage social media to sell directly to customers without distribution intermediaries. Today, our social media algorithms have become hyper-personalised, and consumers’ desire to “fit in and stand out” is well documented. The 1/1/X standard of NFT collections and the generative creative process can leverage this trend to create attractive onchain generative media.

The PFP craze of 2021–2022 showed people’s desire to trade as well as a desire for personalised digital objects within a collection that represent themselves online. A further whitespace for developers involves building products and experiences that adapt to users’ wallet inventories. The first iteration of this was token-gated content/chat groups. The broader question is, “What types of media/content are ripe for onchain personalisation”?

The demand for digital fashion for player avatars in gaming environments such as Roblox, Minecraft and Fortnite is apparent:

• The gaming skins market is estimated to be a $50bn industry
• In 2022, over 157 million users on Roblox acquired free or paid digital fashion items
• 1 in 4 of these paying customers spent between $20 to over $100 on a single item
• 70% of Fortnite players say they buy digital fashion for no in-game benefit other than looking cool
• Fortnite generates “billions” of dollars of revenue per year from purchases of outfits and items from the game’s in-game shop.
• Fortnite made $50 million in income for the platform with their “Fortnite X NFL” skin in 2021

Platforms such as RSTLSS bring personalisation to player avatars by allowing users to customise wearables for gaming environments with permissioned IP from games and brands and artwork from creators.

Whilst the demand for digital fashion is evident in gaming environments such as Roblox, Minecraft and Fortnite, the market for a metaverse is far from reality. Some brands have emerged, leveraging the demand for physical goods today with generative design processes. There have been some early exciting experiments on personalising physical products. Fashion experiments such as Tribute Brand’s “ODDs’’ collection and 9dcc’s “Interaction 002” have remixed the Chromie Squiggle algorithm to create unique physical clothing. Navette by Alexis Andre brought generative design to physical tapestry in an enjoyable alternative experiment.

If collecting and minting NFTs can become the new liking/commenting on social media, we can imagine a world where connecting your wallet (and its inventory of tokens) to a shopping experience can unlock personalised and unique media or products. Today, NFTs are a technology that provides an additional revenue stream to creators; marrying this with a new blockchain-enabled distribution channel can supercharge the opportunity.

What onchain features are suited for personalisation?

Ultimately, distribution onchain today is limited. Some onchain features show early innings of how this might play out:

• 1/1/x rarity distribution in NFT collections + long-form generative systems
• Onchain programmability with functions such as burn and redeem, redeem and replace, which can gamify experiences
• Wallets that can act as an inventory of tokens

Open Questions

• Which digitally native formats of media are ripe for personalisation and bringing onchain?
• What net-new onchain social experiences can be created to supercharge the mass market consumer behaviour (e.g. minting/collecting tokens) needed to make this attractive?

Co-creation and community involvement onchain

Co-creation provides collaboration between brands and creators on an intimate, creative level, whilst community involvement creates a feedback loop between a brand/creator and their community.

Co-creation

Collaborations are at the core of creative work. Brands partner with multiple stakeholders today, from influencers to artists. A subset of collaborations leveraging token-gating include endorsements where an established creator can endorse up-and-coming creators. A basic framework for this is below:

Permissioned co-creation can occur when IP owners introduce a framework that other creators can tinker with and distribute. The basic process looks as follows:

Artists: Utilise and add inputs to tinker with IP/creations and can distribute those on

IP owners: become the curator for collection (e.g. Universal Rayhatcher) created by other artists and sub-lease models built.

How it works:

1. The Artist applies to use the IP owner’s framework.
2. The Creator (Pieter Pisma) allows creators to tinker with the framework.
3. The creator becomes the curator of a collection created using the framework.
4. Blockchains capture the state and manage permissions/creation history of new model usage.

Experiments include:

• Pieter Pasma’s Universal Rayhatcher project, in which selected artists could access his Rayhatcher framework to create and sell long-form generative art pieces.
• Popular musician Grimes created GrimesAI, which is a permissionless platform allowing music creators to use her vocals with an equal 50/50 split of any resulting commercial profits.

Community Involvement

Social media allowed content creation to flourish, and consumers have evolved from posting content on the brand’s products to sharing feedback, thoughts and suggestions on products. Incorporating this feedback loop has become a core component of the modern marketing playbook (see the common “you spoke, we listened” troop). There are several NFT collections and projects today leveraging feedback loops between the community and the core team in novel ways.

• Opepen by Jack Butcher is a collection of 16,000 open-edition NFTs whose artwork changes over a series of drops and reveals. The collector base is allowed to participate in the reveal process and influence the outcome of each drop.
• Kiki World is a beauty brand that lets customers vote for their favourite products to be released and earn rewards.
• Botto is a decentralised autonomous artist who creates works of art based on collective feedback from the community/DAO.

What does Web3 bring to co-creation processes?

• Managing permissions/changes to the state
• Timestamping + immutable record of voting history
• Programmable execution (if X vote passes, Y action happens programmatically)

Open Questions

• What features of the blockchain are best suited to be the initial “hook” to bring content onchain?
• Endorsement permissions can be managed offchain, voting records may not need to be immutable, and programmable execution may not be possible.
• Can co-creation and community involvement create a radically different relationship between the consumer and IP?

Secondary Benefit: Technical distribution and monetisation

It is well documented that most creators struggle to make a living creating content. According to Linktree’s 2022 survey, only 12% of full-time creators make more than $50,000 per year. The Internet was designed as a tool to share information and mainly for free from a user perspective (who are monetised in other ways). The most successful creators have leveraged their audiences with products and businesses instead of monetisation via their content:

• Fenty Beauty by musician Rihanna (generating $570m in revenue in 2021)
• Prime Sports Drink by YouTubers Logan Paul and KSI ($250m in sales in 2022)
• Skims by influencer Kim Kardashian (on track for $750 million in sales this year)

Social graph protocols such as Lens, Farcaster, and Cyberconnect have emerged, allowing users to port their content across platforms and leverage onchain programmability to monetise their content. In the first 7 months of Lens’ beta launch, creators made over $350K, monetizing their content directly with their audiences.

These protocols leverage several properties of blockchains: pricing of both non-fungible and fungible items, onchain micropayments in ways not possible on today’s internet and programmatic execution of payments (e.g. royalties, split mechanics). Currently, many of these payment features are available to creators via Shopify. The exciting opportunity with blockchains comes from their composability. Instead of only being able to execute via a creator’s Shopify page, any front-end can trigger the execution of these payments. Additionally, we expect future innovation around the design space of monetisation to come.

However, the driver of bringing content onchain for monetisation purposes is less apparent when the consumer demand to pay for content still needs to be stronger. The technical advantages of blockchains are clear; emerging behaviour within the crypto community for minting/collecting content exists but the driver for mass market user behaviour to minting/collecting content onchain needs more clarity.

What unique features exist onchain?

• Pricing of discrete, unique editions of NFTs as well as fungible copies of contents
• Programmatic execution of payment flow (e.g. royalties, revenue split mechanics)
• Technical distribution from composability

Open Questions

• Will creators monetise via their content in the future?
• What will the mass market driver be for collecting/minting content onchain?

Conclusion

The evolution of content formats is primarily driven by the constraints and opportunities of new technologies. Generative art has found a firm foothold on blockchain platforms, but the consumption behaviours that drive other media formats onchain remain unclear. The adoption of crypto-native distribution channels for content consumption and creation has been limited. We’re excited to see the evolution of Web3 social to address this predicament and innovative products emerge to incite consumer willingness to pay for content onchain.

For more information on Fabric’s portfolio, opportunities and our investment thesis please visit our website and follow us on Twitter, LinkedIn & Farcaster.