Jarrod Dicker and Gaby Goldberg, investors at The Chernin Group came to speak with Crypto, Culture and Society about Decentralized Media. The conversation was facilitated by Adam Ryan, CEO of Workweek.
Until fairly recently, the structure and value chain of the media industry were quite straightforward. Content was produced by artists, creators, authors, and production companies and sold by commercial distributors such as publishers, film distributors, and record companies. The industries were supplier-led rather than customer-centric.
As distributors and retailers become less profitable, many creators have found it necessary to take advantage of new technologies and have become more self-reliant. So media companies need to evolve to allow themselves and their associated creators to grow and profit together, according to Jarrod Dicker’s The Next Media Business: Talent, Reputation, and Lessons from Record Labels. These creators already have dedicated fans, so leveraging this relationship is key for all media companies.
Media companies should be a platform for creators.
That’s why in DAMN, Gaby Goldberg classifies the next step-function innovation in consumer crypto as DAMNs: decentralized autonomous media networks. A DAMN can be characterized by three fundamental features: a tokenized network owned by its users, built-in incentives for users to coordinate in adding value to the network, and a singular utility to create and distribute media. Media turns to the creator and is a community-driven business.
Your audience is no longer just an audience, reader, or consumer.
The definition of an audience has shifted more towards a community, and so NFTs act as a kind of token for an investor to hold and use for a community's growth and development. To Gaby Goldberg, NFTs are a way for consumers to get involved in a much more meaningful and material way.
Across the board, creators are striving to gain back control, agency, and, increasingly, revenue from employers, publishers, and distributors. This new form of decentralized media is emerging, and we are still very early in its development.
Adam Ryan: In centralized media, many media brands like Food52 and Barstool have succeeded in moving to commerce/retail. Does this happen in decentralized media?
Jarrod: Yes, media is evolutionary and not revolutionary. This means advertising and subscriptions have been the model of media for a very long time, and even as the industry has moved into retail, it is an evolution of advertising. And as we’ve gone into memberships to move down content’s supply chain, that’s an evolution of subscription. When you think about the kinds of business models the media has and the relationship between content and commerce, I think it is very smart for anyone building in the media space, centralized or decentralized, to always have a diversified approach. If you go down decades of history in media, every successful company has done that through either advertising or subscriptions. So one thing I’d say is that I wouldn’t ignore traditional modes of monetization in media like advertising. These business models are not going away.
The way that people are raising money and engaging communities is going to shift, but I think media has always been a community-driven business. This has kind of shifted away a bit more during the web2 social era where a lot of community members’ comments and discussions moved from the bottom of publishers’ articles to Twitter, Facebook, and so forth. But these new methods are starting to bring that back through subscribers feeling like they’re investors and having a way deeper connection within the publication itself. Decentralized media is going to be net new. We’re going to be rethinking a lot of the ways we thought of things, both in terms of the inputs and the outputs, but it’s definitely the first moment that I’ve seen in my short lifetime in media where we’ve had this unlock of revolutionary new ways to monetize.
Adam: Can you help explain how NFTs offer a new business model for media?
Gaby: There's actually a piece by Jesse Walden that I definitely recommend people read. The title is Crypto’s Business Models are Familiar But What Isn't Is Who Benefits. The definition of an audience has shifted more towards a community, and so NFTs act as a kind of token for an investor to hold and use for a community's growth and development. It becomes a two way street as opposed to commerce, which is a one way street from the business to the consumer. So I think NFTs are a way for consumers to get involved in a much more meaningful and material way. One recent example is Poolsuite, which has been an Internet-native media company launching different products. Poolsuite ended up raising ~$2-3M in fully non-diluted funding just by having an NFT drop to buy member passes. Already it’s been so valuable in hosting events and doing various drops. So I think that’s a perfect example of people who follow Poolsuite online and are no longer audience members or consumers but actual investors and community members. They have a real upside in Poolsuite’s growth and how it’ll develop over time.
Adam: Reputation, or something I call cultural liquidity, is something that will define the success of brands in web3. If you were advising someone building a decentralized media company, how do you recommend them building a brand with strong cultural liquidity?
Jarrod: That's effectively one of the most interesting things that is happening in this space right now. One of the things that really grabs me into this space even further was this notion of subscriptions vs. investing and this cultural liquidity element of people really feeling genuinely closer to creators and publications that they love most. I subscribe to many Substacks, and I find myself oftentimes not reading them, not because it's not interesting but just because of time. But I still subscribe because I want to support that writer and creator. This notion of what crypto really does in that relationship is a complete unlock, where I am in fact financially and socially invested in their success and can participate. And I think it's very important to think about that sort of relationship. Your audience is no longer just an audience in that terminology or no longer just a reader or a consumer. They are members. They are a contributor and as you think more along those lines, you really think about different products and opportunities that you can unlock. It really starts to build an entirely different relationship dynamic, and I think that all has to do with incentives, mechanisms, and tools that are now at our disposal.
Adam: How do decentralized media orgs continue to retain and increase the value for their community while having such an influx of talent and content channels?
Jarrod: The community relationship in decentralized media is just so incredibly unique because the incentives tied to ownership and contribution are so real. The relationship is tied to the brand itself, and people take that with them through what they wear and what they purchase. But again it's between the community and creators receiving something in exchange for something like attention or dollars, and this is a completely new mold. Every media company that's building in a decentralized way needs to start thinking about the one way conversation and contribution between community members. This is completely new and different, and we’re seeing this happen in real-time. There is a demand on the community to do more. Web3 is about the active consumer vs. the passive consumer, which unlocks new opportunities but asks a lot from the community and the participants.
Adam: Algos essentially defined centralized media in the last decade. Will algos play a role in the next phase of media? Decentralization offers a new entity structure with token distribution. Can you help others realize the benefits of this for the media?
Gaby: I was working with social apps in my last role, and I heard stories of what some of these companies were doing to go viral on TikTok. One story was of a company that figured out how to go viral. Apparently it happens with your very first video, so they hired hundreds of people in the Philippines to each post one video, and they went insanely viral. Generally, I think the question is: who is building that algorithm? The difference between Web2 and Web3 is that in web2, algorithms are top down. They are built and driven by the platform. TikTok gets to decide what goes viral. In Web3, algorithms are built by the consumer. The consumer is in control of what they want to see, and it’s not TikTok deciding for me.
Adam: Paid acquisition has been a huge portion of the budget for content companies. Does this exist in a decentralized world?
Jarrod: When we wear clothes, we’re effectively advertising for that brand. So when we’re in a world where we’re mostly online and in the metaverse, we’ll start to see brands and advertisers really think about the relationship between the brand and people’s digital avatars or the content they create or other experiences that are more immersive. Thinking about where advertising budgets will go is a wild thought exercise to go through.
Thanks to Sarah Drinkwater, Kassen Qian, Bhaumik Patel for their contributions to this post.