(Part 2) - Web 2.5 is Here - Being Everywhere from Nowhere
My dad embellishes every story by 10% each year. Decentralization is getting hyped, but this time, unlike my dad's stories, the hype is real.
Hi all 🙋♂️
Before we dig in, a few articles this week that either pushed my thinking forward or broadened my perspectives:
Being Everywhere from Nowhere
Executive Summary
Decentralization means:
Getting Paid for Content without the Middleman
Establishing Trust on the Internet
Accessing Peer-to-Peer Networks for More High Quality Access to the Internet
In other words, Web 3.0 is “open-source, open money, open internet”
Inspirations
Shopify
Cameo, OnlyFans
Helium network
Intro
As part two of this ‘Web 2.5’ series, I’d like to start off with another historical parallel. This article’s theme of decentralization for the future Web 3.0, reminds me of the early Shopify days. Back then, and even today, Shopify’s mantra is to ‘arm the rebels’ (against the behemoth Amazon which can charge, in some cases, exorbitant fees to post your product and have it fulfilled via their 3rd party seller platform, FBA).
Before Shopify say mid/late 2000’s, and before Amazon got too large, it took a custom web developer for an individual to stand up website. They would often charges thousands, or 10’s of thousands of dollars for a relatively simple web site, not to mention that monthly fees to host and update the site. These costs seemed astronomical and were barriers to entry, largely because small business owners may not have understood how powerful having an online presence would be.
Web 3.0 will “arm the rebels”...
Body
That’s all great, but what will decentralization mean for commonfolk, like my dad who has barely ever used email? He has asked me before where his email goes, and has asked me if he has to worry about an email server coming back to haunt him like Hillary Clinton.
I say his email in Web 3.0 will not have to run through anymore just to send, it just is. This is why I explained the decentralization concept to him much like a story he told me about how he flipped a car in the 1970s, and shortly after, went to a bar he had never been to, but everyone knew his name from the car flipping story. The good ol’ days. Who knows if that’s what actually happened, but giving the inflation rate of Dad stories, I’m sure it was just a minor fender bender.
Note: this is NOT my dad, but similar car and outcome
As a refresher, here’s what Web 1.0, 2.0, and 3.0 look like:
Web 2.0 saw lots of companies move from static web pages in Web 1.0, to more API driven abstraction layers that automated business processes and logic. For those not familiar with APIs (application programming interface), think of it as a way to determine how a certain process could be run by a machine, without the need for a web page (Web 1.0). Said differently, think of it as systems talking to each other versus a human having to enter data/instructions across systems. In the corporate world, the shift to be more API-driven and automated, has been branded as “digital transformation” or the “move to the digital economy”. Some of the largest companies today were the first to be more API-driven, and many companies are finally embracing this new way to do business. Per Harvard Business Review, IDC projects that organizations will spend $6.8 trillion on digital transformation between 2020 and 2023.
Web 3.0 represents another leap in that direction where all information and data is self-organizing (per the Soaked by Slush podcast). This is a world anyone can run code on a machine and have it scale to serve millions of users, without the need for a middleman like Amazon or Microsoft to run the code for it to execute on the servers you purchase.
Part One - Get Paid for Content without the Middleman
Current state: Covid accelerated many trends, but one in particular was the creator economy. People were locked up in their homes and had limited social interactions. Web 2.0’s ability to distribute and share content between various platforms is crucial to the creator economy’s success.
Just how big is the creator economy? Well, this may seem like cherry picking, but while many platforms like TikTok, YouTube, Cameo, and others flourished in the ‘20 & ‘21, none was bigger than OnlyFans for a few reasons:
(1) their unique pay-for-content model (not ad based payments),
(2) innovation, OnlyFans builds new ways for creators to get paid, such as tips and VIP sessions, and
(3) their growth was insane: took in $2B for creators in 2020 (20% cut for OnlyFans) with projected 100% growth in 2021, 500,000 new users per day, and 7,000 new content creators per day.
Potential Solution: Before you create your OnlyFans account, how what’s the problem with this current state that Web 3.0 will change?
Omnipresence of decentralized web means you can be everywhere, thus not tying you to a single platform like OnlyFans, or device (Apple, Android, etc.).
This means that creator platforms like OnlyFans, Snapchat, etc. can flourish today by ensuring they create a platform with a wide audience and tight network, so creators have an abundance of opportunity and get paid on their platform.
Devices also fit their way into the creator economy because of the ecosystems they help enable, or prohibit. Apple is a clear example of how they can prohibit the creator economy, per Gumroad found Sahil Lavingia, “The creator economy would be 10x larger today if Apple’s fee was 3% instead of 30%,I would say it’s the number one bottleneck to the creator economy today.”
Referencing my previous article on Web 2.5, I wonder if one reason Apple keeps its 30% App Store fees is because it’s easier to retain that revenue stream, than create it’s own ad network (Google/Android), and which would also go against their core values of privacy.
Why it matters: Community creation will still be king for existing creator platforms, but I bet we’ll see a new kind of creator platform that enables quality content creation and editing (video, audio, podcast), then makes it seamless to post on all of your networks (OnlyFans, Snapchat, etc.). This will allow creators to post content everywhere, without being tied to a single platform. If economics are baked into Web 3.0, a creator could make money from posting on their own website, which is hosted on Squarespace for $120/year. That’s a super low cost to entry, without a creator platform taking 20% or more off the top.
On the other hand, current creator platforms will need to acknowledge this trend, and support their creators in their journey, while also rethinking their current ad models.
Part Two - Establishing Trust
Current Problem: One of the current problems with Web 2.0 is the low trust environment it can create. Bots can easily spread disinformation, or trolls can drive cyber bullying with little to no consequences. Sites like Reddit and others have tried to combat these issues by having tight-knit communities where members and moderators ensure the conversation stays orderly, though this doesn’t scale for the entire internet. So how can we fix those problems for the broader internet? Will the term ‘fake news’ be a thing of the past?
Potential Solution: As AI advances, it will ultimately be able to provide users with the best filtered and unbiased data possible. In a decentralized world, everyone connected to the internet will start to earn a reputation, or ‘klout’, that artificial intelligence will analyze to determine trust and intent. For example, if I am constantly shit-posting across the web, my reviews of products may not be weighted as heavily. Or, if I am sharing news from a bot that itself has very little trust, maybe not as many folks I share the news with will see it. While the potential downsides sound scar (like any new technology), the upside could be dramatic.
Why it matters: Trust on the internet, and in the real world, is in many ways subjective and the context matters. With that said, Web3 enables community governance where rules are determined by code and not certain entities (like Facebook, Twitter, etc.). The upshot here is not a single authority can quickly do a ‘bait and switch’ and change the rules (ie current social media sites). Given the direction these social media sites have been heading in light of Trump and Covid, this has sparked the growing interest of the government to regulate the companies that control the flow of information. Thus, recent trends and sentiment favor a world without biased ‘fact-checkers’ sitting behind a keyboard.
Part Three - Peer to Peer Driven Networks
It’s hard to not have another “history doesn’t repeat, but it does rhyme” story. Remember Napster? For those that don’t, it was the first of its kind peer-to-peer file sharing network (P2P). Shawn Fanning, the creator of Napster (and OG), created the first concept of P2P networks, where people were downloading files (namely music files, mp3s) directly from each others’ computers. Obviously the music industry was UP IN ARMS that people were sharing music (and understandably so). @Backus on Twitter shared a tweet I’ve bookmarked for a while, which hits to the core of decentralization. While Napster was forced to shut down due to legal battles with the music industry, the technology of P2P flourished for years to come and was here to stay. Napster was replaced by LimeWire, which was itself replaced by Bearshare, Kazaa, and many others. Until BitTorrent came around to hide ISP traffic from regulators. So in some ways, P2P got more ‘centralized’, but now with the sheer number of computers on the internet, P2P networks make it infinitely easier to truly be more decentralized.
As the comeback story of the 21st century, Shawn Fanning helped to found the Helium network, which is a P2P network that leverages crypto and “5G” to power data sharing. Think of Helium as “the people’s network” that attempts blanket and extend “5G” across the globe, and close the gaps between high speed internet connectivity between cities with 5G and rural areas without 5G. Think of it as riding on the back of and covering the gaps of current cell networks and WiFi.
What does this mean for the world? Think of it as not needing a cell contract provider to ensure Fido’s Fi Smart Collar doesn’t need it’s own phone contract to report its steps, heart beat, etc. while sit your lazy ass on the couch. Commonly referred to as “internet of things” devices (IoT), even smart devices like your Alexas and Google Homes qualify as such to use this type of network. Gone are the days of expensive cell coverage for a mobile device you rarely use. Gone are the days of getting terrible coverage for access to the internet. This means more devices, more data, and more people connected to the internet. This means more access to the internet, which means more access to the opportunity.
Conclusion
Decentralization means:
Getting Paid for Content without the Middleman
Establishing Trust on the Internet
Accessing Peer-to-Peer Networks for More High Quality Access to the Internet