Conditions that we would call feudal in the analog world and that we know from the time of absolutist kingdoms.

In the analog economy (apart from work) everything revolves around increasing the value of ownership/property. You know well how important it was to protect it. A common practice that has been iterated for centuries and continues to this day was the contract. Identifying the owner(s) ensuring that only they could transfer ownership.

In the digital world since the 70s there was no strong culture around ownership. Some of the reasons are:

• Hard to physically grasp things.

• Everyone cultivated open movement (open-source/data/web).

• To attract the masses plus lacking proper infrastructure almost everything was free in the first decades of web history.

• Things you would usually own were rented instead: your email, website domains, etc.

• Also, the value was created and existed in the analog world. The web was only used to distribute at first.

• Ownership is sometimes shared, take social media where ownership and usage rights of our private content are shared with the platforms.

We understand, for long, that there was no such mechanism as a contract that identifies the owner. In the digital age, we first had to invent pen, paper, and signatures.

For over 50 years our digital world is constantly growing quantitatively (mass of data, sites, usage, accounts, revenue…) and qualitatively (value of previous). Perhaps we will soon reach a point similar to the 80s when the financial economy overtook the real economy in value. Or we have already passed this point, who cares?

So what are values in a digital sense? In the real economy, we are talking about land, real estate, art, machines, factories, companies, and more. In the digital world we talk files, data, rights, infrastructure, code, software, domains, etc (certainly also determined by real-world assets e.g. data centers, lines, satellites, and more). One group argues we own nothing, all are rented, and we are dependent. You have access to platforms that usually sell monthly fees to users or your data to companies. Another group argues they have hard drives full of files they own. Private docs, photos, videos, or, public movies, music, books. However, it is questionable whether these have a value (private files) or I actually own them (public files).

Next, we address the question of who owns these assets and how value is captured. Personally, I believe the Internet did not live up to its idealistic ideas of the 80s/90s. The web was rapidly divided among a few and the monopolization of the Internet markets is still extreme today. Everyone can ask themselves: what do I own on the web? But make sure to read the fun terms & conditions your service of preference usually asks you to agree with before allowing you to use their services.

We conclude that the audience on the internet is reduced to consumption (traditional media) and production (social media). It’s the old idea that people do the work and the hegemon claims it for himself.

Maybe we have reached this state because we have entered the new world with old ideas. All these monopolistically acting services and platforms function on an old system, that of the company. The question is whether the functioning of companies, designed for the analog world — meet ideal applicability in the digital world.

Many years before today, many people before me recognized this problem and started to develop solutions. The work wasn’t done by building something like DocuSign, a digital contract on the cloud. The concept designed the contract to actually live. Run and execute defined rules. The smart contract appeared and terms like blockchain made the rounds. Concept-wise probably the last and superior step in the evolution of democratizing ownership. For those who are still not quite sure what the concept of an NFT is about, another attempt at a definition.

An NFT is able to give a digital thing the ability to organise ownership, trade and more. A digital thing can be many things. I will focus on a very generic one: a file.

Of course, a file can be easily copied or stolen. But without the contract (as since ancient times) it cannot be sold. And this contract is the NFT. Basically, ownership certificates that are unique, secure, and tradeable — in a few clicks. Thus, we have developed a new unit of doing business. It no longer requires equity (or similar) investments in (e.g. content right-owning) corporations to participate in the success of the content. You can simply invest in the file.

And as the web is all about files and mostly consists of them but foremost because files have high-value capacities this move allows for owning basically anything in it. The fantasy having invested in Lord of the Rings, Jacko’s Thriller,

Nyan Cat, or Fortnite right after their release.

• Games

• Movies/Series

• Songs/LPs

• Podcasts

• Books/Audiobooks

• Articles/News

• Studies/Paper

• Apps/Programs/Software

• Videos

• Online courses/MOOC

• Images/Photo/GIF

• Art

• Code/Repositories

• Designs/Templates

• Live Audio/Video

• Office Suite: Spreadsheet/Doc/Presentation

• Databanks

• …

However, I still miss one crucial aspect. Ownership and trade are sensibly solved in today’s world. This may be enough for art objects, as these are speculative assets, and no real consumption takes place. But most files on the internet are content intended for consumption: movies, music, etc.

So, the missing aspect is about use and rights. If the file would now also have the ability to organize usage, this would be a spectacular step that would not only change the market completely. Imagine that the file can profit from and protect itself/its rights (usage, third-party distribution, licensing, IP, etc.) from any digital environment, but does not exist compartmentalized. The ability to be distributed (thankfully indefinitely and at zero marginal cost) across any platform and device and always pay the fair cut to its owners.

Imagine, a new movie, music album, or game debuts. Early fans buy NFTs, i.e. shares. They would profit from the distribution of the movie in two ways: asset value increases, sure. But at the same time, the rights of use would bring in income to its creators split with owners in form of dividends. This could work directly via consumers who watch, play, listen…and pay for it. Or indirectly via platforms that license content to play on their streaming offerings. Obviously, this concept is way more tricky than the previous one. Which media institution doesn’t want to know anytime the content they’re owning gets used and how much. It’s not that we’re not trying.

Web 3 though (in an idealistic perspective) offers a wide range of concepts that actually allow for such vision. Sure, more efficient blockchains will be needed than many of the ones we know today. It requires a holistic view of content per se apart from media. Creators need to adapt to this new form. How is the distribution actually organized in this new scenario? These are a few of the challenges.

Let’s also outlook the potential.

• People will start business angel-like investing in undiscovered content and media. But unlike a business angel who goes through complex processes to place an investment and traditionally starts in the 5-digit range (Euro/Dollar), investments in content/files are just a few clicks away and are possible in the 2-digit range due to their low process complexity and costs. This offers the possibility to build up a diversified content portfolio with initial investments of 10k€ (a small equity/angel ticket). The rise of media angels.

• There is the strong dividend argument, creating passive income for those who have great knowledge and understanding about the subcultures they’re in. Who doesn’t have friends who’re nerd’ing a genre of media/content like crazy but never earned something for months of a lifetime than little community credit?

• Consumers becoming investors/owners is fantastic for another major reason. The inherent motivation of each “owner” helping with distribution and monetization could substitute for the utility of the publisher (or centralized platform) in the long term, thus cutting out the middleman. Granting more independence to creators. Optimistically said, quality rules marketing spent.

• The audience determining success and failure would be given a deserved place on the ‘content cap table’ instead of just paying for consumption. This makes a lot of sense not only because the boundaries of the consumer to those of a curator and creator are increasingly blurred but also as their activities in the dissemination of content are more essential than ever today.

• Also, entry barriers are significantly lower. Consumers are exposed to much lower information intransparencies due to the proximity to the product than, for example, on the stock, art, or crypto market. Success comes from demand, i.e. consumption. If usage rights were treated like ownership rights and made tradable, content could become independent of the platform and monetize itself independently.

What sounds like a new universe is in fact handable. Think of creators releasing new content on a superior protocol that includes the properties described. Exchanges and marketplaces would handle the trading of rights. Platforms to consume content (streaming etc.) would rent access and usage rights accordingly. Consumers could purchase shares on consumption platforms, exchanges, or via offers from the creators from their own wallets.

An example. The literary rights to Lord of the Rings (and The Hobbit) were sold a few days ago to a Scandinavian private equity fund (Link). For less than 800m USD the firm now owns the worldwide rights to make films, video games, board games, merchandise, theme parks, and stage productions relating to the Lord of the Rings trilogy and The Hobbit. What would a PE company (or a contemporary equivalent of this form of organization) have paid for the rights in the mid-1950s shortly after the publication of the three volumes? And what return would the passionate fans of the first hour have achieved with an imaginary investment in the books and the associated rights?

As in the last essay (there seems to be a focus here) potential lies in the universe of web3. Securitizing content on the scale described is anything but cost-efficient in the “old world”. Tokenization, existing blockchain protocols, the proliferation of wallets, etc. could solve the problem better. Assuming Creators are willing, a big challenge lies in incentivizing existing consumer platforms or developing new ones. Hard to imagine platforms paying users to upload content tomorrow instead of charging them. Probably the thoughts on usage rights/fees are not very mature here either.

To finalize. Everyone loves (or hates) the feeling when their own (and early) discovery becomes hype. Media, fashion, technology. Crowds in the biggest industries strive to be the first, to lead the barrage of change. Instead of simply asking the public to pay for consumption, create opportunities for investment and participation in success. This creates a sustainable and long-term dynamic between the creator and the audience. And in addition, independence from intermediaries and platforms that have too much influence on the production and too high a share of the profits.

As always, if you are interested to connect around this idea or are in the process of building something, please get in touch.