Power to the Users, Creators, and Developers

On most social networks and creator platforms that exist today, the only business model layered on top is advertising, where take rates are incredibly high, users become the product, and creators can only earn through promotions. But this does not always have to be the case. We are now entering the third era of the internet that offers a radically better approach. 

Simply put, take rates refer to the percentage fee that an intermediary collects from its users, creators, or developers. Let’s take a look at the take rates of centralized Web2 networks and platforms:

• Web2 social networks like Instagram and TikTok collect 100% of the revenue their users generate.

• Web2 creator platforms like YouTube and Twitch collect 50% of the revenue their creators earn.

• Web2 app stores like the Apple App Store and the Galaxy Store collect 30% of the revenue their developers make.

Web2 take rates are unhealthy, as little to no revenue is shared with users, creators, and developers. But soon, more and more people will realize that they can opt out of the Web2 ad-based model and switch to Web3, where networks and platforms are owned by decentralized participants through tokens. Healthy take rates look something like this:

• Web3 social networks like Diamond and UpSocial collect 0% of the revenue their users generate.

• Web3 creator platforms like Rally and Mirror collect 0% of the revenue their creators earn.

• Web3 app stores like Ethereum and Avalanche (in the sense that they are programmable blockchains that apps can be built on) collect 0% of the revenue their developers make.

In Web3, all of the revenue is given back to the users, creators, and developers as rent-seeking intermediaries are removed. People can own, create, build, and fully enjoy the upside. Social networks and creator platforms become value networks through tokens like social tokens, collectibles, digital art, exclusive experiences, tickets, etc., that offer much better economics to creators and developers.

So what does this all mean? Hopefully, it means that we will end up in a world where users, creators, and developers have significantly more power than they do today by accumulating more value and having lower switching costs going from one network or platform to another via crypto wallets. As Vitalik Buterin once said, “whereas most technologies tend to automate workers on the periphery doing menial tasks, blockchains automate away the center. Instead of putting the taxi driver out of a job, blockchain puts Uber out of a job and lets the taxi drivers work with the customer directly.”