It’s no secret that much of blockchain’s rise to prominence in 2021 had to do with non-fungible tokens (NFTs) — an acronym that most people, particularly reporters, are exhausted from reading about. NFTs have percolated through all levels, from Hip-Hop legend Snoop Dogg announcing plans to turn Death Row Records into the world’s first NFT record label to New York City artist ArinaBB raking in six-figure sums from her tokenized art.
The crypto space is exceedingly becoming a “who’s who” business acutely focused on what’s hot and trending right now, which is in some ways reminiscent of early noughties Hollywood. However, when we look beneath the surface, the more intriguing discussion relates to the distorted capitalistic standards that underpin the way money moves through the entertainment industry.
This reality gave rise to a world where content creators are constantly on the lookout for more equitable monetization tools or ways to generate passive income. NFTs enabling both of those things have yielded opportunities for the likes of NFL’s Robert Gronkowski, who earned well into the seven figures off the back of some well-orchestrated NFT offerings. Perhaps the sun is still shining on the NFT hype parade, however social tokens are promising to be the object of focus for content creators in 2022.
What Are Social Tokens?
Social tokens, unlike their closely related non-fungible counterparts, are exchangeable assets tied to a community affiliated with a content creator or brand. They are personalized cryptocurrencies that allow community members, in most cases, to unlock specific engagements or experiences. Fans purchase these tokens in exchange for cash or a reasonably high market cap cryptocurrency, similar to how gamers might use in-game digital currencies to unlock an add-on experience. For the first time ever, creators will be the sole party dictating how and to what extent they retain the value they create.
Areas of Opportunity With Social Tokens
There are few practical use cases and on-ramps into the social token space. The ways in which social tokens are originated as well as acquired are far from intuitive. There are no widely accepted technical standards for what makes a social token and even less infrastructure around the ways in which content creators can integrate these assets into their product offerings.
Spotify’s Discover Weekly, for example, is a centralized location that provides users with personalized lists of new music each week. It makes discovering new artists a passive exercise, optimized for the convenience of the end-user. Without this type of standardization, user journeys become fragmented, drastically reducing the chances of stumbling across anything you hadn’t previously been searching for. This intuitive framework is lacking in the Web3 space, particularly in the realm of social tokens.
Currently, if you happened upon your favorite content creator’s social token, you would undergo an irritatingly arbitrary route to acquiring it. What’s more, the types of experiences unlocked via this social token need to be bolstered by the content creator or their team. For example, if one of those experiences was a quarterly FaceTime call with your celebrity crush, it would be on that content creator to facilitate said experience via Zoom, for example.
Social Tokens vs. NFTs
Social tokens are fungible digital currencies. For example, a celebrity like LeBron James might issue a limited amount of tokens, which would be indistinguishable in function from each other. There would be no differentiating properties between the first and last tokens created. They would all correlate with the value upheld by the celebrity like LeBron himself.
Contrarily, each NFT has unique properties that incentivize collectors to hold these assets. They are excellent tools for monetization within the Web3 creator economy. When paired with social tokens, NFTs can grant content creators sole ownership of their platform, image and intellectual property. Social tokens serve as the guide rails to what eventually becomes an economy: more specifically, the creator’s personal economy.
Although personal monetization will undoubtedly evolve beyond our current conceptual understanding, social tokens can serve as the primary mainstay of how influencers assign, transfer and extract value directly from the communities they work tirelessly to cultivate. NFTs are just one of the ways value flows within a creator’s economy.
Similar to how an artist’s music catalog can posthumously increase in value, or how a stock can plummet on the deviant behaviors of a board executive, the value of an asset associated with a brand should remain detached from the personal circumstances of the individual. Similarly, the value of a creator’s personal stock is represented by their social token and should be largely detached from the creator’s spending habits. Celebrities should in theory be able to, barring any extraordinary events, extract value from their name alone. Similar to how one might use their home or professional sports contract as collateral for a cash advance, content creators could do the same against the market cap of their social token.
Social Tokens on the Rise to Prominence
Social tokens circumvent the relentless hold centralized authorities have on the entertainment industry. They exemplify the core ethos of how intermediaries shouldn’t be a necessary condition of value transfer. Social tokens are a path to financial and creative independence for both content creators and fans. However, current frameworks for launching social tokens must become ergonomic for the average user — the platforms themselves are too decentralized for the untrained eye.
Currently, influencers are forced to build their economies from the ground up and later integrate both the social tokens and various experiences they plan to offer. A completely decentralized approach to this forces outsiders to do their due diligence on every individual part of this ecosystem. There is much opportunity in the space as it continues to be shaped by creators and innovators.