Stoner cats, CryptoPunks and bored monkeys. Blockchains and Metaverses. Cryptocurrencies and non-fungible tokens.
For the past 12 months, as the world has emerged from pandemic crisis mode, the pop culture verse and the Wall Street verse have been filled with discourse and agreement around belief in the revolutionary potential of mind-bogglingly complicated, internet-enabled new communications systems, Content creation, supply chain management, legal documentation and banking. This emerging world has its own nomenclature – the digital version of a velvet rope – but generally it refers to technologies and extremely complex computer processing applications (also known as data mining) that fall under the broad heading “Web3”.
But – put simply – what is Web3? And perhaps just as importantly, when these trappings of pre-pandemic life came back into play, why did it seem like everyone in entertainment, finance, media and law at cocktail parties and mixers started talking about it? The answer is the only thing that is clear in the world of Web3: money.
“I started paying attention to the NFT business in the middle of the pandemic,” says Chris Jacquemin, WME partner and head of the agency’s digital strategy. “By the end of 2020, total market revenue for NFTs was $300 million. A year later it was a $41 billion deal.”
But back to the what is it question. The term “Web3” broadly refers to the next great development in internet communications, aimed at challenging the monopoly power of big tech giants like Facebook, Amazon, Google and Twitter.
Web1 learned how to send and receive email through CompuServe and AOL accounts during the Clinton administration. Web2 built out the World Wide Web, audio and video streaming capabilities, and social media platforms.
As for Web3: Paul Sweeting, founder of Washington, DC-based consulting firm Concurrent Media Strategies, describes it in his recent VIP+ report, Web3 Demystified, as “an abbreviation for creating an intersecting and overlapping set of ideas and technologies who are proponents hope it will make up the next iteration of the internet. At the heart of this Venn diagram is the notion of a World Wide Web built on decentralized protocols like blockchain, rather than the massive, centralized platforms and walled gardens running on the proprietary servers that dominate today’s Web2 build.”
For the creative community, the opportunities enabled by Web3 technology will pave the way for artists to be paid directly by individuals for their work, theoretically eliminating the need for middle tiers of production and distribution. The digital ledgers created by the impossible-to-replicate computations that make up the blockchain will be the ultimate arbiter of who owns what — and they’re creating a digital chain that will, in theory, allow artists to receive royalties that are paid to each sale of their assets are bound for all time.
“This is the last mile of direct-to-consumer,” says Jacquemin. “The data and relationships that artists and sellers have with the consumer are very different in a blockchain environment.”
Cryptocurrencies and the sale of digital assets are at the root of the Web3 concept of business transactions. Fueled by the hype surrounding the promise of Web3 and the big bucks raised by selling NFT creations like Stoner Cats and Bored Ape Yacht Club, the value of Bitcoin, Ethereum and other cryptocurrencies soared in 2021. The market was so red hot that crypto ATMs popped up at gas stations in some urban and suburban areas.
As with all things that go up like a rocket, crypto wasn’t immune to an IRL crash. As prices fell in the spring, holders selling crypto coins accelerated. That took a lot of hot air out of the market. Countless headlines about hackers stealing cryptocurrencies from the myriad online services that facilitate transactions have also raised big questions about their viability as an alternative to old-fashioned greenbacks and the Federal Reserve.
At the same time, there’s no doubt that Web3 has applications that Hollywood needs to understand, if only to understand how the next generation of consumers wants to be entertained and engaged. NFTs, or non-fungible tokens, are digital identifiers recorded on a blockchain. They certify an owner’s authenticity and rights to a specific piece of digital content, such as an image or a video, or a specific animated character in a franchise like Stoner Cats or CryptoPunks. NFT owners receive fan club-like perks that can include broader access, early screenings, and in many cases the right to create their own iterations of the character or asset they own. That ethos is, unsurprisingly, in direct conflict with the tight control Hollywood studios have long had over content.
Those with the mental computing power to study crypto and blockchain say the market is deeply confusing because it is still in its nascent form. Cryptocurrencies in general were a result of the 2008-09 global financial crisis, when trust in big-name banks was torpedoed by ample evidence of greed and unethical activity surrounding home mortgage lending.
Mike Winkelmann is a graphic designer from Charleston, SC who hit the NFT market jackpot with his digital creations, marketed under his trade name Beeple.
“People are starting to demand more transparency and ownership of their virtual selves. And that’s the very beginning of it with NFTs,” says Winklemann. “When people look at that and say, ‘Well, this isn’t a fully-fledged ecosystem that will immediately add value and value to my life.’ Well, of course it’s not. Neither was the internet in the beginning; it was very difficult to use.”
The downside of being wary of big institutions is relying on the collective power of the community. Relationships fueled by online discourse on specialized social media platforms like Twitch and Discord are meaningful and can matter even for big-name talent.
“I see intellectual property generation in a whole new way,” says Tricia Biggio, CEO of Invisible Universe. The animation studio, which just closed a $12 million funding round, is collaborating with partners including Serena Williams, Jennifer Aniston and TikTok dynamo Dixie D’Amelio. Currently, Invisible Universe straddles the Web2 and Web3 worlds as the company relies on large platforms to distribute its short-form animated content. But the horizon is wide, emphasizes Biggio.
“Like we used TikTok to build a community very quickly to curate IP and get ideas for the creative, I think we can do that in a Web3 way to build an affinity with our content,” says Biggio. “Web3 talks a lot more about what it means to collaborate creatively, what it means to own an asset and [to what extent an owner] gets involved in the creative.”
WME’s Jacquemin cites similar themes when pointing out the potential he sees in the WME client Pixel Vault, creator of CryptoPunks. The Web3-centric content operation is growing by leaps and bounds, not thanks to ticket sales or Nielsen ratings, but thanks to hot NFT auctions and performance gains in microchip processing.
Jacquemin and his team firmly believe that Hollywood need only shed the jargon to accept Web3 as a different way of doing business, however radical it may seem today.
“As streamers became an alternative to traditional networks, [Web3] is another iteration of a platform,” says Jacquemin. “In some of these projects, the economics are quite high. That doesn’t spend $5,000 to create a YouTube video. These are companies that want to work with traditional filmmakers and writers.”
Shirley Halperin contributed to this report.