I’ve had this happen a few times, and a couple of years ago I thought it would be nice to be able to invest in what I think are promising creators and earn with them as their popularity grows. In this case, the creator gets investment from his own audience, directs it to improve the quality of his content, thus increasing the number of subscribers. And early investors, in turn, get a tangible profit if the author is successful.
The idea of a platform for investing in creators came about in 2020. After spinning it in my head for a few days, I safely forgot about it. But two years later, after working in one of the largest startup studios in CIS countries and working with bloggers and nft-collectives, I remembered the idea when I realized how it could be implemented.
For the last six months our team of 7 professionals has been passionate about the realization of this idea. We are now finalizing the development of a platform that we believe could revolutionize the creative economy market in the future.
In this article I would like to talk about the social token market in simple words, discuss the future of the creative industry and tell a little about our project.
What are social tokens?
Social tokens are digital assets that are backed by the reputation of a brand, person or community. They fall into two categories:
1. Personal tokens
2. Community tokens.
Our platform focuses on creators (they are authors and bloggers), so we will talk mostly about personal tokens.
The first case of a personal social token issue was recorded a few years ago. Its creator was Alex Masmej, a crypto-enthusiast and entrepreneur, at that time he had about 3 thousand followers on Twitter. That was enough to raise $20,000 from 30 investors. Owners of the $ALEX token could vote on his life decisions, such as which set of exercises he should choose or which diet he should follow. In addition, it was assumed that 15% of all income he would earn over the next 3 years (maximum $100,000) would be distributed to the token holders each quarter.
Alex created quite inflated expectations with his audience, he didn’t position himself as a blogger, his plan was to launch a successful startup. The plan did not materialize, and some time after the initial news boom, the price of the token began to decline. Nevertheless, the token still exists and trades, the price has not dropped to zero, so perhaps it still has a long way to go.
Apart from Masmej, there have been several other projects in the social token market, but so far, no company has been able to achieve worldwide recognition or dominance in the industry, this niche is still vacant. Therefore, we have quite ambitious goals to gain a foothold in this market.
Prospects for the development of the social token market and the creative economy.
In fact, the idea of investing in people is not new at all; I think there are quite a few people who have at least once thought about the fact that it would be great to be able to invest in a promising acquaintance.
David Bowie was a real innovator in that sense, back in 1997 he issued his own bonds, the Bowie Bonds. One bond cost $1,000, had a maturity of ten years and an interest rate of 7.9% on song income. In all, Bowie raised $55 million.
In 1998, when 30 percent of the U.S. population used the Internet, the musician launched his own Internet service provider, BowieNet. Users got exclusive access to the musician’s content, could chat with him on a forum, and at its peak the provider had 100,000 users.
“I wanted to create an environment where not only my fans, but all music lovers could feel like they were part of a community, and also have access to extensive music archives, voice their opinions and exchange ideas.”
David Bowie
That’s pretty much what we’re building now, an opportunity for creators to quickly and easily create a full ecosystem around themselves. Bowie was way ahead of his time, his bond price began to fall because of the rise in popularity of online music, and BowieNet was eventually sold to another company. Twenty-five years ago, the world was not ready for his innovations simply because of the lack of the necessary infrastructure.
That is why today social token technology has great potential to become a new milestone in the development of not only the crypto-asset market, but also the market for Influencer Marketing, bringing significant progress and new opportunities to both industries.
The market for Influencer Marketing is considered quite young. By the standards of history, it is very recent. In 2022, the industry was valued at $16.4 billion, with a compound annual growth rate (CAGR) of about 30%. This means that the Influencer Marketing industry has grown nearly 10-fold over the past 7 years and is projected to reach about $130 billion by 2030.
What opportunities will arise in the Influencer Marketing marketplace with the advent of social tokens?
1. Social tokens open up opportunities for ordinary people to earn in the creative economy industry, and they don’t need to become bloggers for that. It is enough just to have some eyesight and a feeling for talented people. It’s a little like producing; people can invest in promising authors in the early stages and make a profit when they become popular.
It would also be a mistake to think that the price of a token depends only on the number of subscribers the author has. This is an important, but not determining factor. More important are the reputation, credibility, and quality of the author’s audience. For example, an entertainment channel may have more subscribers, but the token capitalization of an author with a more mature, solvent and professional audience may be higher due to a stronger connection between the author and the viewer and due to the value the author puts into his content. For example, Sokolovsky’s channel, which does not have many subscribers, but has a quality and engaged audience. I think he could well compete with some of the big mainstream bloggers.
2. Social tokens allow authors to open up new opportunities to create better content by attracting investment from their audience.
I think it is important to understand here that blogging is exactly the same business as any other, with its own specifics, but operating on the same principles. The author produces a product — content, he has his own consumers — subscribers. The blogger has competition, in order to capture his piece of the market, he needs to stand out from the others. If the viewer devotes time to your content, it means he has less time for others. Therefore, the main currency that the author seeks to earn — attention. Then he exchanges it for real money.
The owner of any business has a choice — to develop on his own funds or to attract external capital. Often in a competitive market, in order to develop effectively, investments are required. Blogging in 2023 is a scarlet ocean (a highly competitive market), but most authors develop on their own.
The problem of lack of investment for bloggers is sometimes solved by different production centers, but the conditions are often not the most favorable for the blogger, so we suggest the author to appeal to his own audience, to offer his viewer to become an investor. The solution to this problem is somewhat similar to crowdfunding, with the difference that it takes place in the media sphere. In exchange for investment, the blogger offers a utility (application of a token). This can be access to exclusive content, the opportunity to ask questions, be in a private chat, call the blogger, receive a portion of the income from his activities, etc. But the most important opportunity is owning a share of the media image of the author, which itself can rise or fall in value, which can be added or sold on the secondary market.
The blogger can describe the development plan, explain what he needs investments for — for equipment, travel expenses, improvement of video quality, etc. A more detailed and clear description of the project will help attract more investors. Better content will attract new subscribers and increase income. Such support from the audience can be a great advantage for the author who wants to establish himself as a blogger and create his unique brand.
3. Audience engagement is one of the key factors to a blogger’s success.
Using social tokens can be a tool to increase audience loyalty. When viewers invest in a blogger, they are no longer just consumers of content, they become part of a team supporting them and helping them achieve their goals. Fans begin to feel like they matter and their opinions matter.
Investors are the most engaged part of the audience, simply because success for the blogger means success for his investors, so it’s in their best interest to help and insure the blogger in every way possible. Social tokens can help establish a really close connection between the blogger and the audience, creating a strong community around the author and the ideas he broadcasts.
4. Investing in people is just fun! I believe that this process can be both fun and rewarding. Every day we evaluate people, communicate with them, observe their actions. Our brain automatically generates estimates of people’s personal qualities, their status and influence in society. It is a skill that allows us to survive in society, it is formed by evolution. Why not use it for investing? Investing in authors can bring not only financial gain, but also emotional satisfaction. You can help a talented person realize ideas and achieve success. By investing in people, you create a relationship of trust that can lead to a longer and more profitable partnership.
Also among the blogger-related investments in 2021 was an interesting and meaningful case study for the industry. Slow Ventures, an investment fund with the Lieberman brothers and a16z crypto fund partner Sriram Krishnan, invested $1.7 million in YouTube blogger Marina Mogilko. The deal stipulates that in exchange for the investment she received, Marina Mogilko will pay 5% of her future earnings for 30 years.
Mogilko used the funds she received to expand her staff of assistants, and while in theory she could simply apply for a loan, the Lieberman brothers point to a significant difference between a loan and an investment.
The Lieberman brothers are also passionate about the idea of investing in people and are now fumbling for a legal framework in the U.S. to implement it. Their goal is to solve the problem of inequality, the concept of investing in people could help with this, since in this case the accumulated wealth is more evenly distributed among less privileged young people.
The case with Marina Mogilko most likely represents not only an investment deal, but also serves the purpose of exploring and testing the Liebermans’ hypothesis, as well as drawing public and stakeholder attention to their vision and ideas for investing in people.
An overview of our startup
As you have already understood, we are creating a social token platform for creators — Crowdstake. We select talented creators ourselves and help them launch their token on our platform. We provide all the infrastructure for easy interaction between bloggers and subscriber investors.
When the blogger has decided on the utility, the general issue, and the price of the token — the opening date of the primary market becomes known, where the blogger’s token is first sold out. Once the primary market ends, the secondary market trading opportunity opens.
Bloggers can publish exclusive content for selected investors directly on the platform, where it is convenient to choose who exactly should get this access (e.g. top 100, top 30 or only the top 5 investors).
We took into account the experience of social token pioneers and analyzed their mistakes, and realized that at least three conditions must be met for the successful implementation of a social token issue.
1. First, the token must have a utility (the use of the token, a benefit). For the token to be attractive to the blogger’s fans and investors, the utility must be really valuable. Our platform has a tier system, i.e. the more a fan invests in a blogger’s token, the more interesting exclusive offers (benefits) he receives.
For example, if an investor buys a blogger token for $5, they can get access to a private chat with the blogger and other investors. If an investor buys $50 worth of tokens, he gets exclusive content, discounts on the blogger’s products, the opportunity to participate in general calls, and so on.
The type of utility depends on the blogger; it’s up to the blogger to choose what will be most appealing to his or her audience. For example, one of the bloggers we cooperate with and plan to launch plans to distribute up to 20% of his income from advertising contracts among big investors (optional item, someone just offers more exclusive content).
2. Second, the blogger must grow. If the business isn’t growing and revenue isn’t increasing, the company’s stock can’t grow. It’s exactly the same here. To successfully grow his blog and increase the value of his tokens, the blogger needs to improve his content and increase his audience. The force of entropy extends to the social token market as well, so “you have to run at full speed just to stay in the same place.
3. The third important aspect is Mass adoption. The main investors of a blogger are his fans and subscribers. If we are talking about an ordinary blogger, not from the subject of web3, then a very large part of his investors are eliminated at the stage of refilling the balance of the exchange because of the inconvenience and complexity of the process. To solve this problem, you need to make the replenishment process as simple and convenient as possible. One option is to provide the ability to quickly deposit from a card or popular e-wallets. The easier and faster users can recharge the platform, the more likely they are to participate in investing.
Frequently Asked Questions:
What does the price of a blogger token depend on, is there anything in common between social tokens and the Ponzi scheme?
I wanted to touch on this question, but it turned out to be a separate short article, so if you’re interested, you can read it here. In short — the price of a token depends on the utility, reputation of the creator and his dynamics in the media. Social tokens have nothing in common with the Ponzi scheme. A blogger’s success in the social token market depends on his personal responsibility, his ability to maintain and increase his audience and to adapt to changing market conditions.
How will there be protection from “pump&dump”?
There are many different methods to protect against market manipulation. For example, stoppage of trading when a certain percentage of price changes is reached, limitation of one-handed selling. Freezing part of the tokens when buying a certain volume, and other methods. The choice of specific protection methods depends on the blogger and the specifics of his tokenomics.
What is the situation with token liquidity?
There are many low liquidity markets, the nft market being one of the closest examples. Despite the lack of market makers in such markets, they still exist and are developing. Low liquidity creates certain inconveniences, but it is not a serious problem for an investor (not to be confused with a trader). Token liquidity will increase as the blogger’s popularity grows, the number of market participants increases, and the site develops in general. To ensure liquidity in the future, we are also considering cooperation with external market makers and individual exchanges.
Conclusion
Social tokens are a technology that could accelerate the development of the Influencer Marketing industry and help expand the cryptocurrency community by attracting new users. I’m sure the concept of direct investment in people might be unfamiliar to some, but I think it’s more a matter of time.
All new ideas and concepts spread along a Gaussian distribution. The theory of the diffusion of innovation proposes a classification of people based on their propensity to adopt and implement innovations. The classification begins with “innovators” — people who are most open to new ideas and willing to adopt innovations before others. And ends with “conservatives” — people who are usually resistant to change.
Sooner or later social tokens will find their product-market fit. Today the stock market is understood by everyone, but you have to understand that it is and has been for over two hundred years. Give investing in people time and it will become just as commonplace.
In general, if the idea of our project seems interesting to you, you can subscribe to our Telegram channel, there we will publish news and discuss plans. We are about to launch beta platform, where everyone can register, issue his token and buy other people’s tokens (for now on demo account), we need it for testing and searching bugs, so join the 16% of innovators)
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