This article originally appeared in MediaPost.
Web3 is a new generation of Internet technologies that encompasses blockchain, cryptocurrencies, and NFTs, all of which aim to develop a decentralized future of the Internet. It includes next-gen immersive social experiences — namely, the much-maligned “metaverse.” While the relevance of these technologies may seem remote to those of us who haven’t eagerly jumped onto the Web3 bandwagon, its influence is far nearer and more significant than it may seem at first glance.
Web3 isn’t just a technological evolution. Its core tenet of decentralization represents a fundamental shift in the expectations and role of individuals, financial institutions, tech companies, and brands, both online and offline.
Brands need to recognize Web3 for what it is — a cultural shift. Web3 will not only change how businesses structure their operations to enable greater transparency and accountability, but it will also impact brands’ core value proposition and strategy at the highest level, due to changes in audience demand drivers. The basis of Web3 is the blockchain, but its conceptual origin lies in a philosophical dialogue on breaking up the monopolies and gatekeepers of the Internet, a conversation echoed by the cultural sensibilities of the up-and-coming Gen Z audience of consumers and creators.
Web3 may take several decades to fully realize. Still, the habits and expectations that inform it have been defined and accepted as de facto in Web2 and are unlikely to recede in relevance.
With all the controversy surrounding Web3, what’s relevant to me?
This year’s shifting tech landscape and its scandals have thrown conversations about the future of Web3 technologies into disarray.
We’ve witnessed the real-world manifestation of Web3 ideals fail in the collapse of stablecoins TerraUSD and LUNA early in 2022, followed by a market crash that even the likes of such household names as Bitcoin and Ethereum have yet to recover. And with this “crypto winter,” digital assets like the “Board Ape Yacht Club” NFTs have fallen from valuations of over a million to less than a tenth of that value.
We’ve seen scandal rock the upper echelons of crypto royalty. There’s the Enron-esque downfall of crypto exchange platform FTX and its CEO Sam Bankman-Fried, who had only months prior graced the halls of the White House, shaking hands with celebrities and world leaders.
And finally, we’ve seen the increasingly apparent shortcomings of Meta’s Web2-posing-as-Web3 venture as screengrabs have been shared of the depressingly low-fi experience Horizon Worlds offers, a $15+ billion-dollar investment into the metaverse that seems to be floundering for a footing in a post-pandemic world.
For all these potholes, the onward march of Web3 technologies is not just likely, but inevitable. The cornerstone of Web3, the blockchain, has already found myriad uses in enabling companies to track and manage their supply chains more accurately than ever before. It promises to foster a more secure future for consumer data, safe from privacy breaches that can occur when personally identifiable information (PII) is saved to a server protected only by the resilience of a private enterprise’s security precautions.
But the face of Web3 doesn’t stop at a brand’s supply chain and infrastructure. Changing expectations means the transactional relationship between the consumer and producers or sellers will also change. With it, new user patterns, interfaces, and applications must spring up or evolve to accommodate these new behaviors.
What should brands anticipate from Web3?
With this paradigm shift on the horizon, brands must understand not only what Web3 is but also what its implications are for their industry and business model. Rather than attempting to shoehorn these technologies in the name of keeping up, it’s critical to identify the parts of the business that would reap benefits from Web3 thinking.
Success stories have emerged from Web2 businesses that have evolved their business model by adopting a Web3-adjacent mentality of decentralization. One of these is HaiDiLao, a Chinese-based restaurant chain that did away with a traditional organizational model in favor of an autonomous network of restaurants with built-in profit sharing based on successful mentorship of leaders of new locations. HaiDiLao’s adoption of this co-op model in which employees have stakes in the larger business has catalyzed its outsized growth and consistent quality standards, is an example of how brands might innovate for resilience in a Web3 world, without needing to employ any actual Web3 technologies.
On the other hand, there are digital-first startups that have only just sprung up in the advent of murmurings about Web3. Royal.io has flipped the music business on its head by transforming fans into investors and enabling artists to manage the distribution rights of their own music. When an artist lists a track on Royal.io, fans may purchase a token representing a percentage of the track’s streaming rights, garnering them royalties every time the track is played. Fans are no longer at the receiving end of an artist’s work but are active participants in the industry.
How will Web 3.0 transform the operating rules of the Internet for brands?
Product offerings based on Web3 technology are emerging, often in the form of apps or software integrations.
Keybase.io is a secure messaging and file-sharing software product that enables individuals to use blockchain to demonstrate that they are the rightful owners of their social media accounts. In the wake of Twitter delegitimizing the “blue check,” a product like this could provide cross-platform trust in a trustless digital ecosystem. For brands, this will make the impact of marketing easier to track and marketing expenditures easier to justify — both are big wins for the profession.
With regard to off-platform marketing, Web3 has additional implications for both consumers and marketers. Brave, a Web3 browser that empowers its users with greater privacy and anonymity controls, has rolled out an opt-in advertising platform that rewards users for their attention. Users can opt into viewing ads to earn revenue or opt out of ads entirely.
Web3 gives content creators more control and ownership of their creations. Today, influencers on such platforms as Twitch and YouTube Gaming have been able to monetize themselves agnostic of platform, commanding hundreds of thousands of dollars as signing bonuses to create content. However, only attributed posts on content platforms are monetized. In the future, blockchain attribution could enable them to monetize their work, even if it is reposted to channels other than the content platform on which they initially published by acting as a watermark. Those who create viral content could receive compensation for every click, regardless of where the click happens.
Developing an understanding of Web 3.0 is critical for brands and business leaders. The development of Web3 is not a matter of “if” but “when.” We may not know what the fully mature Web3 may look like, but its impact on businesses at the forefront of technological innovation is already apparent.
That said, we’re in the infancy of Web3’s development. Because of that, brands are operating at the intersection of opportunity and risk. In many cases, business leaders are working with theories, hypotheses, and early pilots unfolding alongside ongoing technological development.
As businesses embark on ventures in new channels and mediums, it’s important to maintain true to their core brand, even as their ecosystem expands. Success in innovation will quickly require design and user-experience thinking, scalable development, and effective governance of the brand. Not only will brands require their standard brand and digital guidelines, but also guidelines for AR/VR and metaverse experiences, cooperation guidelines for cross-platform interoperability, and participation guidelines for consumer-stakeholders.
The final word is this: Remain responsive and adaptable. Be willing to rethink the way your business works. Consider your customers and employees as stakeholders, not recipients… and you’ll be well-suited to succeed, even as technological innovation continues to accelerate.
Amy Chen is Director, Experience