Author: Bas Grasmayer

NFT Avatars and Onboarding Subcultures to the Web3

Posted on | by Bas Grasmayer

You may have heard of CryptoPunks and Bored Apes. They’re NFT series of 10,000 unique and randomly generated images of characters. They’re also 2 of the most well-known examples of ‘NFT avatars’ – a trend which has exploded in the crypto space of 2021 and is set to permeate subcultures once they move into the web3.

Here’s how, and why.

PFPs & NFT Avatars

NFT avatar projects are casually referred to as PFPs: ProFile Pictures, since that’s a common use case for them. They most often have up to 10,000 template characters that are ‘minted’ by people wanting to own one. Minting costs money (cryptocurrency) and in the process of minting randomized traits are applied, ranging from extremely rare to common. These may be variables like skin colour, headwear, haircuts, shirts, background colours and anything else you may think of that’s appropriate to the project. Many projects will have 10 traits with 10 variables per trait.

Once minted, the character is created and will remain unchanged, so before you mint, you usually only know what the style of the project is, but not what your NFT character will end up looking like. Once all NFTs from a series have been minted, the value of some of the PFPs may increase, since people may try to purchase ones that specifically appeal to them (like Jay-Z’s CryptoPunk).

Being early

The creative web3 space is still relatively small. Many of the more successful projects specifically cater to the crypto community and its aesthetics. As interest has peaked, so have the number of PFP projects that now flood the space. Many struggle to get all their NFTs minted, often resulting in minted NFTs being sold for a price lower than the minting cost, which further slows down the minting process.

Yet we’re early. Many types of aesthetics that are popular in subcultures, for example as album artwork, in music videos, or as tattoos, don’t necessarily resonate well with those already onboarded to the web3. While some of the aesthetics emerging from the web3 space will go on to become cornerstones of emerging subcultures, a more diverse variety of aesthetics will become popular in the web3 as more people get onboarded.

A PFP project making slow progress on minting seems bad, but if it finds ways to onboard the subculture in which its aesthetics are rooted, it can succeed over time and enjoy a potentially more meaningful success than it could by shilling to speculating crypto bros (f/m/non-binary).

Onboarding subcultures

The social dynamics of what’s happening right now are not unique. The clearest memory I have of subcultures shifting to a new type of internet is from around 2009 when artists started switching out the MySpace Music players on their profiles for SoundCloud embeds. SoundCloud’s player was clearly superior. While MySpace limited you to a maximum number of tracks per profile, SoundCloud allowed you to upload 4 tracks of any length per month for free in those days. The benefits were obvious and thus once a few musicians in a genre embedded the SoundCloud player on their MySpace profile, you’d see it spread like wildfire through their subgenre.

The type of people who were the first to switch out their player, the innovators, are now onboarding to the web3. Many of them are already experimenting with NFTs and DAOs. PFPs allow them to signal the web3 to others in their cultural space, just like how the SoundCloud player signalled a shift from the age of downloads to the age of streaming. PFPs are not enough though, since their utility is not as obvious compared to an embeddable player that was easily twice as good as what preceded it.

For subcultures to onboard to the web3, there are two main hurdles to overcome:

  • Proof of stake (PoS). The energy use associated with Proof of Work blockchains like Bitcoin and Ethereum has made many people unwilling to touch any type of crypto. So, I expect a few factors in the next year will drive more people to the web3: 1) Ethereum switching to PoS; 2) maturing ecosystems around PoS blockchains such as Tezos and Solana; 3) more accessible layer 2 rollups for more diverse use cases.
  • Usability. It currently takes about 30-60 minutes to onboard someone to the web3 and buy their first NFT, like an ENS domain (see my primer below). They have to open a wallet, verify their identity on an exchange, buy crypto, wait for transactions to clear, etc. It’s hard to figure things out. It’s easy to make expensive mistakes. Many people who are already onboarded forget how hard it is: try onboarding a friend who’s completely new to it. Sit next to them. Walk them through all the steps.

Subcultures and PFPs

A year from now, things will likely be a lot easier for newcomers. Besides work being done on the previous two bullet points, tech giants like PayPal, Square / Cash App, and likely Facebook / Instagram entering the space will help decrease the number of hurdles (at the cost of decentralization).

It will increase the viability of sounds and images that are specific only to certain subcultures and decrease the necessity to make plays that cater to the wider web3 community. So if you’ve been hesitating to start a PFP project or a DAO, because you don’t think the people are onboard for it yet: start small and do it anyway. Consider a lower number than 10,000, and don’t rush, don’t shill too hard. Your audience will get here eventually and you’ll be the CryptoPunk equivalent of your domain. The OG PFP NFTs of your subculture.

I don’t know about you, but I’m so ready for crypto goth, crypto gabber, and actual crypto punk. See you soon.

Post-pandemic music scenes

Posted on | by Bas Grasmayer

There is no end in sight to the pandemic. Yet a privileged few are getting a taste of it. A preview. The ingredients of post-pandemic scenes will be an urge to move forward, a nostalgia for what existed before, and the integration of methods of resilience in the new status quo for music.

The urge to prefix ‘post-’

The urge to move forward, to connect with music and each other again, is one of the driving forces behind the demand for events and people’s willingness to spend on it. People who are attending an event for the first time since the start of the pandemic come out, vaccinated or tested, but also people who have been plague raving. While many people have spoken out against plague raves, I’m not aware of any blacklists existing and suspect perpetrators will be quickly forgotten in a wish to move on and reunite.

There are also people who have left the scene: from artists, performers, workers in other domains of music, to party-goers. Some have moved out of cities, some changed careers and became programmers, train drivers, designers. Sad as this may be, it also creates space in the most competitive areas for newcomers who perhaps carry a different vision than the old guard does.

There has always been a certain passing of the torch, usually gradually. Now we’ll see it in high contrast.

Nostalgia

Nostalgia comes in many forms. Younger generations will be nostalgic for a future they anticipated having. They’re going to manifest that future now. Then there are the people that are frozen in time. One day in February or March 2020, they left the club and went home, expecting to do the same thing next weekend. For them, in part of the world, that weekend is finally emerging.

This dynamic is also manifesting in music, creating an interesting tension between new emerging visions and the desire to return to our old place of comfort. It’s a perfect recipe for new sounds that integrate throwbacks – whether that’s Britney Spears vocals, 90s subculture aesthetics, or pop punk. 

Methods of resilience

Livestreams, NFTs & DAOs, and countless new formal and informal organisations have all emerged as methods to offer resilience in a period of hardship. Instead of zeroing in on specifics, like we do in the links section of the newsletter, let’s look at the bigger picture.

Normalization of virtual music experiences.

Livestreams and other types of virtual music experiences will sit alongside other offers. They may be highly socialized or ‘single player’ and need to adopt ‘better than real life’ strategies in order to succeed.

Interconnected communities.

Virtual events and Discords connected international communities in ways they weren’t before. While previously the connections were through traveling musicians and promoters, now people from different places have connected through music in another way. This change may be difficult to spot for most readers who have been creatively or professionally involved in music for years, but it’s tangible for superfans as well as aspiring artists just starting out.

New formal networks.

The past year has seen organisations form from the events sector lobbying and trying to stay afloat to social justice organisations standing up for people in music. These organisations are constantly finding ways to stay relevant and help people deal with the issues of the day. They’ll be able to provide representation post-pandemic where previously representation didn’t exist (or struggled to gain visibility).

New informal networks.

Most networks don’t have a name or legal entity, so the changes happening here are harder to represent, but crucial to music going forward. For example: in Berlin, organizers have been allowed to throw gigs outdoors, but with 8 months of gloomy weather per year, the city’s not exactly set up for this. People have scrambled to organize spaces, assisted by formal networks, but coming together in new configurations that previously didn’t exist, with no formal name to signify them. The connections being shaped & the integration of previously disconnected networks will shape at least part of the post-pandemic music landscape in cities around the world.

Web3.

For substance, read everything or anything we’ve already written about on this topic. In short, communities can now turn the value they create into money by raising funds through NFTs and other types of tokens. This goes into platform-agnostic community bank accounts. It’s a powerful dynamic that will be as influential for the next generation of culture as the web 2.0 was for the previous. It gives more people the chance to opt out of the status quo & do things differently. I’m particularly curious how collectives & the informal networks that formed during the pandemic will utilize this for events (real & virtual), merch (real & virtual), and to support their creative work.

At the beginning of the year, we anticipated 2021 would be characterized by new scarcity models. Rather, it’s not just the year – it’s the decade.

Why your crypto startup looks like a scam

Posted on | by Bas Grasmayer

The Web 3 is still rough around the edges, but the growth of value has been immense. Fertile ground for scams. This piece aims to achieve two things:

  1. How to avoid potential scams, and;
  2. How to avoid your company looking like a scam.

This is based on years of watching the crypto space, from ICO pump & dumps to the NFTs & DAOs of today, so I’m not talking about any company in particular. However, should you have the feeling what I say applies to your own, then following the advice laid out here can improve your public perception.

No way to check transactions ‘on-chain’

NFTs took off in a way other digital goods didn’t, because they’re verifiable and you can actually own them in your own wallet. When a platform, for example an NFT marketplace, doesn’t make it possible to track this info (for example via Etherscan), you lose all the major benefits of NFTs. There’s no transparency and there’s no guarantee that the NFT will live beyond the lifespan of the platform in case of bankruptcy or an actual scam. This is really important, because projects will fail. Nearly half of all 2017 ICOs had failed by mid-2018.

No roadmap, whitepaper, explanation

Transparency is key. It’s early days. Things are clunky, they might break, and there are scammers around. The crypto space addresses this with loads of transparency through whitepapers and wikis that explain exactly how things work, what they plan to do in the future, and even the smart contracts that power it all. I personally wouldn’t spend money anywhere where this is missing. It’s such a basic thing.

As an example, here’s the Audius whitepaper (PDF).

No clear skin in the game

The crypto space is young, but it’s easy to build a network. When that network is missing, it suggests being new to the space, not understanding it well, or perhaps not having the intention to. What can compensate for it is a network in another domain, like music, sports or art, so that their reputation can be checked.

No team page on the website

This is not a must, but when all else is missing I want to know who are staking their reputation. I want to find these people on Twitter, Discord, LinkedIn and see who they’re connected to. Basically: who’s handling the money I spend?

Fake social media followers

It’s not that hard to figure out when post likes & follower counts just don’t add up. There are also tools to figure out what % of an account’s followers are bots. To me this often feels like someone trying to buy legitimacy instead of earn it. Scammers tend to move fast, because they need to pull the rug before people bail out.

Err on the side of caution

There are plenty of platforms that do things well. Don’t let FOMO get the better of you. Steer clear of platforms that tick the above boxes and give them time to sort things out. Help your friends do the same. It’s estimated that 80% of 2017’s ICOs were scams with $9 million being lost to them daily (2019). Lots of people trying out the promises of Web 3 got burned immediately and the whole space became known for it.

Let’s not let that happen again.

A music service based on collective bids on NFTs (aka fractional NFT ownership)

Posted on | by Bas Grasmayer | 2 Comments on A music service based on collective bids on NFTs (aka fractional NFT ownership)

This week hundreds of people pooled money to collectively place a bid on NFTs and attain fractional ownership using a tool called PartyBid. They succeeded. 478 people teamed up to form the Party Of The Living Dead and secured one of the highly popular (and expensive) NFT collectible CryptoPunks. 25 people acquired an NFT released by music x web3 project Songcamp Elektra, calling themselves Elektranauts.

After purchasing the NFT (of which there exists 1), buyers get ERC-20 tokens which represent the fractional ownership (of which there exist proportional amounts for each buyer). In my recent piece about data autonomy & the creator economy I explained how tokens on blockchains can be used to create platform-independent social groups. This is an example of it: the fractional ownership of the NFT represents group membership. In the case of the Party of the Living Dead that membership is signified through 1,201,725 $DEAD tokens and in the case of the Elektranauts through 2,100 $SQUAD tokens, a reference to a term used by the Songcamp DAO. What if certain privileges were given to those group members?

From whales to swarms

The NFT boom that happened over the past year saw so-called ‘whales’, people with a lot of (crypto)currency to spend, place huge bids in auctions. As the usability layer of the web3 evolves, we see groups of people (often organised in DAOs) come up with tools like PartyBid to be able to compete with whales.

It is early days for the web3. It may feel differently if you’re out of the loop, but new ideas, interfaces, protocols, tools, improvements, standards are being proposed, shipped and adopted on a daily basis. So what can build upon PartyBid? What can build upon fractionalized ownership of music NFTs?

A Bandcamp for Fan DAOs?

Fans can now come together to place collective bids on music NFTs. Afterwards, they receive tokens to signify their status as a fractional holder of that NFT. What if there was a service that offered extra perks based on the (fractional) ownership of music NFTs?

I buy music on Bandcamp for 3 reasons: 1) to support artists (for the brave: here’s my collection), 2) to get the audio files in order to DJ, 3) to offline sync the music into the Bandcamp app. The music may also be available on large streaming platforms, but I like the idea of ownership & supporting financially – it’s a win-win. So I stream my purchases from the app, or play from the offline cache. Could similar dynamics be utilized for a next-gen music service?

Each fractional NFT token you hold could unlock things like offline playback, although it may take a few years for the music licensing landscape to catch up with the web3. So let’s look at two other scenarios:

Fan chat

Communication tools for mini-fan clubs, e.g. a group chat. You login with your crypto-wallet, the service reads your tokens and 🪄✨ like magic ✨🪄 you’re connected to other fans. It would have to compete with other apps that may implement tokenized group chats, like Telegram (and I predict Instagram), so perhaps music-specific features should be included, initially by integrating with web2 platforms like SoundCloud, Bandcamp, Spotify, etc. A web3 route would mean empowering the group with tools specifically tailored towards DAOs of music fans.

Fan galleries

As a fan you can show off your collection on a profile. A service might help people find holders of fractional tokens of NFTs minted by the same addresses. That means: if an artist created 2 NFTs, the token holders for those NFTs can find each other through the platform.

This could create an economy on its own. If other people want in on the fractional ownership, then a new community could organize and place a bid to buyout the original community. The original’s members would be able to profit from the increased value of the NFT, plus would still be able to join the new community’s bid, so they retain access after the sale. Importantly, the original artist would also be able to receive a % of resale money, if such a clause is contained in the smart contract.

And then…

To imagine what the space could look like, one should ask “and then what?” If a certain scenario plays out, what does it look like when people build from there? What would have to surround it? There’s a whole lot of imagining going on right now and a lot of building. Some of it will follow patterns we’re familiar with from the web2, but much of it will diverge.

What’s becoming clear to anyone paying attention: what makes NFTs is not the high auction sums – it’s their functionality & use to underpin a new decentralized social web.

Data Autonomy, the Creator Economy and Web3

Posted on | by Bas Grasmayer

In the platform economy, your account, your username, your social connections: none of those belong to you. If you break the terms of service, or are merely suspected of doing so, the platform may revoke any or all of those and take away everything you’ve created or built (after it has reaped the benefits in terms of ad dollars from it).

I understand why people may be skeptical of NFTs and smart contracts, but I feel the budding Web3 solves issues left unsolved by the Web 2.0… and the space is heating up as creator economy trends coalesce.

“Would you consider selling the URL?”

A few years ago someone reached out to me to see if I’d be willing to part ways with my 3-letter username on a platform. I wasn’t really, but was open to consider it. I also knew that if I wrote that in an email and the platform to which I had registered saw that email, they’d have cause to revoke my account.

The URL, or the part of the username in there, is not mine to sell. It’s owned by the platform. My account, with all the content I had created and followers I had attained, was equally not mine to sell. Sure, it happens all the time, but with risk.

There are multiple reasons for platforms’ prohibition of selling accounts or any aspects directly related to account. The reason most talked about is to prevent scams like fake followers, astroturfing or username squatting. The other reason is because these platforms depend on data monopolies to survive.

Data monopolies & walled gardens

Early in the web 2.0 days, there was this dream of open APIs, services talking to each other, people forging completely new services by leveraging APIs. It wasn’t just a dream. People did so. Loads of cool hacks and apps launched this way – some survived by pivoting away from external APIs, most died. What happened?

In short, advertising happened. It seemed like the only viable business model at a time before most people were used to doing payments online. A time before modern smartphones. It doesn’t feel long ago, but the internet was such a different place. When you want to make money with ads, you need eyeballs and you need data; lots of it. That means people need to spend time on your platform, so their eyes are there and their data is yours. And so is their ad revenue. External APIs got crippled.

The pandemic has accelerated the rise of the creator economy. It has made calls for fair compensation louder (see Spotify). It has made people go direct to their audience via newsletters instead of relying on Twitter or Medium. It has made people experiment with more direct forms of monetization through livestreams, virtual events, and fan communities on Patreon and OnlyFans.

And then there’s NFTs.

Your username as an NFT

We’re all familiar with the headlines of NFTs being sold for millions. Let’s look at the extra utility and how it matches creators’ demands for more autonomy & ownership of their data and the value they generate.

Recently I created a web3 primer video to set folks up with a crypto wallet and buy their first NFT using ENS. ENS lets you register a legible name as an NFT, like basgras.eth, that points to your wallet address (a hash code) in a way similar to how an email address points towards a mail server or a domain name points towards a host.

Services that support ENS allow people to display their .eth name as their usernames. So if someone wanted to ‘buy my URL’ or username on a service, I could just sell the NFT which only ever belongs to the person in whose wallet it sits.

What if we apply this concept of data ownership to more forms of data? We can apply it to social graphs via the community tokens someone holds in their wallet. Some of those community tokens may be specific to a small group of friends, like a group chat on Facebook or Telegram. Want to take those connections elsewhere? Just join another service and it automatically connects the holders of those tokens.

What about other data, like your posts? I expect they’ll become portable as NFTs with the media hosted through IPFS. It won’t be the incumbent platforms making the first step here. The autonomy and portability of NFTs will have to be created outside of them, so that they have no choice but to integrate them. That sets a new standard: “wait, I can bring my NFTs from outside in, but I can’t take my content out?”

This tension field is emerging and will likely strand incumbents somewhere between web2 and web3. How far it goes in terms of decentralization depends on the business models that get enabled (can this become bigger than advertising?) and how effective the trends are at confronting concentrations of power. What’s certain: People will expect to have more of a say over their data and they’ll expect ownership over the context in which they create value, which will become normalized through DAOs.

Facebook wasn’t MySpace’s web 2.0 successor: they were both web 2.0. Facebook’s web 1.0 predecessor was Geocities. The web 3 leap is larger: the successors to Spotify, Facebook and Twitter will look nothing like them, but will be able to solve the same problems & address the same needs. This time around, you’ll be able to move your data out. The incentive not to do so? You’ll own a part of them.

Thanks Dame.eth for the inspo

Sometimes a single sentence can connect all the dots.

A simple guide to disrupting the music industry

Posted on | by Bas Grasmayer | 1 Comment on A simple guide to disrupting the music industry

The trigger: a new technology or a shift in the digital landscape. Aspiring founders are searching for a good use case to leverage that development and turn to something they’re passionate about. Music. With a vague understanding of the music business, they proudly announce their plan that will totally disrupt the industry.

People who’ve spent a decade in music have likely seen a dozen of companies promising to disrupt come and go. Disruption doesn’t sell. Solving problems does. The most common misunderstanding seems to stem from a fallacy around intermediaries and that disintermediation always improves things. The oversimplified view is that everything besides the artist & fan is ‘extra’ and both would profit if it can be successfully disrupted.

The reality is that things don’t function as an artist-management-label-distributor-DSP-fan chain. Music doesn’t always travel through it like that. Value doesn’t always travel through that chain. Instead there’s a whole network of connections where various types of value are exchanged, connected and created. In most cases it’s not linear; it’s a network.

The above may seem obvious, but this misunderstanding occurs time and time again. It leads founders to present themselves in an adversarial way to parts of the industry that actually should be their customer. If you can do X better than how a label is currently doing that, then that label might be happy to pay you for it. Artists & their management have a ton of things to do, so in many cases they’re happy to let labels or label services companies take care of some of it.

Don’t get me wrong: there are plenty of inefficiencies and practices of exploitation in the music industry that need to be disrupted. These may occur anywhere in the ecosystem (which also includes other parties like everything related to live, merch, PROs, etc) or in the connections between players. They typically don’t apply to an entire domain, e.g. ‘all labels’ or ‘all booking agencies’. Even when they do, like in the case of inefficiencies or friction, there may be other aspects of those businesses that would not benefit from complete disruption.

What I’m saying is do your research. Create a map of the industry’s domain you’re interested in and also map out everything adjacent to it, because there will be unforeseen connections. Understand how companies collaborate, what goals they’re trying to achieve, how they add value, and where frictions may occur. Read Don Passman‘s All You Need to Know About the Music Business. Speak with people to understand whether your research is based on current-day practices, because it definitely happens that people launch companies with assumptions based on early 2000s practices.

Music is complex. Part of it unnecessarily, but there’s a reason why things are structured this way. Figure out those reasons. Learn how others leverage those reasons to pioneer new businesses. Identify the trends. Understand the complexity to avoid endless pivots and repositioning. Music is in need of innovation – do it through partnership.