In 1997, David Bowie issued Bowie Bonds , an asset-based bond that securitized the income from his earlier albums, paying 7.9% annual interest over the decade to 2007. Prudential Financial paid $55M for those bonds.

Social tokens are further evidence of the internet’s move from Web 1.0, which provided information more efficiently, to Web 2.0, where users create content that platforms curate, to Web 3.0, where users curate their own content. Social tokens, true products of Web 3.0, directly connect the creators and consumers of content. They differ from celebrity bonds because there’s no intermediary in the transaction, and from ICOs because they plug into existing community-building efforts around the creator, driving actual value creation.

• Access: Fans may simply buy tokens for the access they provide. For example, one band (Portugal. The Man) gives fans who buy 10 coins access to benefits such as the band’s audio archive, text and video chats, and other benefits.

• Exchange: The coins can be used as a medium of exchange. Instead of the “tip jar” found on some websites, fans directly donate a token to compensate the creator.

• Investment: With the token supply limited, rising demand drives value up. Fans can redeem coins, treating them as an investment (albeit a very risky one), and creators can augment their their income.

Token value depends on a creator’s ongoing content production. Failing to deliver would be professional suicide. Anecdotal accounts show that influencers can suffer psychological harm from the stress of constantly providing content. As a hypothetical example, would Taylor Swift have gone pop if the “TaylorCoin’s” value might’ve cratered?

Several legal gray areas exist for something as novel as social tokens, ranging from concerns about false advertising to broad liability issues. The SEC is working on defining safe harbor provisions for tokens, which would clarify some elements of the space.