Content creators can use the tokens they issue in two self-reinforcing ways: to build and reward their fan community and to compensate themselves for their creative work. Most frequently, fans buy tokens, but some artists, such as RAC, give them away to loyal fans. As community members, fans receive benefits such as unique video content, access to group chats or exclusive merchandise. Generally, different ownership levels receive different benefits.Because only a limited number of tokens exist, rising demand increases their value.

Building and rewarding communities + compensating creators

In 1997, David Bowie issued <a href="https://www.ft.com/content/6b4839dd-0539-34c4-bb1d-0edf95255d72">Bowie Bonds </a>, 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.

David Bowie issued a precursor of Social Tokens

Token value depends on a creator’s ongoing content production. Failing to deliver would be professional suicide. <a href="https://www.theguardian.com/us-news/2019/jan/08/instagram-influencers-psychology-social-media-anxiety">Anecdotal accounts </a>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 <a href="https://www.mondaq.com/unitedstates/advertising-marketing-branding/1084096/a-legal-primer-on-social-tokens">legal gray areas </a>exist for something as novel as social tokens, ranging from concerns about false advertising to broad liability issues. The SEC is working on <a href="https://www.sec.gov/news/public-statement/peirce-statement-token-safe-harbor-proposal-2.0">defining safe harbor provisions </a>for tokens, which would clarify some elements of the space.

The risks of Social Tokens

Content creators — artists, musicians, writers, social influencers — are the true stars and revenue drivers for media properties, but they are often not adequately rewarded for their efforts. The relationship between creator and fans is intermediated through a third party, such as Instagram, which shares the revenue and exerts some artistic control. By directly rewarding creators for their work, social tokens — a type of cryptocurrency (crypto) whose value reflects fan enthusiasm — may fundamentally disrupt this long-standing model. Creators, in essence, become their own economies.

In Web 3.0 the creators are directly rewarded by their audiences

• 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.

The 3 ways of using Social tokens

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.

Social Tokens directly connect the content creators & consumers

Exploring how will social tokens change online communities as we know them today. How will middlemen fade away and creators will retain much more value from their audiences.

Creators, in essence, become their own economies.

David Bowie issued a precursor of Social Tokens

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