The Metaverse is being built on reputation scores and social ranking for access to the ‘decentralized economy’ where people will directly to each other. But before we get there Zuckerberg is bringing us to the Instaverse (Meta’s Metaverse!), in which anyone can create NFTs in-app at a tap. Influencers are among the first to jump on NFTs via social tokens; will they inspire a whole new generation of ticket-clippers to the rentier class?
From July, Australia’s “health influencers” will be prohibited from paid promotions of therapeutic goods on social media regardless of whether a testimonial is genuine.
The newly enforced Therapeutic Goods Advertising Code is to prevent conflicts of interest arising between consumers who are trying to make a health choice and influencers who gain financially from the sale. It applies to medicines and medical devices, supplements and sunscreen.
For a country obsessed with sun, screens and influencers this seems like a reasonable move to protect consumers.
Personally I endorse the regulator’s move. My family suffered sunstroke for the first time this summer after switching to an Aussie ‘natural’ sunscreen marketed to my partner on Insta.
And we weren’t alone, several reviewers had the exact same experience. Yet the product continues to be advertised by influencers making false claims.
More importantly, the regulator’s move will hopefully lift the lowest rung of the ladder just enough out of the reach of a rentier ticket-clipping class that has grown voraciously in every industry in the digital economy. In the early days of the internet people predicted the death of ticket-clippers and middlemen, disintermediated by tech. Instead middlemen have flourished in even more varieties in the digital economy.
The same promise has been made of “decentralized” Web3 but so far the opposite has happened. Let’s assess how, on its current trajectory, it is empowering and creating more influencers, middlemen and ticketclippers than Web2.
The flock of Byron’s Baes
Like the crescendo of a Home and Away break-up scene Aussie influencers are screaming that the new therapeutic goods advertising rules will destroy them and their business model tenanted on Big Tech.
But just before the influencer can get to the nearest crypto cafe and learn how to mint her own NFT in the metaverse there’s a knock on the door.
Enter Mark Zuckerberg, all sun-scorched and speedos.
He assuages the heartbroken influencer with talk of “another chance” and “trust me ”. He opens a closed palm to reveal in his palm glistening reputation tokens, all theirs if they migrate to the Instaverse.
Dubbed Zuck Bucks by employees, Meta is soon to release “social tokens”, “creator coins” and NFTs into its apps.
So from the very inception the Metaverse/NFTs are being clipped.
Australian influencers and fast money
Australia is in the last stage of an almost uninterrupted 30-year credit expansion and Aussies are no stranger to financial excess.
It is fertile ground for fast money, supplement multi-level marketing, pyramid schemes and crypto scams and Australia stands out from its peers as one of the few countries to still allow CFD retail trading, which is banned in the UK, Europe and US.
As I mentioned in a previous article, crypto and the multi-level marketing supplement industry share similar traits and emerged in a regulatory vacuum created by Wall St and Big Pharma lobbyists respectively. The two are now riding on their coattails into the mainstream and I see Bitcoin as the Herbalife OG of network-marketed money.
Australian trading platform Cash FX operates on the exact same premise of companies like Herbalife.
CFX’s business model recruits people to recruit people to sell crypto packages earning commissions from their referees’ referees’ referrals, etc. One of the main advertising venues is of course Instagram.
Australia’s financial regulator ASIC has issued a warning about CFX, as have the United Kingdom, New Zealand, Canada and others.
“The Cash FX Group website predominantly promotes a ‘Trading Academy’ with various deposit plans. Upon investing in these plans, the website claims that a portion of the money will be allocated into a trading pool, where it will be managed by a team of in-house ’expert traders’ guaranteeing high passive returns.”
The scary part of the Instaverse is that any crypto marketers can go over the top of platforms like CFX to create their own pyramid scheme at their fingertips.
Social credit scores and social graphs
The foundations of every social network, from Facebook to LinkedIn is the social graph. These are the trillions of relational data points between users that platforms build their products and microtarget ads with.
In Web3, the so-called “Creator Economy” the vision is for everyone to own their own unique Web3 ID, or decentralized ID. A metaverse passport as it were.
Decentralized ID, or DID, is a hot rock of a topic in the metaverse right now.
Its promise is that users will own their social graph, not LinkedIn, and can monetize it themselves. Visitors to the metaverse will also be scored and ranked by their online behavior, interacting with Dapps etc, which score will be linked to their Metamask wallet key.
If this sounds alarmingly like China’s social credit system but with a capital D in front of it, you’re too late it’s already underway.
There are several ethereum-based social graph and social scoring protocols live. Let’s look at some strategies of how one could monetize their social graphs and social credit in Web3. Who better than influencers?!
1. Social scores for cheaper DeFi loans
- Monetize Web3 ID, reputation and social media following by minting NFT
- Collateralize Web3 ID reputation with own NFT for loans in DeFi
- Access to better DeFi borrowing and lending rates using ‘social collateral’
- Automate your own multi-level marketing scheme
2. Influencer NFT business model
In theory, influencers could go over the top of the platforms like Instagram and jurisdictional regulations to sell directly to the consumer with their own ‘influencer’ coins.
- Australian health influencer mints coin
- Sells to their followers through their social channels, Discord
- Promotes health products through ‘decentralized’ apps and platforms
- Followers can buy health product from influencer at a discount, using coin
- Influencer sets up Multi-level marketing campaign for health product, programming coin/NFT to do something similar to DeFi Liquidity Provider/miner coins which earns a proportion of trading fees
- Referrals earn commission on referee’s referees and so on
- The more social interaction and product sales they makes they get the more the influencer coin is worth
3. Ad agency NFT business model
This time an advertising agency for say a toothpaste brand sets up a campaign around tooth decay. The advertising agency contracts influencers and ambassadors to the campaign thusly:
- Agency creates NFTs for ad campaign videos and art
- Agency gives influencer some NFTs (aka digital claims) linked to campaign’s video and artwork
- Influencer promotes these videos and art on their Telegram, Discord, Odyssey, other apps
- Popularity, views and sharing of reflected in the NFT held by influencer
- Influencer sells NFT on OpenSea
- On to the next project
4. DJ/Musician NFT royalty model
This ones isn’t hypothetical. One of my favourite DJs has just forayed into the metaverse to monetise his music and brand. I write this as I’m listening to his Backyard Boogie Mixes.
Moon Boots has launched his own community on Web3 creator platform Highlight, access to which is available only by buying his NFT tokens.
- Exclusive downloads & mixes
- Discounts on merch & exclusive merch
- Talking with me about music or production on Discord
- Meeting other fans on Discord
- Early access to tickets for future shows
I’m not too sure what the “tokenomics” of these creator coins is premised on, but, presumably, like the gravitational pull of everything in the metaverse more FOMO = higher price.
Musicians and artists have benefited little financially from the digital economy largely because their work is intermediated by more middlemen than ever. But also because the barrier to entry has been so lowered by advancements in music technology, or the “democratization” of music, that the quality has dropped while the market has been flooded with billions of ‘artists’.
Think Spotify, YouTube but also all the millions of YouTube accounts that make money from uploading other artists music with a scan JPEG of the album cover or lyrics. I’m sure there’s a better way for digital creators to earn directly from their work.
But crypto’s ability to flood the market with millions of new tokens will inevitably cheapen many of the social interactions that were once highly valued even though the didn’t have price on them.
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