Web 3 and the Rise of Small Media

You. Yes, you. Are you an actual human?

It’s not an entirely unreasonable question to ask because the odds of a human reading these words is about one in three. You see, two-thirds of traffic on the internet is comprised of bots, according to analysis by security vendor Barracuda Networks.

What are these bots doing? Many are cruising the web indexing web pages, making it easier to find content. Others are doing “bad bot” things like trying to hack into sites. Yet more are clicking on ads.

Joon Ian Wong hosts a podcast called "GMI Crypto Media" analyzing the evolution of media businesses in crypto over the years.

It’s those ad-clicking bots that are a symptom of the problem plaguing media today. Click fraud is profitable because clicks generate payouts from ad networks. But as the volume of traffic surges, the value of each click falls. So the scale of traffic required to support actual journalism and publishing becomes ever larger.

The ad-fraud researcher Augustine Fou has a great chart titled “Not Humans, Something Else.” It plots the total number of internet users in the U.S. since 2004 against annual digital ad spending. Ad spend rockets upwards and to the right, far outpacing the number of internet users. To whom are advertisers showing all those ads? Probably bots.

What to do about all those bots reading your carefully crafted and edited articles? And, more importantly, how do publishers get paid if bots siphon away valuable human attention and depress ad rates? Blockchains solve this – well, at least partially.

For blockchains to work at all, they have to solve the same problem facing publishers trying to figure out whether their audience is human or robot: Sybil attacks. A Sybil attack is when a pseudonymous actor spins up multiple identities to overwhelm a network. The Bitcoin blockchain solves this by requiring nodes to pay a “tax on identity creation” without sacrificing pseudonymity, as the authors of the excellent Princeton textbook “Bitcoin and Cryptocurrency Technologies” put it. This is Bitcoin’s famous “proof of work” Sybil-resistance mechanism.

Similarly, we can imagine sprinkling some Web 3, blockchain-enabled magic on media models to create Sybil-resistant media. One of the simplest mechanisms for this is showing a reader content only if they hold some token, or a sum of tokens, in their crypto wallet.

This type of token-gated media model doesn’t presume the type of token: FWB, which is not just “SoHo House without the house,” but also publishes several streams of journalism, operates with a fungible FWB token. Meanwhile, a project like Unlock Protocol offers token-gating behind non-fungible tokens (NFT).

But because tokens are needed to reveal content means the tax on would-be Sybil attackers rises. What’s more, as the publisher gains popularity its token should rise in value, therefore levying a heavier tax on non-human readers. This aligns the interests of reader and publisher, cutting out the bot-enabled middlemen.

The notion of Sybil-resistant media isn’t just a blockchain pipedream. More traditional media businesses (TradMedia?) are also coming around to the idea that small is better. Instead of the venture-capital backed mass audiences of yore — think of venture darling BuzzFeed (BZFD) and how its stock price fell off a cliff once public markets could evaluate it. There’s now a case for smaller but more lucrative audiences.

Read more: Joon Ian Wong – The Future of NFTs Is Fungible

This is the “primary engagement media,” which the analyst Brian Morrissey has championed lately. Morrissey says publishers that adopt this model will go deep and narrow rather than wide and shallow. Crucially, this form of media will also be sufficiently influential to get readers to do stuff – whether that’s buying things from a publisher’s e-commerce platform or re-upping a subscription.

The canonical example of primary engagement media done right is the "Not Boring" author Packy McCormick, who, perhaps predictably, has also morphed into a crypto thought leader and investor. He cultivates an audience through his newsletter, creates hugely influential sponsored deep-dives for that audience, and also gets his readers to invest in his fund. That’s a lot of primary engagement for a solo operator. And you’re not exactly seeing BuzzFeed getting [liquidity providers] for its latest GameFi fund from its readership.

What types of Sybil-resistant crypto media do we have today? For starters, many such projects shy away from using the word “media” at all. They might call themselves decentralized autonomous organizations (DAO), communities or some other variation of those words.

The aforementioned FWB is one example. Hold a certain balance of FWB tokens and you get access to its hot events and in-the-know chat. But what’s less talked about is its editorial division, which was one of the first things the group spun up, even before its now legendary parties.

FWB editorial now comprises feature stories in the form of Works in Progress, or WIP, ranging from “an oral history of Crypto Coven” to an extended metaphor on how Alcoholics Anonymous is really an 86-year-old DAO. It also publishes a weekly newsletter called TL;DR, which is essentially a form of local journalism (you need 1 FWB to read it). Instead of journalists covering different community boards or town hall meetings, writers discuss what went down on the FWB Discord server’s warren of channels, threads and voice chats.

Water and Music, founded by journalist Cherie Hu, is another crypto media outfit that benefits from primary engagement. It co-writes research reports with dozens of its community members on how technology is changing the music industry, paying them in its own STREAM token. (Disclosure: I advised Water and Music as part of my contribution to the Seed Club accelerator.) You can join the community (read: Discord server) by paying a good old-fashioned subscription, but then take part in things like co-writing reports using the token. Water & Music has 1,500 paying subscribers, and they’re mostly people whose jobs are affected by tech in music.

Forefront is another content-heavy project that eschews the “media” label, preferring instead to call itself a “port of entry” to Web 3. It publishes a podcast, hosts a data offering, and sends out a weekly newsletter. Like Water & Music, it rewards contributors in its FF token, and you become a community member by holding some FF to begin with.

While the Web 2 media world is still grappling with a shift to reader-supported business models, crypto media can show the way with Web 3-enabled features. It can swap proprietary paywalls with universally readable wallets. It can turn passive readers into active co-creators with token incentives. And it can tell both the unfolding story of crypto media as it is creating it themselves. I’d like to see a bot make sense of that.