May 27, 2022·edited May 27, 2022Liked by Brad Berens

I think it's a mistake to make an assumption that Web2 = big companies = exploitation. Instead, ask what value Spotify has... and to whom... and extrapolate.

A company like Spotify provides a number of things:

An audience to sell ads to

Discovery, so the audience can find what they want and stay

Exposure for artists

This works better *with* scale. That is, more audience means more ad sales. And thus this is VC gold.

Now look at sound.xyz. They don't need the audience scale to sell ads to, so perhaps scale is not as important. But it still needs to provide the other two. And there you find some issues. Who is paying for the discovery engine? Does this money scale, or are the VC's not going to get paid? (My guess is the latter.) If the audience does not scale, exposure is worth less. And so on.

The vision you painted is the utopia some of us remember was predicted for Web1. (I first used Mosaic in late 1993.) Remember, anyone could post anything in Web1 and we were all supposed to find whatever we wanted.

It did not turn out that way. Discovery is hard for individuals, which led to all sorts of Search. (I remember Altavista!) Doing it well is not free, and the genius of Google was less a good algorithm than in understanding how to monetize it better.

I predict that Discovery will also consolidate in your Web3 vision... because it's hard when there's a lot of content and therefore expensive. Who will pay for it? I doubt consumers will pay, so either there will be advertising or the artists will... the latter being true of any distributor mark-up channel. And then they have the incentive to make it easy for artists to have storefronts, with finances coordinated for them.

Which makes me think ebay or etsy is the model you should expect.

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Hi Dan!

First, thank you for reading the Dispatch! I'm grateful.

I also don't think that our positions are all that far apart. Your example of Spotify is a good one for Web 2.0: it has huge scale, minimal direct returns for individual creators, and is an amazing deal for subscribers. Discovery is algorithmically-driven with a high time cost but a low dollar cost.

Web3's vision of discovery is more like the analog days, community driven (like the record store characters in High Fidelity), with more base hits and fewer big hits... unless (unlikely) intermediaries like Billboard and radio stations regain influence.

Consumers *will* pay for discovery... they just won't pay for *generic* discovery. Hence my nod to Kelly's 1000 True Fans idea. Your eBay/Etsy idea is along the same lines.

Again, thanks for reading. Great to hear from you!

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