🎙 101 - The Ownership Economy | Li Jin

that can be the basis of entirely new types of jobs and income that hadn't existed before online welcome to bank list where we explore the frontier of internet money and internet finance this is how to get started how to get better and how to front run the opportunity this is ryan sean adams i'm here with david hoffman and we're here to help you become more bankless guys we have a fantastic episode talking about the ownership economy the creator economy both of those things a few things to take a look

out for the first is the creator economy versus the ownership economy what is the difference between these two terms we go through it with legion second the original sin of the internet what was that sin what did it cost us third four things that will actually fix the original sin and usher us into the ownership economy number four the web three renaissance what that is what that means number five how crypto can actually fix wealth inequality legion

gives her opinion on how that could be the case how we might come up with a fix for some of the wealth inequality issues and finally number six what this means for you how to set yourself up in the ownership economy how to be your own boss how to take advantage of the web 3 renaissance that is coming all of this unpacked on the show today david what were your thoughts on this episode gosh lee jin is such a clear articulate thinker and she really does a very fantastic job of taking us from the very

beginning of this story at the dawn of the internet while the the founding people of the internet we're really thinking about what happens next now that we have this internet thing taking us all the way to where we are today and then also extrapolating extrapolating into the future about what it means to create content on the internet and i think one of my my favorite things about lee and her interest in the creator economy in the in the owner economy is that she's she's very pragmatic she wants to see creators and creativity blossom and that

is her goal her goal i don't think is really to get crypto to take over the world she sees crypto as a means to an end for what what she wants to see in the world which is inspiring creativity and everyone being able to be their own boss by unlocking and unleashing their internal creativity colonel that we all have inside of us she's not like you or me and we're like um you know we are focused on crypto and we want crypto to take over the world she wants creativity to take over the world and she sees

crypto as a viable way to get that done uh and i think she even she hints in this in the show that she used to be very very pragmatic about intersecting like here we can use web 2 for this and we can use web 3 for this but she said she's recently capitulated and it says that it's only web 3 here on out and it's actually through web3 that we can fully unleash crypto or excuse me fully unleash creativity to its maximum degree in a way that we've never seen before out of humanity yeah absolutely i think

that's a great insight i i also think this is this is almost the sister episode to our episode with chris dixon uh where we went through five mental models of web 3. um and i think this is a mental model the idea of the creator economy their ownership economy is the mental model that uh all bankless listeners should have locked in their brains for 2022 because once you understand this you start to see different areas you can invest in your time your money um your skills your jobs

and and the world kind of opens up um web 3 and crypto really is going to usher a new type of economy it's going to create a new business model for the internet and we tap into all of that here so uh stay tuned for this episode as always like subscribe review if you're watching this on youtube make sure you subscribe uh give us a podcast review if you're listening to this on your podcast player we're going to get to the episode with lee jin but before we do we want to thank the sponsors that

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her thesis i think the thesis of variant fun writ large is that next generation networks will grow faster and bigger because they are owned and operated by their users this is called the ownership economy web 3 as you can imagine crypto as you can imagine has a huge role to play here she's also a writer on substance fantastic writer by the way and a hobbyist painter legion welcome back to bankless it's great to have you on again thank you so much for having me guys it's a delight to be here

i think last time you were on you're on a you're on a panel and we enjoyed that panel so much we're like uh we've got to bring lee back to talk about the ownership economy in more depth the creator economy and actually i want to ask you that question do you like the term creator economy or ownership economy better when you define this thing uh so i think those two things are actually slightly distinct they're overlapping it's like a venn diagram there's crater economy non-ownership economy version there's crater economy ownership economy

overlap and then there's other ownership economy stuff that is outside of the greater economy well i like that could you get into the detail there so creator economy i'm imagining is um well yeah why don't you describe the the venn diagrams for us yeah sure so the creator economy is really this um this economy that exists online marked by this proliferation of individual content creators who are uploading user-generated content and monetizing that in a host of

different ways and essentially ever since uh like as for as long as the internet has existed there have been creators on the internet ranging from people starting blogs and posting on forums to today you know posting on youtube making podcasts like we are right now and the way that people have monetized their independent creations have varied over the years it really used to be banner ads and then programmatic advertising and in the last couple of years i think the resurgence or the

increased attention the creator economy has gotten has really been around the potential for direct monetization of one's audience spanning from writing a subscription newsletter to starting a patreon to starting you know any sort of like direct fan monetization type of business um and so the creator economy has been around for i i would say like over a decade um and it's gone through multiple phases in its history which we talked about on the panel with cooper and jesse

um and i think we're right now in the third phase of the crater economy which is that they regard themselves as independent businesses in in and of themselves in their own right um they used to be people who helped other businesses to grow by selling sponsorship placements or doing advertising on behalf of other brands but today i think the mental shift that a lot of creators have made is that they they think of themselves as businesses and brands

as as individuals as personas and where that starts to overlap with the idea of the ownership economy which is the idea that all next generation internet products and services are going to be owned by their users and go through the progressive decentralization playbook is that i think there's really this convergence where um there has been the broad recognition that creators have been responsible for creating a lot of the value on the web 2 internet but have

not really been the beneficiaries of that value creation instead it's gone to the owners of the platforms that they're working on so um a creator on youtube or create on facebook etc they aren't earning income on the side for sure um and they can find external ways to monetize their audience but they haven't been owners of the underlying platforms that they're posting content on and actually contributing value to um and that comes in the form of both economic ownership as well as any sort of governance rights

and so we're really seeing this overlap in this flourishing of the creator economy and ownership economy today um wherein people are having the conversation of well creators should actually be owning more of the value that they create they should be the beneficiaries of the value creation that they're doing and they should become just as other users in the community owners of these platforms too so the creator economy then obviously predates crypto but was maybe uniquely enabled by the internet we'll we'll get

into that but is the ownership economy is that sort of a product of um of crypto and how does this term web 3 do you think relate is are web 3 and the ownership economy part of the same you know would you bucket the ownership economy under web 3 or do you think it's its own thing following its own path and trajectory that's just related somehow yeah we have this internal debate all the time among the variant team as to what all these different terms mean crypto web 3 ownership economy how do we

diff them and where are the boundaries i think frankly like it's still such a nascent area of technology that no one can really say conclusively what is one thing versus another and the terms have sort of taken on lives of their own um my personal uh feeling and the way that i personally define them is i think the ownership economy is actually a bigger like umbrella um phenomenon in which users and participants of platforms are becoming

owners and there was a web 2 version of the ownership economy in which companies were trying to utilize um traditional equity and legal structures in order to give ownership to their users that was like the weak form of the ownership economy and the strong form of the ownership economy is enabled by crypto and tokens which represent ownership um and then as for web3 i think most people are using it synonymously with crypto but i think the ownership economy is is bigger

than all of that lee in order to fully explain the creator economy and the ownership economy we're going to take a second to go all the way back to the dawn of the internet but before we do that can you just explain or illustrate the arc that i think exists with uh the trend of the creator economy you already illustrated a little bit where creators used to create for others and now they are creating for themselves and then you also think there's another phase coming can you just summarize the trend of the creator economy kind of where it started and where it's going and what the

general arc what it arcs into over time absolutely um so i described the creator economy in terms of different phases and the evolution of the phases that we've gone through over the past decade or so so creator economy 1.0 um which was the very the the dawn of the creator economy i think of as existing as long as the internet has existed um so initially people were uploading content online um they were doing so on their own

independent websites or blogs that they set up and then as the social network started to come out people also utilized those for content creation um so so in those days i would consider everyone to have been a content creator as long as they were posting content but it was very nascent in terms of the economy piece of the content creation so there were creators but less so an economy actually happening creator economy 2.0 i think was really the burgeoning economy around people who built up fame and influence on all of

those channels so gradually you had people who accumulated audiences by posting content on the internet um and they were kind of like digitally native celebrities and this influential class who we typically refer to now as the creator class then began to receive monetization um usually in the form of advertising or brand sponsorships so they monetize the eyeballs and the reach that they got from their total audience and that was a game that really rewarded reach and

scale um and and now we've shifted i think just in the last couple of years or so to the phase that we're in now which is creator economy 3.0 which is this phase in which creators are no longer just conduits for selling other people's products and plugging other people's businesses and brands um but instead are regarding themselves as the brand as the business and they are trying to monetize their own persona in different ways um and they're doing so increasingly by using lots of different

tools and platforms that have flourished in the last couple of years um all really based on direct monetization of their super fans so that's that's the phase where and now uh creator economy 3.0 which is creators as their own independent businesses i think nft is actually i would bucket under that third phase of like it's uh it's another tool in the toolkit that creators are using today for direct monetization of fans where i see this all going in the future is eventually um

the next phase of the creator economy will be the dissolution of boundaries between who is a creator versus who is an audience member and so it becomes much less clearly delineated the the creator versus the fan and instead it moves towards this world in which creators co-create with their audience and they're all part of a community that is helping to drive value back to the collective output that they that they put out and in that world i think everyone

um is compensated with uh you know a reward proportional to how much value they drove to the community um and i call that uh evolution from the creator economy to the community economy um and that is really the the supercharged version of the creator economy and where we go that's really cool from from the individual creators to entire communities and creators co-creating with their fans and fans creating with uh with the creators as

well um this is super interesting and i think that that definitely dovetails into the the ownership economy as well because that provides maybe the underlying alignment or incentive mechanism but like i don't wanna we jump ahead of ourselves yet because this has almost been like a tease so far of everything we're going to unpack in this episode i think i want to go back to a post that you uh wrote recently a fantastic post called the web3 renaissance the golden age for

content and let's go back as david was saying to like the founding of the internet uh and there was this essay i believe in 1996 i guess this was a little bit after you know the the internet came on board but this famous essay from bill gates entitled people have probably heard this phrase content is king right you've heard that meme propagated around and bills gates said at that time in that essay one of the exciting things about the internet is that anyone with a pc and a modem can publish whatever content they create

from the for the internet to thrive content providers must be paid for their work the long term prospects are good but i expect a lot of disappointment in the short term you go in your post on to unpack that but can you really put us back in the shoes of bill gates when he wrote that in 1996 what did he see in the internet at that point in time and why did he expect this disappointment in the short term are we still kind of living in that disappointment talk us

through that sure so firstly i would say uh when this article was published it was very very early days of the internet this was 1996. i think globally there were like 30 million users total on the internet today it's like 3.5 billion um so at the time it was less than one percent of the world population so this was very very early days also i would just say that at the time i was five or six years old and so i was

not an active internet user um i was probably playing with barbies or something and so a lot of what i know about that era is not from my first hand experience of using the internet but rather from reading and talking to friends who are older than me more mature than me um but regardless so i think putting ourselves into the shoes of bill gates in that era the internet was really nascent um it was nascent in terms of user adoption not to mention the revenue element of

you know what existed in terms of businesses on the internet um at that point in time people really regarded the internet as this kind of like toy or interesting novelty but didn't really see a viable place for businesses to get built in his article he outlines that right now the internet is predominantly used by businesses to drive purchases offline so you kind of give a tease or a look at like your offerings and wears and then hopefully some of those users go offline and purchase your magazine or your book

or your content thing it's kind of the internet is a static catalog idea it's not really dynamic you don't really interact with it so much yeah exactly it wasn't it wasn't dynamic at the time um and at the time yeah there were very few options for actually collecting payments or monetizing users directly advertising was also really early um he states in the article that advertising might be promising in the future but today the total amount of advertising revenue that's being

collected on the internet is nearly zero and so this is this is really the basis for why he predicted a lot of short-term pain in terms of content creators online was because it there was just very little there there was very little users there was very little monetization happening and so he he had this optimistic view of well the internet is really powerful hypothetically because it's permissionless and anyone can go online and post content and the barriers to entry are much lower and i think that

has proven out to be true like we have had this flourishing of content creation on the internet everyone can become a creator um but the second part of his prediction was was that there would be there was it was challenging to actually make money from being a content creator on the internet and i think that was um true up until we saw the web 2 platforms and the aggregators who obviously were very profitable and did make money from the content creation that they face facilitated but that revenue

uh ultimately a large portion of it did not actually end up in the hands of the individual content creators so bill gates it's a disappointment that he predicted he wasn't just predicting the frustration that we often talk about today with web 2 platforms he his predicted disappointment was coming just from the fact that there was no internet there was no money flowing through the internet in the early days of the internet there was just as as ryan and you said so you know static pages just to disseminate information there was no

uh passing of credit card information or not not even to mention cryptocurrency so like being a content producer in the early days just had it was only intrinsic there was no any extrinsic value flows is this is this is all correct yeah that that is my understanding from what i've read is like at the time there was basically like two types of businesses that actually worked on the internet one was e-commerce amazon got certain in 1994 and the way that they accepted payments usually was someone mailing them a check and then getting mailed the product

so e-commerce was happening so physical products and then there was porn and then beyond that there was basically nothing else people were very reticent in those days to enter their credit card information onto a web page and it was also very difficult on the supply side for publishers or web page creators to even accept credit card payments and so direct payment was really not a thing advertisers had not yet moved online and so the whole landscape of revenues online was just

very very early so from the perspective of this early days of the internet the pl web 2 platforms facebook youtube etc was probably actually um viewed as probably a very good thing that if that if they could have seen that on the horizon because these things these platforms made it very easy for content creators or easier for content creators to actually monetize themselves in the first place would you agree with that statement i would agree with that statement i think that in the early days of these

web 2 aggregators or platforms they were viewed in a much more positive light both from the consumer perspective as well as from the supply side perspective of the content creator so on the consumer perspective i think the early days of the internet were marked by this belief that like the internet is this really overwhelming place and it's awash in this like sea of all sorts of different types of content and i like as a user i can't make sense of it

there's like headlines from the new york times at that period of time where people are calling the internet this overwhelming sea of websites that like can't possibly be navigated search also by the way was really early in these days um and so i think on the consumer side like the aggregators played a really important role in helping consumers to make sense of all of that information putting into one place having an algorithm that ranked it and surfaced up what was most interesting and help users to basically sift through everything that was out there and then on the content creator side i

think in the early days the challenge was like okay i've published my blog online now what like how do i actually get connected to audiences and end users um there's not really there's no google yet um search engines don't really exist the internet had all these like closed ecosystems like aol and msn how do you actually get connected to end consumer that was really difficult too um let alone you know the difficulty in those days of like setting up your own website and getting your own server so i think the dawn of

the web 2 platforms was actually a really positive thing it it was regarded as really um enabling the vision that bill gates set out which was facilitating this flourishing of content creation and making it possible for people to reach the people who would connect with their content yeah i'm really blown away with uh by by this um you said in you know 1996 bill gates concern in the contentious king article is that there's not enough there's not a business model for content

creators like he saw the potential but he's like there's no way for them to make money there's no way for individuals to find them as probably the the more one of the more elder millennials uh on the on this podcast i do remember when facebook actually uh came to my university i was like it was the coolest freaking thing ever like facebook is here okay now we have a way to like socially connect with our friends and peers this was like a rev a revolution in the internet right it's like all of the the

microsoft's in the world they were kind of the the old guard of computing but like the facebooks and google this was the uh the revolution this was giving creators an aggregation point a connection point to their audience creating a business model for them uh and uh it's so funny how quickly that happened right so you chart like 10 years from 1996 to 2006 and then you have the beginnings of facebook and you have google and you have an underlying business model of the web but something from that point on a little bit after

maybe like turned towards a a dark path right and now um the googles and the facebooks of the world aren't necessarily perceived as our friends i'm wondering if you could talk about this because this is in your article as well lee the original sin of the internet i think this is a a term from uh mark andreessen if uh if i'm not mistaken um can you tell us about the original sin of the internet and why that led to the outcomes that we have today maybe the business model that the internet operates on today

yeah sure so the term the phrase the original set of the internet i it's from um this fireside chat that took place a couple of years ago between mark andreessen and katie hahn who are two of the general partners at a16z i think they were talking at one of their crypto regulatory summits about crypto and the future of the internet and mark was talking about his experience building netscape in the early days of the internet and he calls

the fact that browsers did not incorporate payments natively into the browser he calls this the original sin of the internet um and he said that this they tried to do this but conversations with banks and credit card companies didn't go anywhere and so they sort of gave up on embedding payments directly into the browser um and this is the original sin he says because it's created all of these downstream problems that we have today that stem from the fact that advertising

then became the prevalent business model online because it didn't require payments um and and because of advertising you have issues around privacy and data collection and uh the misalignment of incentives between all of these content platforms and what users actually want to see um and and so uh the way that he frames it is it it stems really from the fact that the internet didn't have this native ability to transfer value

and i think it was a really interesting conversation uh and he goes into a few implications for you know what could have happened otherwise if payments had been built into the browser he talks about how there might have been this parallel transaction system outside of the hands of a few centralized gatekeepers he talks about how it would have been you could have had aligned incentives between the platforms and their users and then he also talks about how maybe the internet economy would actually be much bigger

if there had been this direct payments model instead of just advertising and i think um when i when i probe into all of these points through the lens of the creator economy i do think that things would have turned out really differently had there been payments from day one because essentially like the trajectory that we took with the creator economy wherein um as you recall like in phase two of the crater economy everyone was basically acting as a conduit to sell other types of products and to show

other brands and help other companies advertise their their wares like i think that really skewed um a lot of the incentives of content creators themselves they had to grow their audience to be as big as possible so that they could actually monetize to a larger extent they had to make their content really aspirational and make people feel like they were lacking something in order to drum up the desire to purchase um and yeah they had to go for reach and skill and in order to get that you kind

of have to create kind of like vanilla surface level mass appeal content versus niche in-depth like passion driven content um and i think you see that across the internet where it's it's impacted the incentives of these content creators and as we know incentives drive everything and so you have social networks that are full of content that is really mass surface level shallow aspirational it results in people feeling bad about their lives and