The NFT Industry Can Be More Democratic. Here’s How.

By Danny Mozlin, founder and CEO at Mozverse

It’s no secret by now that the metaverse and Web3 are reshaping the way companies think about doing business. With this new ecosystem on the horizon, we have an opportunity to capitalize on the successes – and learn from the mistakes – of Web2 predecessors.

Winner Takes All

The Web2 era recentralized the internet. While initially there were many search engines, there is now effectively only Google. Online shopping essentially belongs to Amazon. Meanwhile, competitors to Twitter and YouTube have risen and failed to gain traction.

There are natural reasons for this. Success begets success and lowers cost to deliver. From a user’s perspective, it is easier to use one service than to choose between several, especially if that one service is also the biggest. Suppliers, meanwhile, benefit from a greater reach.

But reducing choice also poses a problem for both suppliers and consumers. First of all, lack of competition means higher take-rates. The App Store can charge up to 30% of revenue just for the right to be on it. Meanwhile, social media companies pay their content creators (the users) precisely zero dollars – or a 100% take-rate, as a16z’s State of Crypto 2022 report wryly observes.

And the issues with centralization don’t stop there. If the platform fails, or if access to it is blocked (for whatever reason), there is no other feasible route to market.

It is even a problem for the platform itself. The responsibility for vetting and moderating high volumes of content can be too much for a single entity to handle. Over-delegation to algorithms impacts the experience of consumers and undermines the very convenience a single-source is meant to provide.

The NFT Industry 

Blockchain technology spreads responsibility among a larger group of actors or nodes, removing the need for an all-powerful central entity. Unlike a post on Twitter or a video on Instagram, NFTs allow creators to own and monetize their work. So, what’s the problem?

The problem is the old dynamics of winner-takes-all creeping into the picture. This includes NFT mega-marketplaces such as OpenSea, and metaverse equivalents for digital real estate such as Sandbox and Decentraland. Naturally, what was once Facebook and is now known as Meta is also scheming to be the “winner” in both categories.

But does it have to be this way? Or is this just the old order reasserting itself, unaware that its time has passed?

Everyone Can Win

In fields such as art and music, which lend themselves particularly well to the NFT medium, the age of winner-takes-all is over. For some years, creators have not needed institutions to help them record, edit, and publish their art. The only remaining advantage offered by these institutions (record labels, publishing companies, etc.) is distribution.

For firms with an established niche, following, and brand, this benefit is obsolete. Being targeted as they are, they don’t need to seek wide adoption and mass distribution. They don’t need to “find” their fans – their fans already have found them. And they don’t need to be told how to interact with them; they know this better than anyone else.

With the right infrastructure – turnkey solutions for brand-owned NFT marketplaces, for instance – individual brands can establish themselves comfortably in the metaverse (which is infinite, unlike a shelf in Walmart). This beats the alternative of being drowned in a sea of unrelated options and taxed by an overworked middleman for the privilege.

The Future

The writer Nassim Taleb wrote insightfully about innovation as the product of many small experiments, rather than a few big ones. The re-fragmentation of commerce, away from centralized infrastructure and toward energized communities of fans, could be the defining feature of the Web3 economy. And we’re getting close to it. 

About the author:

Danny Mozlin is Founder and CEO of Mozverse, the Web3 startup building products and platforms to power the metaverse. He is a successful technology entrepreneur with years of experience developing effective solutions to complex challenges. Danny is a leading expert in augmented reality, virtual reality, blockchain development, artificial intelligence, big data, and cybersecurity. He is known for his innovation and creative strategies that enable interoperability between disparate systems while minimizing risk exposure and aligning development with larger business goals.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.