a16z partner Chris Dixon: The transition from Web2 to Web3, your cut is my opportunity

Written by: a16z General Partner Chris Dixon
Translated by: Chain News Lu Jiangfei

From Web2 to Web3------your cut is my opportunity.

Jeff Bezos, the founder of Amazon, once said, "Your profit is my opportunity."

Jeff Bezos referred to how Amazon captures market share by lowering prices and eating into competitors' profits. What they have done in the business realm is quite similar to what the internet has done in the past. Since the 1990s, lowering prices and redistributing value to users has always been the core economic driver of internet development.

In fact, there are numerous examples in the internet industry:

• Craigslist has lowered prices and redistributed value to users in the classified ads space;
• Google and Facebook have lowered prices and redistributed value to users in the media space;
• TripAdvisor and Airbnb have lowered prices and redistributed value to users in the travel space.

Now, some Web3 startups are also starting to eat into the profits of traditional Web2 companies, and this trend continues------the higher the cut taken by Web2 companies, the greater the opportunity for Web3 companies.

Chris Dixon, a16z General Partner

How does Web3 affect the video game industry?

The video game industry generates significant revenue, with annual sales reaching $120 billion, a large portion of which comes from virtual goods sales, with most video games having a cut that can reach 100%. In contrast, Web3 games (essentially crypto games) have a much lower cut because they directly return profits to players. For example, Axie Infinity had total sales exceeding $1 billion in the past year, most of which was returned to player users.

For most video games, some people are willing to spend money to excel in the game, while others will spend a lot of time and effort in the game to gain an advantage through experience. The difference with Web3 is that its economic model is P2P: players can profit from each other without having to "feed back" all the money and effort invested in the game to game developers as in the past.

How does Web3 affect the streaming industry?

Today, there are over 8 million musicians using streaming services, but fewer than 15,000 of them earn more than $50,000 a year, accounting for less than 0.2%. In fact, most of the revenue in the streaming industry goes into the pockets of streaming service providers and record labels.

Through NFTs, musicians can retain over 90% of their sales, and by eliminating the "middle layer" (traditional streaming service providers and record labels), musicians can profit from their fans, perhaps only needing 1,000 true fans to sustain themselves.

How does Web3 affect the social media industry?

Social media platforms like Twitter, Instagram, and TikTok take cuts as high as 100%------yet they do not share any revenue with content creators! For these social media platforms, maintaining the status quo is good enough, but it is terrible for users.

In contrast, Web3 social media platforms like Rally, Mirror, and BitClout have effective cuts far below 10%, but these platforms return most of the revenue to users and content creators.

Web2 platforms rely entirely on content creators, yet they do not provide any returns to them, making this model unsustainable.

In summary, the cuts of Web2 will be the opportunities for Web3.

Source link: twitter.com