As the world explores newer ways of engagement, the blockchain comes off as an important tool for artists and creators to build newer forms of economic relationships between their fans through social tokens. In pop culture, several musicians such as Grammy award-winning artists RAC, or even sports legends like Spencer Dinwiddie and Jaylen Clark are notable names blazing the trail of social tokens. So what are social tokens, and why are they recently getting so increased attention? This article might help you with answering those questions.
What are social tokens?
Social tokens are blockchain tokens that serve as a contract with special access or royalties when issued to someone by an artist or creator. In the above examples, artists or creators use it to monetize their work. The supporters either get these social tokens through any distribution means or buy them as a sign of loyalty to the creators (and maybe get something back, e.g., a badge or a title).
The exciting thing about social tokens is that they are not limited to the creator community as they can be exchanged or utilized for yield-bearing activities like staking. With social tokens, celebrities and influencers can mint them, offer them as rewards or sell them for additional revenue to boost their brands.
Why social tokens?
One significant problem for creators is extracting maximum value for their work. While supporters pay for the entertainment and value they get from favorite artists, distribution platforms like YouTube, Patreon, Twitch etc., also charge content creators in outrageous percentages to reach their fans. This limits the ability of creators to get the best value for their intellectual properties (IPs). Moreso, the cost barrier kept fans and supporters from collectively sharing in the growth potential of the creator's value.
A paradigm shift from social media to social tokens
Social tokens offered a better win-win model for both artists/creators and their teaming fans to solve creators' monetization problems. Unlike the usual blockchain token models, social tokens are grounded in one belief: a community, creator, or brand will become more valuable tomorrow than it is today. Fans with a shared ideology with their favorite artist invest in their token, which is tradable in exchanges to accelerate the artist's brand further. Additionally, celebrities or artists can use these social tokens as a gatekeeping mechanism to offer premium access content only to their largest token holders.
What is the difference between social tokens and NFTs?
The significant difference between social tokens and NFTs is fungibility. Social tokens are fungible, and this means that each unit of a social token has the same value as another. In other words, one social token (A) can be easily exchanged or interchanged with another social token (B), e.g. trading Bitcoin for Ethereum Ether. In contrast, each unit of an NFT is unique and hence cannot be exchanged or interchanged with another NFT. Taking artwork as an example, NFT owners are given special ownership rights to a particular piece of a creator's artwork. Social tokens allow holders to share the same benefit, privileges, and ownership rights to a creator's work of art while maintaining the fungible trait. Thus, they offer more flexibility and liquidity than NFTs.
The future of the creators’ economy and social tokens
In 2020, the social token market was worth around $81 million in total market capitalization, with over 22 big social tokens. By 2021, the space has grown 500% to a market cap of over $300 million and currently boasts over $530 million in total market value, according to CoinGecko. Today, social tokens encompass everything from different issuance forms to tailored distribution mechanics, community tooling, and aggregators. For instance, creators and communities can launch their tokens on a platform like the Aura Network, then create reward and royalty sharing systems through tokenized access based on the active contributions of a creator’s supporters. Take a look at some reasons why social tokens will be popular amongst creators:
- A trust-creating mechanism: By encoding trust in smart contracts, it becomes impossible to alter the terms of the agreement, ensuring trust between parties from the beginning. For instance, three startups came together to form the Modern Billboard Collective in a bid to create a tokenized equivalent of the famous Million Dollar Homepage. The Modern Billboard Collective sell ad space on their websites as freely tradable NFTs.
- Reduces the need for legal contracts: Without social tokens, the startups that make up the collective would have needed legal agreements, which are expensive and time-consuming.
- Fast tracks royalty sharing: Royalties would have to be shared manually without social tokens, making the whole process inefficient. Social tokens enable trust, flexibility, and speed.
- An essential marketing tool: Social tokens provide creators with a valuable way to reach their market like never before. With social tokens, a business can efficiently engage users and make them feel special with something unique to them, such as access to a particular feature or a forum that is only for token holders.
Creators and artists are doubling down on using social tokens as practical tools in building loyal communities and fanbases. Social tokens equally help align economic interests between artists and fans with shared interests. It presents a modern model for creating a robust community where loyal supporters buy tokens to access special perks, voting power, and rare privileges. Like NFTs, social tokens are community-centric and help build a collaborative community pushing for a shared goal.