The Dangers of Digital Sharecropping in Web3
We cannot afford to repeat the mistakes of Web2.
The transition from Web1 to Web2 was quiet, gradual.
It wasn’t so much that there were lessons to be learned and new worlds to be built, rather that ideas were being iterated upon until the internet didn’t resemble its first form anymore. The move to Web3, however early in the journey we are, has been much louder and more ambitious; a proposed revolution instead of evolution.
The lessons most spoken of are privacy, control, and walls. We can no longer allow our personal information and habits to be used as a currency. We can no longer allow the products we use stifle competition and balance. We can no longer allow arbitrary digital borders to be erected, walling off countries and communities from one another.
Amongst these lessons are lots of small but significant courses we can correct – but, arguably, the biggest mistake of Web2 has already found its way into Web3.
What is Digital Sharecropping?
The term sharecropping has a dark and horrific history, intrinsically linked with slavery and exploitation. The term, however, was intended to cover the agreement between a landlord and a tenant in which crops can be grown on the land in return for the landlord receiving a cut of the returns.
Digital sharecropping refers to building a business on a platform you do not own. I first wrote about this topic with regards to the photography industry – and the similarities are eerie. I’d been involved in that industry for a decade at that point and had plenty of examples to draw from, but I’ll give you one of the strongest.
A talented photographer friend of mine had built himself a 6-figure following on Facebook, back when Facebook pages were still new. Whatever he posted, it would receive thousands of likes and comments. This, of course, attracted all sorts of opportunities and landed him some lucrative paid work. It was so valuable to his business, in fact, that he had to lean into it and allocate time and effort into nurturing the page.
Then, one day – and without warning – a change was made to the Facebook algorithm, and his interaction rate went down by over 99%. If I visit his page today, I can find (beautiful) portraits of his photogenic friends from 2015 with over 6,000 likes. Now, he posts (even more beautiful) portraits of A-list celebrities and they get between 6 and 80 likes. He changed nothing, but this crash in engagement happened instantly.
Fortunately for my friend, he had eggs in multiple baskets and has a thriving career, but many were not that thoughtful.
I’ve seen far too many photographers and influencers build businesses on Instagram, only to lose control of their account or be scythed down by a change in the algorithm. I’ve seen content creators on YouTube have their channels demonetized and lose their biggest revenue stream. If your primary marketing tool is your reach and engagement, losing that suddenly – through no fault of your own – is a terrifying prospect.
There lies the danger of digital sharecropping. You’re building your business on someone else’s land.
Now, this can be mitigated by building on multiple platforms – or better still, anchoring your audience to your own website. There’s no perfect system and you’ll always be at the mercy of someone or something (SEO for example), but that doesn’t mean it isn’t worth lowering the risk.
Digital Sharecropping in Web3
It’s difficult to build a business on a Web3 platform in the same way as Web2. Web2 platforms still reign supreme – at least with regards to social media. Even titanic marketplaces such as OpenSea, LooksRare, and AtomicHub do not replace the social engagement side of Twitter.
Some may claim that building on the “wrong” chain could be an example of digital sharecropping. We’ve seen blockchains rise and fall in popularity, and if you were to achieve success on one that falls out of favour – or worse, crashes like Terra (LUNA) did – there are a lot of similarities. That said, if you were an NFT creator making a full-time living on a blockchain that collapsed, you would be able to carry some of that over to a new chain at least.
There are plenty of ways to offset this risk. For example, you could expand your work to multiple chains, or build on blockchains with bridges to other chains. You cannot avoid the volatility of crypto, but you can mitigate the risks to your business in the same way you would by building an audience on multiple platforms – or your own brand independent of Web3, such as Discord, a website, a Telegram group or others.
As distant as some of these examples might feel in our current blockchain landscape, there are instances far closer to home. The first serious case of the dangers of digital sharecropping in Web3 is emerging as we speak: the grafting of Web3 onto Web2 platforms. This is most common in blockchain gaming – and a recent example had a sizable impact.
On July 29, Jenz Alipar wrote Is Minecraft’s NFT Ban A Crushing Blow For Web3 Gaming? This refers to Mojang, the Microsoft-owned developer of the hit sandbox game, Minecraft, and their outright ban of all NFT and crypto interaction with their game.
Minecraft achieved much of its success from community-built and run servers, which in some cases have increased in complexity to the point of being games in their own right. As a result, some indie developers have chosen to build projects on Minecraft servers like you might develop a game on Unity or Unreal Engine – the difference being that Minecraft is a game rather than an engine, and like a sovereign state, they have a say over what you use it for.
Then, there’s NFT Worlds. I’ll quote Jenz here:
“NFT Worlds, an ETH-based project built on Minecraft, saw its 3 ETH floor price plummet by 70%, whilst the price of their native $WRLD token dropped from $0.038 to $0.0147 according to CoinMarketCap.”
In all cases, there are many implications.
Every blockchain-based Minecraft server I know of has had money invested in it by its players in one way or another. Most commonly, that’s by the purchasing of NFTs for the game – which have now plummeted and are outright unusable in their current form. Unlike digital sharecropping in Web2 where only the business-owner suffers, in these early Web3 cases, we’re seeing both owners and consumers adversely affected and out of pocket.
There are solutions, but none of them fool-proof. The best solution is to avoid digital sharecropping altogether, but it’s a growing trend. We’re seeing lots of examples of Web3 elements being housed in Web2 systems, from the legitimate (Twitter PFPs) to the illegitimate (private servers for games like GTA V). Unless the games or platforms have made it clear they will not ban NFTs – like Epic Games CEO, Tim Sweeney has – then games and collections are being built on unsteady foundations.
Then there’s gaming platforms like Steam, which are intent on staying firmly in Web2, pulling any games using NFTs or crypto from its store. Valve’s Steam has been the premier gaming platform for decades, enabling gamers to find and play games en masse. Although their stance on NFTs was laid out reasonably early, there were still games on Steam that were developing a following before being suddenly removed.
Moreover, the app stores – though Apple’s in particular – are inconsistent with how to deal with NFTs in mobile apps. Some games and apps appear to dance through the minefield unscathed, but many cannot even get listed; it took Token Gamer months of back and forth, and we had to strip back functionality to adhere to Apple’s rules. The apps that did not do the same bending to Apple’s will may have got lucky and made it onto the store, but could be yanked away at any point – developers beware!
The number of people who have been affected by digital sharecropping in Web3 is still comparatively few, but we must learn from the mistakes of the past.
Developers: I implore you to build independently, on a dedicated Web3 platform or a Web2 platform that has made its position on NFTs clear. To everyone else: check that where you are putting your time and money is a project built on solid ground, and not the next Minecraft.
Web3 represents a new era of opportunity for online businesses, and though new risks do come with that, we need to do our best to avoid falling back into the risks of old.