Ownership in the metaverse
In terms of aligning technologies together it is very had to tell the difference between the future of the internet and blockchain, with NFTs being integrated into everything, so you can own your very own $1M ape jpeg. Whatever that means.
I want to highlight a couple of things that I think are going to be critical over the next handful of years as these technologies continues to develop, but I think there are a few important trends in the industry and in technology that are going to matter. The key part of this is that the big money is chasing subscriptions. It is hard to look at the last 10 years and not be amazed at how music and video have transformed from buying to subscribing, and I would contend that this is the model that is going to continue going forward, some kind of subscription model will drive most interactions, rather than permanent ownership. Beyond the business drivers, think about the usefulness of a jpeg as anything more than a symbol, you don’t need a globally distributed transaction log in order to let people know you are one of the >5 million people who bought Taylor Swift’s album 1989. Leave the ape jpegs for the same people who have an original copy of the first Batman comic, they aren’t going to be part of changing how the Internet works. And about that 1989 album, you may have bought it, but you are probably paying someone to stream it to you anyway.
If you want to see what individual purchases are going to look like, you should look at some of the most highly profitable games on the internet right now, free to play games. They sell you convenience or social status in the form of costumes, or they sell you raffle tickets to try your luck at their loot boxes. Typically small charges for very specific things, and all of them extremely tightly tied to the context of the game or system you are interacting with. This lets additional money be exchanged beyond the subscription to squeeze some more money out of people willing to upgrade their experience. One paying player in 100 can help offset the cost of the entire system.
The next thing to focus on is scarcity, and stretching beyond that into the value of having a common experience.
Scarcity is important because it is a way to create value and the perception of value, you can’t play a game where everyone is the winner all of the time, it just won’t be engaging. But on the other hand, there is no reason to create scarcity of a virtual space. You can imagine having an online home, someplace to hold your virtual furniture and meet friends in VR. The cost and complexity is effectively the same if this virtual place feels like a 500 ft^2 studio apartment or a 10,000 ft^2 mansion, this may be something games control to help create a progression, but if you just want to hang out with friends, this shouldn’t be about cost but about letting people experience the virtual life they want. Anyone or any company that tries to monetize this is going to be immediately replaced by a competing product that gives away free space more generously.
Another proposed area of scarcity is something like Decentraland, which is busy selling virtual real-estate for some very real money. This assumes that not only will those virtual plots of land develop into something, but that their relative location and size will matter. I honestly think this is going to be a fascinating challenge for the metaverse, but it will be decided by the users more than the companies that try to create the eco-system.
Do you want to be able to walk around a virtual world, that feels like a physical world, and is shared with everyone else? Imagine a shopping mall, where there is a Target, then a Clarie’s then a Gamestop, and when you talk to friends you are all familiar with the stores and can meet places or give directions. Would you rather have that, or would you rather have your own private mall, perhaps with exactly the same stores, or with an edited list of stores that are ordered exactly the way you (or your AI, or some advertiser’s AI) want them to be. In a virtual world, there is no reason everyone has to have the same experience, that is a choice, and by having that choice it definitely calls into the question of various efforts at digital real-estate.
So I think ownership is going to be fascinating, but I think that it is going to be a lot more transient and transactional, a thing of rentals and subscriptions and one time payments for ephemeral goods. Anyone trying to sell you something permanent in the metaverse is someone you need to be very skeptical about.
