Multicoin Capital: From UGC to UGP, Web3 consumer brands and communities create together

Multicoin Capital

23-05-13 14:00

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Original title: " Multicoin Capital: From UGC to UGP, Web3 Consumer Branding and Co-creation "

Original author: ALEKSIJA VUJICIC

Original source: Deep Tide TechFlow

Many argue that co-creation will eventually lead to the democratization of the creator class, redefining fan culture, and turning fans into creators. However, this discussion ignores the impact of co-creation on brands, which may have a greater impact on the co-creators themselves.

In the past, brands created products, and more generally, culture, and promoted them through centralized, top-down media . Social media disrupted the medium of communication, and naturally the transmission of culture, which in turn sparked the first wave of massive co-creation between brands and their communities. Just as consumers, for the first time, can showcase products on social media to show engagement with a particular culture, so too can they shape that culture, and in turn the brands that create them, by sharing feedback, ideas and advice. Thus, the brand influences the consumer, who in turn influences the brand, and the cycle of co-creation begins.

However, although consumers contributed value in the co-creation process, they received no economic value in return; brands received 100% of the economic gain. In short, successful Web2 brands are built on community and eat the whole cake.

Successful Web3 consumer brands will build with their communities, formalize the co-creation process, and in turn reward their communities - growing together and sharing the pie.

How is brand culture (co-)created?

Starbucks is obviously much more than a brand. It is an "extreme leisure" lifestyle, a semi-public facility, and a "third-party place" in society. Simply put, Starbucks is a culture. But once it was just... coffee.

In defining "how brands are born", Marc de Swaan Aron believes that the 20th century brought consumers the standardization of quality products, "requiring companies to find A new way to differentiate yourself from your competitors”—thus, modern marketing was born. Instead of focusing on the functional value of a product, marketers differentiate themselves from competitors by creating an emotional connection with consumers. Brands then start to associate with subcultures and project these onto their consumers – in other words: brand cultures are created from the top down.

“In the CPSE model, companies brand products. They point to subcultures to justify the existence of products and use data marketing to classify people into Demographic information for starter packs. Subcultures become consumer goods Subcultures are made up of products. In the new cultural economy, culture is the product. It is made up of practices, ideas and discourse. Products are ancillary, supportive, but not primary .” -Toby Shorin, Life After Lifestyle

As religion declines in the Western world, consumers look elsewhere for meaning, identity, and belonging— Such as influencers, or more importantly, from brands. It is no longer enough for brands to be attached to a subculture, brands recognize the need to be the culture itself. At the same time, as the Internet drives production and distribution costs to zero, and the only scarce resource becomes consumer attention, community-focused marketing has become more valuable than ever.

These trends have profound implications for brands. Community is becoming more and more important, brands cannot create culture without consumers, so brand culture becomes the result of co-creation.

“People co-create their identities with brands just as they do with religions, communities, and other systems of meaning. This constructivist view is in line with postmodern critical is incompatible with popular forms, but it also opens up new opportunities for critique. We live in an age where brands not only reflect our values, but also act on them. Trust in business is no longer based on authenticity visual signals, and only based on proof of work." -Toby Shorin, Life After Lifestyle

From User Generated Content (UGC)

Culture is always transmitted through content. While information is broadcast through top-down media such as radio, television, newspapers, etc., culture also spreads in a top-down manner. The advent of social media has changed that. On Instagram and TikTok, content creation has been democratized and decentralized — and so has culture. So when brands recognize the need to co-create culture with their communities, they turn to social media and UGC to make it happen.

Instead of simply encouraging consumers to post photos wearing their clothing, brands are asking their communities for instant feedback, ideas, requests and more. Correspondingly, the community began to move from co-creating content to co-creating products.

Glossier also used this approach to define the direct-to-consumer (DTC) era, and it was input from their Slack community that prompted them to use pumps instead of jars, filled with mineral sunscreens and more. Since then, community co-creation has become standard practice in modern marketing playbooks, used by brands across industries such as Samsung, Supergoop, Chipotle, IKEA, LEGO, Unilever, and more—indeed, There is already a book dedicated to this topic.

However, important questions remain: What did the inventors of the Hazelnut Macchiato get for submitting their idea to Starbucks?

Developing in the direction of user-generated products (UGP)

There is an attribution problem in co-creation, And Web3 solves this problem.

Borrowing an idea from Marty Bell, the founder of Vacation and Poolsuite, future brands will be more like "open companies", where brands and communities build communities desired product. He said:

“Over the years, I thought the best thing to do with the brand and business I built was to sit back and be very quiet and then put out a finished product and say, this is our new product... What I want NFTs to do from now on is get people involved in this creative process and building with us. So, I think all of this should be Openly, not behind closed doors. We now have maybe 20 ideas about what we're going to do next. We're equally excited about all of them, it doesn't really matter to us. The most important thing is that our community is the most excited things.”

Web3 facilitates co-creation (and thus the “open company” of the future) through two mechanisms: facilitating more effective human coordination and improving attribution question.

Human Coordination: In any heterogeneous organization (most of Web3), the community faces the problem of how to make collective decisions. This is especially true in terms of co-creation, which in turn requires significant and precise human coordination. Tokens are a useful coordination tool that allow brands to prove membership, conduct credential verification, grant permissions, enable voting mechanisms, and more.

Attribution: As we have discussed throughout most of this article, brands are already engaging with their consumers Creation - The problem is the lack of social and financial recognition for these contributors. However, to quote Sari Azout in her Attribution+ article:

“The real power of Web3 technologies lies in reshaping the way value is created, shared and distributed on the Internet , making distributing value as easy as sending and receiving email. This is a fundamental technology unlock that allows creators on the Internet to capture more of the value they create.”

Tokens allow brands to not only attribute social recognition by documenting provenance and point of origin of ideas, etc., but also to transmit financial value to those who own those ideas.

We see how entrepreneurs, developers and brand builders can leverage new collaboration strategies to build a new class of brands to increase engagement, sales, loyalty degree and retention, and align their values with those of the community. Co-creation falls into three categories: individual creation, group creation, and community creation.

1. Personal creation: In the future, the brand will release blank canvas digital products (changeable NFT) as "templates", aiming at Let consumers remix according to their own taste. Imagine a white Porsche or Air Jordans that consumers can design exactly to their unique vision.

Each consumer will have their own uniquely designed digital item and the opportunity to have a 1:1 physical replica made. Additionally, the community may vote on collections of ideas to choose a design that will then be made available to the mass market.

Good examples include Nike x RTFKT's "Your Force One" project, people who hold CloneX can design their own Air Force 1, have the opportunity to see They are made in reality. Likewise, the latest Porsche NFT allows holders to design the Porsche of their dreams, and the community can vote for their favorite project, ultimately seeing that car speed down the highway.

2. Group Creation: A group can consist of any group of people, ideally between 5-50 people, working together The goal is to produce one product or a limited number of products. This may be reminiscent of Yancey Stricklers' concept of MetaLabel, which he defines as "a group of people using a common identity to pursue a common goal and focus on publishing publicly to show their worldview". In this case, the cohort pursues product building with the brand.

Digital fashion co-creation platform Effekt recently launched their first group creation project, paving the way forward for the field. 20 global community members gathered in a Discord chat to help create the brand's first in-house fashion pieces. Over the course of several weeks, cohorts collaborate to curate mood boards and inspirations, make design suggestions, and facilitate the design process through voting, written and graphic proposals, and other feedback systems. While the queue provided all the suggestions and feedback, the final product was produced by Effekt, allowing them to engage the community while still retaining some control over the outcome. Digital fashion items created by the group will be sold as limited-edition NFTs, with revenue split between Effekt and co-creators.

Going from real world examples to hypothetical ones, we can imagine something like Rebecca Minkoff The brand enlists a small group of around 20 consumers to create a capsule collection. Members may be selected to be part of the team based on their past credentials - whether it's owning an Access NFT, purchase history, winning a design competition, etc. Once selected, members can gather in a small chat room to offer design suggestions, provide fabric feedback, and vote on the outcome, perhaps mediated through a governance tool like JokeDAO. Access NFTs may embed smart contracts that allow revenue sharing from collection product sales, or each team member earns the entire collection through a digital marketplace like DressX. The collaborative surface area here is vast.

3. Community Creation: Further possibilities include a brand derived entirely from tokenized communities that come together Decide what kind of product they want to see, like CPG Club or Poolsuite. While there are advantages to decentralization of ideas, we believe execution still requires some degree of centralization, led by capable teams to turn ideas into reality. With built-in mass distribution and consumers in the game, this could be the magic formula for launching the next wave of successful consumer brands.

Conclusion

As the number of co-authored products continues to grow, we expect builders to Leverage blockchain-based - in the form of fungible and non-fungible tokens - to create social and financial alignment with their communities.

On-chain co-creation will lead to better products, stronger communities and a beautiful flywheel of capitalist consumption. To incentivize this behavior, brands must first recognize and reward it - and Web3 does this through membership, provenance, reputation, cuts, and more.