GCR

INTRODUCTION

At the moment, DAOs are all the rage. DAOs are touted as the next big thing following the DeFi Summer and the NFT boom.

There is a foundation for all these hullabaloo. DAOs have the potential to be a superior mode of organization by orders of magnitude. Many industries of our economy will be disrupted by DAOs. The legacy media is a prime example of a fading conventional industry. There are numerous indicators, ranging from a loss of trust in legacy media institutions to their failed business models. It’s only a matter of time before incumbents are disrupted by MediaDAOs.

Basically, a MediaDAO is any DAO that is made up of creatives who produce media. Some examples include Global Coin Research DAO, BanklessDAO, ForefrontDAO, ScribeDAO, among others.

While DAOs of video creators, podcasters, musicians, digital artists and so on are all MediaDAOs, this article is focused on DAOs that produce written content. However, that doesn’t mean the lessons can’t be applied to other DAOs.

DAOs, like organisms that require food to survive, require capital to thrive in the long run. This article examines how MediaDAOs can raise funds.

MONETIZATION MODELS

Paywalls

Every MediaDAO aims to produce a large number of media products. These could include anything from articles to newsletters to books to digital courses. Selling these is one-way DAOs can generate capital. DAOs may accept cryptocurrencies instead of fiat currency.

While this may seem like an obvious choice, it may not be the best move for many DAOs for two reasons. For starters, it contradicts the entire Web3 ethos of free flow of information and open-source everything. Second, this will limit the DAO’s reach. A DAO’s value will increase if it can reach a larger number of people. However, if DAOs decide to paywall the article, the reach will be reduced.

There are numerous examples of people making money in this manner. The rise of direct-to-fans software like Substack and OnlyFans indicates that this sector is booming. Bankless Newsletter is a great example. They have a massive paid newsletter.

If DAOs choose to go this route, the best solution would be to make 90% of their content free to access and 10% paywalled. This gives you the best of both worlds. Paid content will generate revenue, while free content will increase distribution.

Currently, there aren’t any Web3 native applications for this purpose. But, we’ll see solutions in the future. As a result, DAOs will have to rely on solutions such as Substack or Gumroad for the time being. It should be noted that cryptocurrencies cannot be accepted on these platforms.

There are novel Web3 native forms of paywalls. Token-gating is an example. In this case, however, value-capture works by increasing the demand for tokens. Global Coin Research is a DAO that does this. Creators can do this with MintGate and Outpost. The possibilities are endless. For example, there could be a system that requires you to burn a certain number of tokens in order to gain access. However, we are still in the early stages and will need to run numerous experiments to determine which models work best.

Craft as Service

All MediaDAOs have two skill sets that can be monetized: writing and researching.

Quality written materials are in high demand. Protocols require technical documents, DAOs require call scribes, businesses require marketing materials, and so on. Since MediaDAOs will be a hub for talented writers, they can easily generate revenue by catering to this market demand. BanklessDAO is a good example in this case.

There’s also market demand for quality research on specific topics. Many MediaDAOs will be perfectly positioned to capitalise on this demand. DAOrayaki has developed a business model where readers who want a particular area covered can pay the DAO to conduct research and write a report on it. They have written many such reports. A similar opportunity would be consulting. BanklessDAO has a consulting wing as well.

Distribution as Service

Successful MediaDAOs will, by definition, have wide distribution. They will be able to reach a large number of people who consume their media. This can be leveraged to generate revenue by a MediaDAO.

An old-fashioned way to do this would be to place ads on their platform. Because there will be a clear consumer profile, there will be a large number of people willing to pay a premium to do so. Ads placed on Bankless newsletter are a great example. On one hand, it is a great way for them to generate revenue. Protocols like Aave and Uniswap, on the other hand, get direct access to the exact person they want, someone who is deeply interested in crypto and DeFi.

Another way to monetize is to publish paid content. Protocols or any other interested party can request that a DAO analyze/review them. If it is in the best interests of DAO consumers, then a DAO can do it. Obviously, the ethical issues of objectivity and misaligned interests must be properly navigated. Packy McCormick’s Sponsored Deep Dive Sections for Not Boring is a great example of this approach.

Non-Fungible Tokens

Recently, NFTs have emerged as a means for artists and creatives to make money. Beeple sold Everydays: The First 5000 days for around $69 Million USD. Cryptopunks’ market capitalization is estimated to be more than $2 billion by some. NFTs can also be used by DAOs to generate capital.

MediaDAOs can do the same. They can raise funds by selling the media they produce as NFTs. There are numerous examples of writers raising money by selling NFTs. Cooper Turley’s article “DAO Landscape” was sold as an NFT for $3,262.20 USD, or 0.70 ETH. Patrick Riverra’s article on Community DAOs has raised approximately $8072 USD or 1.90 ETH as of November 16th, 2021.

The possibility space that NFTs create for DAOs is enormous. It is not limited to minting and selling essays as NFTs. Collaboration with art-oriented DAOs is another way for writing-oriented MediaDAOs to generate capital from NFTs. Forefront, for example, collaborated with Mintfund artist Ikaro Cavalcante (Occulted) on two NFT drops: “Genesis Connect” and “Genesis Access.” They raised approximately 15.5 ETH in total. Entire media companies can be run solely on NFT sales revenue. Dirt newsletter is an excellent example of this. It is an entire media company based solely on NFT sales. They intend to become DirtDAO in the 2022.

Crowdfunding is another area that was innovated by NFTs.

Crowdfunding

Crowdfunding is a method used by many projects to raise funds by collecting relatively small amounts from a large number of people. While DAOs can raise funds through traditional crowdfunding, Mirror.xyz has released a new tool that combines crowdfunding and NFTs. This innovation gives crowdfund supporters a financial stake in the project’s future financial success. Essentially, it gives supporters a stake in the product’s NFT. As a result, a portion of the proceeds from the sale of NFTs would be distributed to supporters.

There are many successful examples for this. John Palmer raised around 10.49 ETH for his essay on Scissor Labels. Emily Segal crowdfunded around 25 ETH for her novel Burn Alpha. All of these occurred before these authors published their final work. There are many more examples from people like Cooper Turley and The Generalist.

Token sales are something that is very close to this kind of crowdfunding. However, I’ve decided to put it as a different category since it has different dynamics.

Token Sales

Token sales are something that was uniquely enabled by Web3. Basically, a social token for a DAO is analogous to equity for a traditional company. They indicate ownership over the DAO. If the MediaDAO can convince people that they are a worthwhile enterprise, they can generate capital by selling tokens. However, issuing tokens could place you in legal limbo. Hence, it is necessary to consult a lawyer before proceeding.

ICO boom of 2017 is choke-full of examples of DAOs raising (deservedly and undeservedly) capital. The crowdfund that Crypto, Culture, and Society DAO (CCS DAO) did is a great example of token sale conducted by a MediaDAO. During their token sale, they exchanged their token, $SOCIETY, for ETH. Then, participation in some of the activities of the DAO was restricted to token holders.

Grants

Many institutions and organizations will be interested in educating people and spreading a particular message. Many of them will have grants to further this purpose. MediaDAOs will be eligible for these grants, if their values align.

There will also be a plethora of organizations that will fund public goods. There are two requirements for something to be considered a public good. First off, people should be able to use them for free. Secondly, someone’s use of it should not reduce the availability of the good. The majority of the time, media products fall under public goods category. As a result, they will be eligible for public goods grants. A great example of this is the Gitcoin grant given to BanklessDAO.

FUTURE POSSIBILITIES

Innovations in crypto and blockchain technologies are profoundly changing our society. It is generating a lot of infrastructure-level innovations. These innovations may enable other types of funding that are not currently possible or imaginable. Non-fungible Tokens, Basic Attention Tokens, Initial Coin Offerings, and so on are examples of innovations that would be impossible to imagine without blockchain.

By utilizing Crypto and MediaDAOs, I believe the world will become a much better place. WAGMI.