In the last few articles I argued that Teia's arts community is the "next big thing" in NFTs - its unique combination of its dedicated membership and the unusual circumstances in which the community formed has the "marks of success" written all over it. While a lot of Web3 startups are now starting to go under, Teia has kept its costs minimal and can run on basically indefinitely at this point. (Many of them are probably laughing at our meager ~500 XTZ in our treasury right now, but hey, 0 to something beats going up then all the way down. Ouch.)

Long story short, slow and steady wins the race...and the community itself is setting itself up nicely for the next hype cycle to come. The DAO is only a month old at this point and we're just getting started. 💪 If interested, more updates about Teia below:

• Why the Teia Non-Profit NFT Marketplace Will Be the Next "Unicorn" in Web3 (ft. Dogecoin)
• Teia - The First Decentralized, Non-Profit NFT Marketplace

In the last article I hinted at why Teia's status as both a non-profit and a marketplace puts them in an unique position to succeed in the NFT/crypto spaces through proper due-diligence, which is something that is sorely missing right now in the ecosystem as a whole. We are currently looking for allies (artists, developers, curators, operators and professionals, investors, and any curious souls) who are ambitious enough to do things the right way, for the long-term. More details on the "hows and whys" below:

What Needs to Get Done vs What Actually Gets Done

Part of what makes the startup scene in Web3 challenging is that a lot of the problems that the industry is facing right now can only be solved through partnership ecosystems (in a nutshell, this is what makes the arts and entertainment industries "work") - which is a very different mentality than what has been popular in Silicon Valley up until this point. The 2010's of the tech industry (aka "Web2") can sort of be characterized as an era of:

• Total founder control, where startup CEOs control the majority shares and decisions of the entire company and the board is just there for the ride. (Steve Blank has a great video called Why Founders Need a Moral Compass talking about this issue.)
• Monopoly markets, where every startup's goal is to become the next monopoly, or get acquired by one. (Unicorns = Centralized Monopolies = "Winning")
• Unprofitable startups, where the priority becomes perpetual fundraising rather than revenue generation. (Artificial/debt-based economics, or depending on who you ask, just bad business practice, really.)
• Companies that are personality driven rather than product driven - many startup founders out there were trying to make money through notoriety rather than actual sales or revenue. (Source of tech culture's toxicity, even in Web3 - the logical outcome of investors having prioritized vanity metrics over performance.)

In a way, the whole crypto movement emerged because the ones paying attention to these trends could see where all of this was going - a gilded-age of sorts where everything is controlled by a few monopolies, turning the economy into a ticking time-bomb resulting from its own lack of competition and oversight. We got a few glimpses of that with recent high level scams/scandals, but there are - and will be - many more like it coming out of the woodwork, both in crypto and in fiat as a whole. (As I've been saying on repeat for the last few years...there's a big shift coming soon that will expose the cracks in the economy that has been building up for years - hold onto your butts, folks. 😱)

Crypto and blockchain projects were supposed to "fix" the economy of today by making everything more secure, transparent, and fair. Of course, old habits die hard - or maybe it's more accurate to say that these habits never really went away to begin with because there are also entrenched interests out there that would prefer things stay the way they are. Doing things in a decentralized way requires people to relinquish power willingly, after all - and we do already know that that is not something human nature is typically good at doing.

We're already starting to see the cracks emerge in Web3 projects that tried to cut corners by centralizing parts of blockchain projects they probably shouldn't have - turning them into basically "Web 2.1". The problem with the "Web2.1" approach is that they more often than not fail to leverage the real power of the blockchain and end up competing against the incumbents at their own game - which ultimately is a losing battle since they've been doing it for much longer and have near-unlimited resources to stave off any competition that might emerge. Web3 projects need to stay 2-steps ahead of the game for it to have any chance of having any impact at all - the only way to "win" - really - is to change the game itself.

To be fair, I don't think that most people actually really care whether or not a project is "sufficiently decentralized" - they just want something that works. But crypto doesn't have those parts working either - most of the tools and platforms we have in Web3 up to now are not even remotely ready for public consumption yet. Can we get there eventually? Sure - that's why many of us are still here. Are we doing it right now? The answer to that question is somewhere in between "sort of" and "not really", and that sentiment is reflected in the indecisive markets, too. Below is an explanation of how that can be changed:

What NFTs Need: The "New Intermediaries"

This section is an overview of what needs to change conceptually in the Web3 space if it were to have any hopes of making further progress among the NFT communities online right now. If you want something more practical and nuts-and-bolts, skip over to the next section to get a simple list of tasks. (Though I would recommend at least taking a glance here because the biases against creative work in the tech industry are deeply engrained and not easy to dislodge.)

While I've been through several crypto runs in the past (starting in 2014-ish, where I mined some Bitcoin on a USB miner then use the proceeds from that to get into the Ethereum ICO) 2023 is the year I finally decided to start my own company - M1X Labs - along with two other co-founders I met along the way. (In the spirit of decentralization, our equity distribution is equal among us as well.) Our agenda? Getting artists paid.

With so many people saying the same thing over and over throughout the years I thought that it would have gotten done by now, honestly. But the more I looked into it, the more I realized that there is a fundamental problem with how Silicon Valley had conceptualized creative work itself that makes success in this environment much more difficult than it needs to be. In a way we're still paying the price for the mistakes that were made by the industry's generation before.

Well, for one - an honest look at the business models of most "creative" platforms clearly points in the direction that they see artists as customers, not producers - which already undermines its own narrative in a way. (The message is: we value you as a customer, not a partner - you are still the product - ouch.) How do we plan to do it differently? We put artists in the "producers" category (they are there to make money) and separate them from the average audience member (they are there to spend money), while creating incentive structures around the people in "the middle" - curators, distributors, agencies, management - also known as the "intermediaries". And the plan is to do it at scale, so that it benefits people and markets as a whole, rather than just the already-successful 1%.

Right now the NFT ecosystem in Web3 spaces are stuck in the artist-collector duality - we assume that there are artists creating artworks, and there are collectors out there that simply want to own them. But if you take a step back and think about it for a bit - how often does that actually happen in the real world? When you go to a movie theater or see/hear something online that you enjoy, is your first thought "wow, how can I buy the rights to that?" While there are few out there who might actually think that way, the majority of people consuming content aren't looking for an investment opportunity like a lot of crypto folks do - they're just there to be entertained.

Yet, this is what the NFT ecosystem as a whole chose to try to push on people during the bull run - buy an NFT now and you too, can now be an investor! ("Just like me, the VC that paid for this whole party." 😉) Did it work? From the looks at the numbers right now - probably not. 🤷‍♂️

Don't get me wrong, the fact that anyone can participate in an investment scheme without Wall Street's permission is a great thing overall - but those folks are probably better off spending their time in DeFi where the focus on money itself is the topic at hand. NFTs, on the other hand, make the claim that it is creative, it is art, it is expressive - therefore, it needs to be looked at from that vantage point. A lot of the roadblocks that keep crypto from reaching its full maturity come from the lack of industry knowledge in areas of arts/entertainment - the cultural gap between art and tech ecosystems that still struggles to close, even to this day - even after over a decade of attempts.

One hold-over idea in Web3 (inherited from bad habits of Web2) is the idea of "disrupting the middlemen" - which was a mantra of sorts back in the 10's. If you look at how the arts and entertainment industries actually work, the "middlemen" compose of 80%+ of the market and is an essential part of what made the whole thing work to begin with. (Again with the movie theater analogy - most people do not do direct sales with the art/entertainment they interact with day to day.)

This is largely the reason why most art/music tech platforms tend to flop or remain unprofitable even when they get "big" - and has gained a reputation in Silicon Valley as investment categories to avoid. (I got this "advice" from a music-focused VC some years ago when I was just starting out - it is actually a very difficult space to be in, even as an investor.) After realizing that the artist-collector duality mindset doesn't actually work in practice, a lot of startups try to hard pivot out of it, only to realize that content-making is not as easy as they might have thought...by then, it's usually too little, too late.

Spotify/Pandora pays more than half of their stream revenue to labels, by the way, and many tech platforms that deal with copyrighted video/audio content are in a similar boat as well. You might imagine how difficult it is for startups to succeed when they know there's a huge 50% "tax" waiting for them for any money they ever make, ever. But they usually fall in line with this arrangement because they have no other means to survive, otherwise - a content platform without content that people actually want is just an empty string of code, after all.

So what's the solution? Well, companies like Netflix and Amazon have wisened up in recent years, producing their own content in-house since in most cases it's actually cheaper to do. The big question, though, is: can tech companies produce content that is better than what Hollywood or traditional institutions are doing right now? That outcome is still in progress - yet to be seen.

While the whole "tech companies making their own content" arc is a very interesting story worth paying attention to, it's still a game that only big companies with a lot of money can participate in right now. (Making a full length feature film and TV shows costs millions, after all.) If creatives want to be part of this story at a scale they're familiar with, they will need technologies like crypto and the blockchain to turn it into a reality. There is a reason why many got enamored with the idea, after all - it was more than just the money...it was about the potential to reform and revive the creative industry, whom now most would agree has been in decline for quite some time.

Long story short, the traditional arts/entertainment industries did not do a very good job at adapting to the digital age and is now struggling for relevance, while the tech industry largely missed the mark in terms of its approach and is mostly lost, talking about technical topics that have no relevance to the markets themselves - there is still a massive void waiting to be filled, even now. Having less strings attached to incumbent interests, Web3 projects are still in the best position to fill that void - but it has to be built around real needs and real solutions, or it probably will not be around for very long, anyway.

While the idea of the "middlemen" is an easy target for startups to try to "disrupt" - I get the feeling that most founders coming from the tech side don't even know what that really means. The reality is that the intermediaries were always necessary for a healthy ecosystem to thrive - they were the glue that held the bridge between the artist and the audience in tact. All Web3 projects need to do is to build their models around those needs, then execute them at scale - the enemy is not Silicon Valley nor Hollywood itself, but the large amounts of paperwork and administrative tasks that are distracting artists from working on their craft.

Automate those away using smart contracts, and everyone wins. And remember that while everyone focuses on the top 1% of "successful" artists - the opportunities there are few and far between and brutally competitive - you'll be spending most of your time fighting for crumbs, if you even get acknowledge by them at all. The real money is in the 90% of the economy - the indies, the scenesters, the underground, the "degens", the working artists, the art teachers, the kids making things just for fun - and making things work, at scale.

If someone can solve for these problems in an effective way, they will probably take the cake as a whole for a very long time - even small progress made in this area will probably dwarf anything that has happened in crypto up until this point because the potential upside is just that massive. But it's probably not going to happen in the usual places - and it's probably not going to happen because of one individual...again, that era is (thankfully) finally coming to a close. Real progress in crypto spaces are likely to come from DAOs and secondary market actors, where the incentives to "play nice" with each other is actually there.

What does that exactly mean? Well, some concrete examples below:

What NFTs Need Right Now: A List

Here is a short list of bottlenecks (but by no means, complete) in the NFT ecosystem right now that needs immediate attention:

Storage issues for content delivery need a definitive, cost-effective, and agreed-upon solution: Showcasing the NFTs themselves is not that easy - and often very expensive. Part of the reason why we don't see more dApp projects emerge is because when people try to pull content from IFPS there's a need to use gateway services for it to render properly.

Public gateways tend to be unreliable, leading to broken links - private gateways are too expensive and are untenable, financially. (The way to "fix" this is for every project to run their own IPFS node or private gateway, which is too prohibitive for most.) There are many projects out there (including the beloved Hen Radio) that run into this problem, find no answers or support, then are given up out of frustration shortly thereafter. This is a bottleneck that absolutely needs to get fixed because the roadblock is turning off developers and creators from the ecosystem every day.

The ecosystem is in need of standards around file types and upload sizes: Teia accomplished a major milestone recently by raising the upload limit of files to 2GB, making large video files in NFTs viable for the first time. The timing of it was somewhat ironic because it happened after the hype - too little too late, at least for some.

I saw this happen with 5MB, 20MB, 100MB limits on some minting platforms before, but from the artist's point of view, when they upload their works into the blockchain they're under the impression that this is a "permanent" action, therefore it needs to be of the highest quality possible. So why wouldn't they max out their uploads? Get ready for 2GB pixel art with a resolution of 1000000000x1000000000 for 🎨maximum quality🎨 - amirite?

For artists, after they have done this - they are "done", as far as they're concerned. (Which honestly is a reasonable conclusion to reach, really.) But this poses a problem for the showcasing side, when they have to display 2GB images over and over for every user, eating into bandwidth and gateway costs for both. You don't have to be a math genius to realize that this becomes cost prohibitive and unsustainable, very quickly - the costs of it is quite obviously unreasonable.

In order to fix this issue - there needs to be some sort of compression process or some mechanism to pass the costs of gateway bandwidth down so that the curator isn't left with the entire bill. The irony is that blockchain/smart contracts were literally built to solve for problems like these, but it just hasn't been done, yet.

More clarity is needed around royalties, copy-minting, intellectual property protection, and their implications: enforcing royalties on-chain is somewhat of a controversial topic since among the developer communities there seems to be a consensus that these things are very difficult to enforce on a technical level. Protocol-level developers are often reluctant to implement on-chain royalty enforcement since they're afraid that people will leave the ecosystem to get a "better deal" - the same reason why a number of platforms have already backtracked on their pledge to respect royalties, claiming that they needed to give up on it to stay "competitive".

Of course, what they're not accounting for is that word of it eventually gets around and artists will start minting their works elsewhere, turning the project into a race-to-the-bottom model. Once you go down that route, there's usually no going back - when you prime both the artists and audience to expect less, that becomes the story of the project itself and it eventually self-destructs as the value of the product itself approaches 0. (Infinite supply of digital goods + no quality control = a value of 0. It's just math, really.) This type of short-term thinking is exactly why the crypto-arts ecosystem never had a chance to thrive, despite its many attempts at doing so in the past.

If a technical solution is not feasible for royalty enforcement - which is often the case, even in Web3 - that's not the end of the world. The the community itself can manage a list of platforms they recommend minting on to reward good actors while punishing bad ones - manual work is just as valid and effective, if done right. (One of Teia DAO's core functions will be to protect artists interests in this way, in my opinion - they are they modern day guilds and unions of the information age.) If a platform decides to under cut artists' royalties, they do so at their own peril, in that case.

Now, most artists actually do understand these are complex subjects and there are no quick and easy answers to them - but the most harmful thing in this scenario is the lack of clarity, more than the problem itself. If someone gets ripped off, that's a direct problem that can be handled in a direct way, but it is often the uncertainty itself that kills the momentum because it discourages people from trying at all when they're not sure which way the wind is going to blow.

So, it would be in everyone's own interest - if they're actually serious about fostering a real NFT ecosystem - to be very clear on where they stand in regards to this issue. On-chain royalty enforcement? Yes, here it is. Or - no, it's not feasible given the circumstances right now - you have to solve this one among yourselves. Either response is fine because it can lead to concrete action items - everything in between is a waste of people's time.

Problems in Web3 are everywhere and I could probably go on for longer, but I hope you get the point. (My gut feeling tells me that encouraging indexers take on these responsibilities is the most ideal since the benefits can be filtered down to a simple API call with minimal maintenance.) The main issue - really - is that you don't see people talking about these nuts-and-bolts issues anywhere - these have been known problems for a while now but even as the years pass nothing seems to happen since most people are chasing after pots of gold, rather than addressing the problems themselves. This leads to a lot of projects and initiatives that are...lets say, way off the mark. If Web3 advocates are serious about building the types of futures they're always talking about, they need to start talking more about the things that actually matter in the day-to-day work.

So where are these "real talks" happening in the NFT space now? Off the top of my head...there's Teia, and uh...I think that's about it. I know there are lots of people working on this stuff in good faith, but it is few and far in between - and rarely seen in the "official" channels. There are people working in good-faith within institutional settings (we have talked to many of them), but because they're not the ones making the decisions at the top, these "suggestions" often get lost by the time they get reported anywhere. (Although there are lots of announcements of technical improvements that have no direct usability, which is a common thing you see in tech projects - old habits still do stick around.)

The HEN and Teia communities have stuck around for over 3 years now, despite having no VC backing and "official" support from any of the big-name institutions out there. The "secret" to Teia's sustainability is that they are making tools for artists, built by the artists themselves. Most of the core team in the DAO would identify as a practicing artist in one way or another, including myself as a musician - which is actually a very unique circumstance since most DAOs and NFT projects are run by tech industry folks rather than art folks. So it's this authentic collaboration between the two worlds that will make it work in the long run, I believe. Not "tech trying to do art" nor "art trying to do tech", but the two of them together, collaborating as equal partners in the endeavor itself.

I know there are people out there scattered about all over the place who wants to do things the right way, and we're always on the lookout for allies and potential collaborators out there. They just need to be rallied into a space where they feel comfortable expressing themselves and do the real work.

We're honestly just getting started, really. 💪 Hope people are up for the challenge.