By Bronwyn Williams, co-founder and chief commercial officer of Metanomic
Between articles offering explanations of its origins to jargon-heavy dissections of its key attributes, most think pieces on the metaverse tend to focus on the largely esoteric opportunities it provides. There’s an audience hungry for actionable information about how to execute a business model in Web3, and it would be a mistake to both overlook them or treat the metaverse like just a new storefront. The economic model of the metaverse differs significantly from what we currently know and use. However, the change will not be immediate or obvious, and that presents a challenge for business leaders accustomed to making informed decisions.
A new economic forum requires a new economic model
The first thing to understand about the metaverse is that it is a waste to simply recreate an established business within it. The metaverse provides brands and businesses the opportunity to create fully developed and specified worlds that run on their own rules. Businesses who understand this will also understand that simply replicating the real world (or their original business models) by making so-called “digital twins” of “reality” will miss out on the bigger opportunities to create new metaverse-specific products or services, as well as new revenue streams.
Who’s the customer base within the metaverse? Everyone, potentially. The borderless and fully digital nature of the metaverse enables opportunities for businesses to connect with customers all over the world, dramatically leveling the playing field for emerging markets. Because of this infinite reach, global forces will now affect private economies. We will see global market forces interacting with previously closed economies – all of which have their own currencies and their own rules, but all of which can now interact with each other and have a material economic impact on each other.
What we currently see is not what we will ultimately get
The current trend of established businesses and brands “getting into” the metaverse can come across as a marketing move executed to appease investors, without a new business model to support an otherwise drastic pivot. Businesses that insert themselves into a metaverse without changing their business model will not last. Most businesses are still just replicating their existing business models rather than exploring the limits of what is possible in a fully virtual space. They should instead look beyond the buzzwords. Explorations and experiments around NFTs and DAOs indicate the start of new types of borderless business models that can be built and run in the metaverse.
Business leaders should focus on what can be accomplished within the metaverse that cannot take place outside of it. Re-evaluate the notion of “goods and services.” One of the strongest assets the metaverse can provide is insights into the unique data gathered from consumers within the metaverse. Resist the temptation to replicate existing business models, because use cases need to be experience-based and data-driven.
The basics of any economy will remain: supply and demand, and the power of scarcity. Real value remains connected to real scarcity, and real scarcity in the metaverse comes from human attention. This is made scarce because of the true physical and financial cost of running AI and all of the servers that support tech-based businesses. Regardless of the scale and creativity of the metaverse, there will always be a physical server keeping it alive that will require space and energy.
Web3 is an economy built on credit, not trust
A metaverse allows every action to be tracked, traced and held accountable. This is critical for the Web3 economy. All that can be digitized can be measured and monitored, which means it can then be optimized. Another way to say this is that the metaverse will be “gamified” – optimized to maximize utility for both the player (consumer) and the company.
Business models will need to balance monetary value and intrinsic value. In order to maximize utility in the metaverse, platforms, games and companies should be careful to maximize a sort of quadratic equation of explicit monetary value and intrinsic value, which can be loosely defined as human attention, or “fun.” If money is not balanced with engagement, both are risked.
Ultimately, Web3 can offer new avenues to commoditize the digital commons. Data is king! This means all interactions in Web3 can be priced – they can be measured, valued and monitored. This allows for the facilitation of an individual’s personal credit. All data becomes credit data. If businesses prioritize data, they can analyze it in such a way that it compounds in usefulness, and that is the true value offered by the metaverse. That is what businesses have to understand.
Guiding theories for new economies
Businesses authentically interested in transitioning their model into the metaverse must understand the following: a) that all data is credit data, b) that credit can be platformed to access to real value, c) all real value comes from real scarcity, and d) real scarcity in the metaverse comes from human attention. Successful metaverse business models will be structured around the relationship between the value offered to a consumer, and the value the consumer provides in the form of data. This is the core relationship that businesses need to build around in the metaverse.
About the author:
Bronwyn Williams is Co-Founder and Chief Commercial Officer at Metanomic, a metaverse and web3 economy-as-a-service platform for developers. She holds a Masters in Economics and Game Theory, and is a well-known trend analyst, keynote speaker, and futurist who has a history of helping to launch crypto and blockchain-based startups in South Africa. Bronwyn has co-authored best-selling books with Dion Chang (The New Urban Tribes of South Africa) and Theo Priestley (The Future Starts Now: Expert Insights Into the Future of Business, Technology and Society). Bronwyn is also the Chief Commercial Officer and Co-Founder at Carbon Based Lifeforms, a cutting-edge MMO gaming studio.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.