Elon Musk certainly gets emotions running high.
When he purchased Twitter, many predicted the site would die. The end was near. In fact, there were how it might not make it another 30 days.
Obviously, the news of the demise were greatly exaggerated.
Right from the start, Musk talked about a payment system. Twitter was always going to be more than a social media platform. This means it was going to command a higher value.
We are now seeing some of the progress unfolding.
X Moving Towards The Everything App
We are going to look at the major lessons that X is delivering.
Before getting into that, I think some clarification is required. X, in my view, is going to end up dominated Web 2.0. Musk is simply going to pillage the other platforms. We will show how this will be done.
At the same time, make no mistake, he is all in on Web 2.0. For all the talk of crypto and DOGE, Musk is perfectly happy with regulation, the existing system, and has no interest in blockchain. Calls for him to move into crypto are laughable. He is obviously investing in crypto (or some of his companies are) and he might even accept it as payment. Yet, that does not make him a proponent of Web3.
He isn't.
Everything that takes place on X, like any other Web 2.0 platform, is with permission. As the scope of offerings grows, keep this in mind. Of course, all other alternatives, for the moment, are pretty much the same.
The only difference is the dictator who oversees the platform.
Within the Web 2.0 realm, strides are underway to expand greatly. It appears thenext target is video.
Musk’s goal is to encourage users to watch “long videos on a bigger screen,” part of a plan first teased in July designed to make X more attractive to online influencers and advertisers.
“He is set on competing with YouTube,” said the source, who asked to remain anonymous because they weren’t authorized to talk to the press. The source cited live-streaming platform Twitch, the encrypted messaging app Signal, and the social media forum Reddit among some of the other services that Musk wants to compete with.
It appears bringing celebrities onto the platform is going to be the first initiative.
Also part of Musk’s push to bring longer-form content to the site, he recruited popular YouTuber MrBeast to post a video to X and recently inked a deal with disgraced former CNN anchor Don Lemon, who’s set to debut a new show exclusively on X on March 18.
Basically we have the application moving closer to the broadcast world. This is something that we see from other technology companies as this is where a lot of value resides.
All the while, Musk has given his employees an October 2024 deadline to roll out a payments processing mechanism that will enable people to do away with their bank accounts.
“When I say payments, I actually mean someone’s entire financial life,” Musk told his charges at an all-hands meeting late last year.
The last part is already in process. At least announcement, in the United States, X received money transfer licenses in 37 states.
This is also what can build enormous value very quickly. PayPal has a market capitalization of over $60 billion.
Platform Economics 101
Why is there a lesson for Web3?
This is platform economics 101. It is something we discussed on a number of occasions.
The key with digital platforms is every incremental increase in value, regardless of where it comes from, is spread across to every user. There are a number of ways this can be achieved. Most tend to look at users as the sole metric, believing that is where the starting point is. Actually, it can take place anywhere in the process and often requires greater functionality.
Focusing on video and financial does this. It is also a powerful message for Web3.
Obviously, blockchains have the financial native, at least with regards to payments. Building out financial services is still something that is required.
With video, we get further confirmation regarding its power.
People watch videos on X in eight out of 10 user sessions, per the blog post shared in early January.
Twitter was the microblogging, text based center of the universe. It was the one area where hundreds of millions of messages, mostly text were dropped on a daily basis.
And now we are told 80% of all sessions on there are video? What does this tell us about the state of the digital world and where the value reside?
To me, this, once again, screams that video is the golden goose.
This can be enhanced by the prospect of getting into broadcast television. After all, streaming is king right now. The problem is, for most standalone entities, it is a money loser. When, however, it is combined with a other aspects of a digital platform, such as what Google and Amazon did, it becomes another feature that is offered to the user base.
Once again, feeding into the basics of digital networks and the platforms that operate upon them.
Web3 is obviously different since the networksand platforms tend not to be the same. By disrupting the client-server architecture, we see a new model arising. That said, the totality is the same, simply a different ownership model is introduced.
That said, the path is becoming clear.
While most want to focus upon more users believing that is the answer, the basic premise of these platforms means features (or services) are required.
Consider this:
It is reported that X has 421 million users. Source
This means that adding a payment system with digital wallets would make it one of the largest financial institutions in the world in terms of potential accounts. PayPal is somewhere around a similar number which dwarfs the banks.
Then you add in video and the potential to get a portion to utilize the streaming services. Obviously, we have no idea what pricing or even what it will look like. The key takeaway is that the present users are going to have more options.
Once again, Platform Economics 101.
The Everything Network
Web 3 has the advantage in that we could see the "Everything Network".
With a blockchain, we can see the entire spectrum of features discussed provides by Web3 applications. The availability of data with reduced friction could help to grow things quicker than we see with Web 2.0. At this point, that is likely simply a swapping of chairs on a cruise ship.
New technology has to go through the development period. Growth is often slow even if it is exponential. The reason for this is the baseline is almost non-existent. The number of Web3 users, even compared to crypto, is miniscule.
Here is where application developers have to seriously look at what they are doing. Is the development moving in an area where viable services are being rolled out? What is the focus of the activity that is sought? As stated, if video is not on the agenda, most of the market is being overlooked.
There is nothing that can be created in Web 2.0 that cannot also reside on a Web3 network. In fact, the ability to generate more interoperability is inherent simply due the open nature of much of the data generated. Anything written to the network can be accessed by any interface. This is a tremendous feeder system especially for newer applications.
Social media is no longer a standalone sector. If it is not being combined with a host of other services, it is dying. The barriers of industries are rapidly deteriorating. Nowhere is this more evident than in the world of video entertainment. Hollywood's moat is being crossed by a host of threats, ones that have more resources in many instances (Amazon and Apple).
Image what could be possible with a Web3 network that was focused on becoming the "Everything Network". Here is where all the Web 2.0 structures would face tremendous pressure.
The lessons are there. We simply have to learn from them and build based upon the economics being spelled out.