Getting paid to play
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How will we connect with work colleagues, collaborators and friends in the future? You could do worse than look to the gaming industry for clues. Long before the mass migration to working and communicating online in 2020, the norm for gamers has been to stick on a pair of headphones and engage in both competition and teamwork with their friends - all entirely remotely. Many of these friendships have developed despite the individuals never having met ‘in real-life' (IRL).
The participants in many of these virtual worlds have become so accustomed to these relationship dynamics that the concept of 'real-life' has shifted, as has their perception of value - equal importance is given to clothing, accessories, or property in a game as IRL.
While we all seem to inherently understand that physical land and the buildings that sit on it are economically valuable, the concept that the same could be true of 'land' in a game is still confusing for many.
All of this goes some way to explain why the surging interest in NFTs (non-fungible tokens) since the beginning of this year simultaneously flummoxed the uninitiated and provoked the typical 'emperors new clothes' response that often accompanies significant shifts in technological development. Sometimes, it's easier to dismiss something as an irrelevance if it's difficult to comprehend.
Like it or not, on and offline worlds have already converged, and this has fundamentally changed social interactions, whether through online gaming, social networks, dating apps, or video calls.
Clearly, this has profoundly affected the way we work over the past year, but it's also opened my eyes to where we might go from here. Here's a clue - it isn't back to the office five days per week. Well, the office may play a part, but sticking to the virtual world for the moment, what I’ve gradually been wrapping my head around of late is the idea that in the future, people will be paid to do things that were previously considered leisure pursuits - like gaming, for example.
It wasn’t so long ago that esports was considered a bizarre concept, yet it’s now a billion-dollar industry. Take another step beyond esports, though, and you arrive at the case of Axie Infinity, a new type of game, partially owned and operated by its players, including Philippine entrepreneur Gabby Dizon. Last year, Dizon created Yield Guild Games to promote an economy where players can earn living wages playing video games. The Guild now has over 16,000 members who play games like Axie Infinity, which uses NFTs to reward players the more they play.
As this article in Ledger Insights reports:
"The group takes money from investors and money earned in the games and reinvests it in NFT in-game assets. For example, the Guild spent over $100,000 on 88 plots of Savannah in Axie Infinity and a 12-by-12 virtual land sale in Animoca's The Sandbox.
One service provided by YGG is scholarships. A scholarship is a profit-sharing model where an Axie NFT owner can rent their NFT to new players who don't have any money upfront to invest in the game to start playing and earn in-game tokens. Profits are split between the NFT owner, the player, and the Community Manager. Community Managers are like employees in YGG and are responsible for recruiting and training new players."
If you’ve got a spare half hour, listen to this episode of Danny in the Valley to hear Dizon explain the economics of the game and how people earn. If not, you can read this article to learn how, after earning loot drops of the Small Love Potion token (SLP), you can then cash out via exchanges like Binance and Uniswap.
If that last sentence didn’t make sense to you, don’t worry. The key takeaway is that people in countries like the Philippines, Indonesia, Brazil, and Venezuela can now earn more playing and trading within this virtual world than they can in 'proper real-world jobs' - and they don’t even have to be that good at playing.
Crazy, right?!
Well, not mad enough to stop Yield Guild Games from raising $4 million in a Series A funding round led by gaming and esports firm BITKRAFT last week.
My guest on Take My Advice (I'm Not Using It) last week, Dror Poleg, has helped me join the dots between many of these ideas recently, and I'd suggest you check out his blog, in which he explores the future of work, cities, and human communities — online and off.
For now, though, let me share how he explains the potential value of NFTs to more established business models using his own experience as a use-case:
"When you hear a song on the radio, every time the song is played, a bunch of people get paid. The person who wrote it, the person who sang, the person who played bass, the person who produced - sometimes dozens of people it kind of trickles down. That's a very old cumbersome system. There's a lot of people involved in keeping it working and enforcing it, and even then, the system doesn't work really well.
What NFTs [and smart contracts] allow us to do, at least with some digital goods, but increasingly with other things, is to automate a lot of that and to make that completely streamlined.
So I don't need lawyers. I don't need the recording industry bodies. I don't need people to report that they actually play the song. I know automatically that the file has been used. And I know who deserves what kind of percentage at what point in time automatically - not once a year when they tally everything - which is already a big improvement.
As an author, for example, my book gets sold every day, but I only hear about it once a year when I get a proper report from my publisher, which is really stupid.
So all of that can be done much better, but much more interestingly, the transaction costs of enforcing this system are much lower because they're done automatically. You can suddenly apply them to much simpler kinds of interactions.
You don't need to be a Taylor Swift or a multi-billion dollar industry in order to enforce the system. You can just be a guy who wrote a blog post and quoted a few ideas from other people and linked to a few articles and it then automatically compensates those people who are quoted in the post or were linked to. And we're starting to see people doing that. The next stage is if that article ever gets sold, every time it gets sold, even if the original creator is not the owner anymore, you can make sure that they get a piece out of it.
It also means that I can scale myself much more significantly than before, because my ideas can now be monetised without me having to worry about them or to create anything directly myself. They can make money for me while I sleep, and here too, the threshold is becoming much lower. I don't need to write a full book and go with the publisher and have the whole copyright system in place. I can just be a guy who wrote a blog post that someone happened to quote. And that's actually happened – there are two different articles that I got paid for that other people wrote and quoted me."
As Dror himself would say, none of this is necessarily an argument for NFTs per se. Instead, it's a broader indication of how technological innovation creates previously unimaginable jobs and fundamentally changes how we perceive the meaning of work - some of which is exciting, some worrying, all mindbending!
If you want to hear more on this topic, our conversations about why Peloton and WeWork are examples of why the trend toward decentralisation of jobs is no longer just a digital phenomenon, and why being “a storyteller is becoming more important than any inherent characteristics your business has”, check out our conversation.
Thanks for reading,
Ollie
Any Other Business:
Back firmly in the physical world, Dror is a real estate expert and runs Real Innovation Academy. Given the ongoing discussion about the reduction in demand for office space, I asked him to what extent it would be possible to convert existing buildings for residential use. Although it's tricky to generalise, his view is that less than 5% of current office space would fit this purpose. A much more realistic scenario is that you could either create 'residential adjacent' property – cloud kitchens, healthcare, education – or demolish the building and develop them for residential use. Whichever way you cut it, this trend will have significant, long-term effects on the economy and change the makeup of our towns and cities. Again, more on this in the pod.
As Andrew Hill writes in the Financial Times, As lockdowns ease, the fine line between enticement and coercion will become a divisive issue in global workplaces. In “Bagpipes and barbecues: incentives abound to lure staff back to the office”, he writes that incentives to return to the workplace, even for only a few days a week, fall into five broad categories: hygiene, structure, connection, carrots and cash.
As your team return to the office in whatever capacity, it would be worth reflecting on ‘How to Re-Onboard Employees Who Started Remotely’. You can read some advice on the subject in this article by Rebecca Zucker in Harvard Business Review.
Has anyone ever pointed out that you have big pupils? Well, if it happens again, you should take it as a compliment. As this article in Scientific American explains, there is a surprising correlation between baseline pupil size and several measures of cognitive ability. In other words, the bigger they are, the smarter you are.
Significant investments in NFT-related games aren’t just confined to companies you’ve never heard of, as another article from Ledger Insights explains. Burberry has just partnered with Mythical Games, a non-fungible token (NFT)-based video game startup, on a play-to-earn game called Blankos Block Party. Incidentally, Mythical Games themselves raised $75 million in a Series B round of funding last week.
And finally, as this Bloomberg article outlines, NFTs are already impacting the music industry - they’re helping shift more power to artists, as demonstrated by RAC, who has made over $1 million this year for a collection related to his latest album. In a similar vein to Dror’s observations in the podcast, Anjos’s aspirations are “to use blockchain to change how the music industry operates, specifically the layers of agents and lawyers and studio executives who all take cut of what musicians earn, as well as the loan shark tendencies of record-label financing.