# Web3: Transforming Fans into Participants in the Entertainment Industry

Web3 technology is revolutionizing the entertainment industry by transforming fans from passive consumers to active participants, creating new opportunities for value generation. However, significant technological barriers and market volatility pose challenges to widespread adoption, warranting a thorough review of practical applications.

Companies such as Modhaus, Yoake, and Alt.Town leverage Web3 technology to enhance fan engagement and overhaul industry structures. Through on-chain voting, tokenomics, and artist tokenization, fans are more actively involved, fostering a sustainable ecosystem.

These players are reconfiguring the artist-fan relationship, expanding the market, and increasing predictability, albeit at the risk of speculation and market distortion, necessitating a balanced approach.

# Introduction
Efforts to apply Web3 technology in the entertainment industry have been ongoing, representing a paradigm shift beyond mere technical experimentation. Traditionally passive, support-centric structures are evolving into active, participation-driven models through Web3.

However, the application process within the industry is not without challenges. High technological barriers impede fan participation, limiting widespread adoption, while the volatility and negative perception of cryptocurrency markets evoke concerns among fans. Therefore, a detailed review of Web3’s application in the industry is essential, along with a fundamental examination of the value it can create.

This report explores recent cases of Web3 application in the entertainment industry, particularly focusing on fan-driven popular entertainment to identify future development directions.

# Web3-based Entertainment Projects

## Modhaus: Reevaluating the Essence of the Industry
Modhaus, a South Korean Web3-based entertainment agency, has planned and produced fan-participation artist groups, such as TripleS and ARTMS. Utilizing Web3, they have built a system where fans can directly participate in artist activities, earning tokens through community activities and NFT photocard purchases, which are used for key decisions like unit formation and concept selection.

Since their inception, TripleS and ARTMS have built a robust fan base, with their music recognized by Billboard as notable K-Pop albums to watch in 2024. The success lies in their focus on the core of the entertainment business: content quality and fan experience. Unlike other Web3 projects, Modhaus emphasized authentic content creation and sincere fan communication rather than short-term speculative interests.

Web3 technology has significantly contributed to their success, particularly in the ARTMS project. Transparency needs arose from past incidents in the Korean entertainment industry, like the ‘Produce 101′ voting manipulation. Artist NFT sales were transparently recorded, allowing fans to verify their artists’ earnings, thus building trust between artists and fans.

Moreover, Web3 enhanced global fan accessibility. Token-based systems supported the global fandom economy, allowing fans worldwide to equally participate in governance. Fans could purchase NFT photocards through an app without facing high shipping fees or unnecessary expenses, significantly reducing barriers.

Modhaus’s success demonstrates the harmonious alignment of continuous effort, popular music appeal, and strategic use of Web3 technology without making it the focal point. This approach differentiated Modhaus and is regarded as a successful Web3 implementation case in the entertainment industry.

## Yoake: Introducing a New Paradigm in Fandom Economy
Yoake, a Japanese blockchain-based entertainment fandom platform, is led by legendary producer Yasushi Akimoto. Collaborating with Startale, a core partner of Sonyum, Yoake launched a beta app on the Sonyum mainnet. Fans participate in various activities like setlist selection and best-dresser voting through on-chain voting, securing over 60,000 new users.

Yoake aims to create a transparent reward ecosystem proportionate to fan contributions. Traditionally, fans have actively promoted artists but have not been recorded or rewarded. Yoake records fan activities on the blockchain and offers fair rewards, ensuring fans experience their support translating into economic value.

Yoake also aims to integrate dispersed content within the entertainment industry. Currently, fans navigate through multiple platforms like TikTok and YouTube to consume content. Yoake plans to consolidate these experiences into ‘Yoake Space,’ providing a convenient platform for fan activities and recognition systems.

Yoake will issue $YOAKE tokens, fulfilling dual purposes: serving as currency within the platform for live streaming, goods purchase, and ticketing, and rewarding fan activities based on on-chain data. Unlike Modhaus, Yoake tokens are transferable and tradable, allowing fans to cash out or utilize them in DeFi services. This shift from unilateral consumption to collaborative value creation is anticipated to transform the industry, akin to YouTube’s impact on the creator economy.

## Alt.Town: Tokenizing Artist Value
Alt.Town is a platform that tokenizes the value of virtual celebs (artists). Differing from other Web3 fandom platforms focused on rewarding fan contributions, Alt.Town emphasizes the intrinsic value of an artist’s popularity and growth potential. Each artist issues a unique ‘DNA’ token, allowing fans and communities to directly participate in the artist’s growth. The value of these tokens is determined by market demand and supply, with future evaluations incorporating data on artist popularity, activity, and fandom size.

This model introduces a new funding method, shifting from large agencies and investors to a decentralized support system involving fans and communities. This diversification is especially beneficial for small to mid-sized agencies and independent artists, offering new funding paths and efficient content creation and promotion environments.

# Transformative Potential of Web3 in the Entertainment Industry

## From a Hit-Driven to a Predictable Industry
The entertainment industry has been reliant on hit-driven models, with unpredictable artist popularity and rapidly changing trends making investment decisions uncertain. Blockchain technology offers potential solutions by transparently recording and utilizing data throughout content production, distribution, and consumption, raising industry-wide predictability.

Blockchain enables the identification of genuine fans and consumers and real-time understanding of their behaviors and preferences, providing a dependable data basis for decision-making. Consequently, Web3 can convert the entertainment industry into a healthier and more sustainable growth structure.

## Expanding Diversity through Decentralized Fundraising
Traditionally, major agencies and investors dominated entertainment industry funding, particularly in idol industries requiring significant debut and activity costs. Web3 introduces changes with DAO-style fundraising, allowing consumers to act not just as fans but as active investors in project decision-making.

For instance, the Nippon Idol 3.0 project utilizes IEO fundraising, granting fans governance rights and economic rewards while enabling projects sans major institutional investment. This decentralized fundraising model offers new opportunities for small to midsize agencies and independent artists, enhancing market diversity by accommodating niche genres or experimental content supported by specific fanbases.

## Expanding Fan Economy and Flywheel Effect
The entertainment industry’s growth has always depended on fan bases, but traditional models limited fans to content consumption roles. Web3 technology fundamentally changes this, transforming fan activities into economic value and creating a cycle where generated value reinvests into the ecosystem.

Fan activities, previously informal or difficult to monetize, like fan art and community management, can now receive recognition and rewards through token economies. This change expands the scope of fan economy, making fans active ecosystem participants. Increasing participation strengthens fandom, forming a flywheel effect where profits re-invested into content creation further artist growth and fan engagement, contributing to a sustainable economic structure.

# Conclusion
Web3 technology is bringing gradual yet significant change to the entertainment industry, presently limited to functional improvements like on-chain voting. However, as fan engagement and economic reward models refine, long-term structural industry changes and redefined fan-artist relationship perceptions could emerge.

Web3 technology will not replace fundamental elements like direct fan interaction, content quality, and popularity. Instead, it complements these by fostering market transparency and supporting healthy growth. By connecting global fandoms through open infrastructure, Web3 enhances industry scalability beyond geographic limitations.

Web3 is more about taking the entertainment industry from level one to ten rather than creating something from nothing. It will add new possibilities and scalability rather than redefining the industry’s core framework.

However, potential pitfalls, such as speculative investors prioritizing price margins over fandom value and governance structures skewed by capital power, may undermine fair market operations. Hence, balanced designs maintaining intrinsic values while minimizing negative impacts are crucial for sustainable industry advancement. This balanced application of Web3 technology has the potential to foster a sustainable economy and create new collaborative models between fans and artists.

*This article is a transcript of the comprehensive report “Web3: The Next Level for the Entertainment Industry” by Tiger Research, a global Web3 research institution and partner of Block Media. The full report can be found on Tiger Research’s official website.