Like so much in technological innovation, Water & Music's journey into Web3 happened very slowly, and then all at once.
After covering music, tech and crypto from a critical, research-oriented perspective for the past two years, we dove headfirst into becoming Web3 and DAO operators ourselves in the second half of 2021. Within the span of just five months, we:
This post below is focused on fleshing out both the philosophical context and tactical details behind our inaugural $STREAMdrop (see what we did there?...). Not only is our airdrop approach complex in its multiple component parts, but it's also markedly different in its intention and target audience from those of many other DAOs, because fundamentally we are not a Web3-native community.
Rather, we have a nearly three-year history of running as a "Web2-native" business, supported entirely by recurring fiat membership fees from over 1,500 supporters. Over the course of these few years, we've cultivated a distinguished editorial voice and reputation in the music industry, as well as a robust community culture of members who have been intrinsically incentivized to support our mission and help their peers learn and grow, without any promise of extrinsic financial rewards (aside from perhaps the indirect upside of gaining the industry knowledge and connections to land their next big job, speaking gig or business partnership).
Hence, our $STREAM airdrop has two strategic objectives that sit at an interesting crossroads in how we are evolving as a community and brand:
While we certainly don't have all the answers, we nonetheless hope the below discussion can provide a helpful starting blueprint for other Web2-native communities looking to make a similar foray into embracing Web3 infrastructure for collective financing and governance.
The core concept behind $STREAM as laid out in our original Hello World post remains true: $STREAM is a “research token” that represents high-quality, tangible contributions to our larger project of collaborative research, knowledge-sharing and community-building in music and tech.
As a reminder, the $STREAM token has no inherent financial value. Rather, the token functions primarily as a key to on-chain governance for our most active contributors and supporters, especially with respect to how we use our community treasury resources to fund future research and editorial projects.
There is a fixed supply of 10 million $STREAM, broken down into the following four buckets:
Like any other token, you can view $STREAM's entire distribution and ownership history on-chain. Unlike many other tokens, however, no part of the incentive design or reward mechanics for $STREAM is currently automated; instead, core Water & Music team members (and, down the line, our core supporters and contributors) determine who earns $STREAM based on a more holistic evaluation on a given member's value-add to our community.
Apart from us, almost no examples exist of Web2-native brands or companies that have retroactively airdropped tokens (fungible and/or non-fungible) to their historical community members. A few exceptions:
In other words, literally no playbook or "best practice" for what we are trying to do exists. So, like many other emergent crypto communities, we have to write and iterate on our own playbook as we go, based on what we feel is most appropriate for our community.
We dedicated 20% of the $STREAM supply — or 2M $STREAM — to the retro community portion of our $STREAM airdrop. Our core pitch to prospective members is that the dynamism, intelligence and resourcefulness of our community, as displayed in our private Discord server, is as much a source of value as the original articles and research that we publish. To that end, we structured our retro community airdrop allocation into the following five buckets:
Getting a concrete list of members for buckets 1, 4 and 5 were relatively straightforward, simply pulling from our archive of articles and email digests. Buckets 2 and 3 took longer to nail down from an engineering perspective, but also proved to be the most interesting and fruitful design spaces for creating our own retroactive reward system.
For both longtime Patreon supporters and engaged Discord users, we wanted to combat recency bias by implementing a time-weighted value system. We broke down Water & Music's existing history as a community and brand into the following three eras, giving more weight to qualifying members in earlier cohorts:
Beyond time-weighting, there was also the question of what specific metrics in our Discord server best represented a concrete value-add in the context of our community. We wanted to avoid purely one-dimensional measures of engagement, such as merely rewarding the chattiest people in our server without measuring the extent of their direct interactions with others.
Ultimately, we decided on a custom blended weighting system that took into account the following four metrics for each Discord member:
There were two main forms of rewards for research contributors to $STREAM S1:
A total of 44 contributors — all current Water & Music members or staff — participated in putting together $STREAM S1, with a starting date of October 22, 2021. Anyone who contributed in a direct capacity throughout the eight-week process, from our first week seeding research questions from the community to our final week editing articles and rolling out the report, was eligible to receive $STREAM and ETH rewards. Contributors also took on a variety of different roles throughout this journey, from interviewers, writers and document annotators to data analysts/curators and overall project leads; nearly all of these roles emerged organically over time instead of being predetermined. You can view detailed lists of contributors and the roles they took on at the bottom of each article in our report.
Ultimately, we decided to approach token allocations via a top-down points system, which you can see laid out in detail in this spreadsheet. We assigned each contributor a specific number of points via the following three steps:
The hope is that this approach does a fair job of prioritizing the following groups of contributors:
All in all, each contributor to our report received an average of 2,273 $STREAM and 0.29 ETH (roughly US$1,100) for their work. Project leads also received separate one-time payments for the several hours they spent per week contributing and coordinating research, with the choice of receiving such payments in either fiat or a cryptocurrency of their choice.
While this compensation system has gotten positive feedback from our contributor community, it's also definitely imperfect, especially in how it provided little to no room for contributors to have a say in how their collective value was assessed. For instance, we assigned point values to specific tasks and job roles, but did not track other signals that others in the community might also find valuable (e.g. who consistently brought in and onboarded new contributors, or who led our weekly research standups and working-group calls). We're exploring using tools like Coordinape to facilitate more peer-to-peer token allocations around our future research seasons on top of base compensation, which will be an important step in practicing what we preach when it comes to building a DAO.
At large, airdrops are a crucial component of the marketing toolkit for many crypto projects today. More specifically, many early-stage Web3-native projects treat airdrops as a marketing tactic to growth-hack communities from the ground up. Recent examples include:
A Twitter search for "drop your ENS" or "drop your ETH address" surfaces hundreds upon hundreds of other airdrop giveaways for as-yet unproven or unannounced tokens. Under this model, tweets act as a sort of public waitlist system, leveraging Twitter's network effects to maximize a project's attention — arguably the most scarce resource in crypto.
That said, the high frequency of airdrops has also created a culture in crypto where many prospective contributors join a community with the sole aim of maximizing their chances of getting airdropped tokens in the future — regardless of how invested they are in the community as a whole, or how slim the chances of these airdrops happening actually are. Such incentive structures run the risk of focusing a community participant's energy on earning tokens for their own sake, at the expense of ensuring they are serving the community's core mission and people. Hence many airdrops understandably feel borderline unnavigable and scammy for people who are uninformed about tokenomics, especially the implications of liquidity for tokens that have no clear utility or product roadmap.
This terrain has the potential to be especially treacherous for Web2 communities that want to honor a pre-existing set of social and cultural norms and expectations in their shift to Web3, instead of immediately drowning in the meta-game of tokenomics upon entering the scene. At Water & Music, we wanted to be much more thoughtful about our airdrop approach, and are intentionally diverging from the dominant "airdrop culture" by treating this launch first and foremost as a tool for strengthening our existing community and signaling the core values of our mission, instead of purely pursuing top-of-funnel marketing growth.
One crucial decision we had to make about this airdrop was whether to adopt a push or pull approach. In summary:
Many people we spoke with early on suggested going with a pull/claim approach, primarily because of the exorbitant gas fees that would be involved otherwise. Ultimately, though, we decided to go with the push approach for a few reasons:
Hence we executed both stages of our retro $STREAM airdrop via a push approach, using the CSV bulk transaction tool from our Gnosis safe. This approach ended up costing us around 0.9 ETH in gas. While we were comfortable fronting this cost as a business, it would clearly be more financially sustainable for us to move to a pull approach for future airdrops.
Catering an airdrop solely to a whitelisted group of Web2 community members introduces a whole different set of onboarding and communication challenges from those of more public, open airdrops.
Some general rules of thumb for any communities transitioning to a new system:
We're seeing the importance of patient, hands-on onboarding unfold in real time for our retro airdrop. For context, we have roughly 1,000 members who qualify for the Patreon-supporter bucket of our airdrop — but only around 30% of those people actually opted in to receive tokens, via an Airtable form that we've been sending out consistently via email to qualifying members over the last four weeks.
We don't have full context on why a given qualifying member ends up not filling out the form. Perhaps they're not interested in being a member of our DAO, or are generally reluctant to participate in crypto because they're still skeptical of the tech — or, maybe they just missed out on these emails entirely. Whatever the case, arguably the best course of action is simply to give qualifying people more time to discover this information, and give them the tools to make their own informed decisions about whether they want to participate in the airdrop. To this end, we're planning on doing a second wave of our retro community airdrop to any remaining whitelisted token holders in late January 2022, after which any unclaimed tokens will be kept in the W&M community treasury.
Moreover, out of the ~300 qualifying members who did opt in to the airdrop, roughly 1 out of 9 said they did not have a crypto wallet yet and needed help setting one up. To that end, our core team members held a series of live crypto wallet setup tutorials in our Discord server in December led by. We plan on holding more of these tutorials in the next few weeks as we onboard both historical and new members into our DAO.
In the process of generating our list of qualifying members for our airdrop, we ran into a frustrating but eye-opening problem of trying to reconcile member identities across both our Patreon and Memberful databases (which was a necessary step for us in determining active members’ lifetime contribution history). While simple on the surface, this bucket quickly became a complex data modeling problem, because there was no consistent member identifier across both platforms to easily merge the two lists. Several of our members changed their email or Discord handle amidst the transition, while others changed the name associated with their account and/or maintained multiple different accounts.
We think this has significant implications for any community with a cross-platform presence that wants to approach retroactive token distribution in a fair and comprehensive way. Ironically, reconciliation of supporter identities across platforms is not only an important component of equitably onboarding Web2 communities into crypto, but is also a massive, persistent marketing and data-modeling challenge far beyond Web3 alone.
Now that our first airdrop is fully executed and $STREAM S1 is out in the world as our "proof of process," we're one step closer now to our mission of building an environment that tangibly rewards collaboration and peer-to-peer knowledge-building in music.
Now, the hard and important work comes in around honing this process to accommodate an expanding slate of contributors and research interests across the music and tech industries. We'll publish a more detailed post in the next week about how our emergent research process unfolded for S1, and how we'll improve on contributor onboarding, wayfinding and coordination for upcoming seasons.
In the meantime, there are already a handful of different follow-up research ideas and working groups swirling around our Discord server, from constructing modular music NFT contract templates to running a deeper interview project on music/label DAOs. You can sign up for our membership to support this ongoing research, follow the discussions in our server and learn more about how you can contribute.
Continued investment in onboarding will also be a core focus for our team in the next few weeks — communicating as clearly as we can with our membership on who has $STREAM in their wallets and why, and how they will be able to use $STREAM down the line to help shape the future of our DAO as a whole. Given our history and our established editorial voice, we're not rushing the process to on-chain governance and are thinking critically about what decisions will be open to community stewardship, what models we will use to make those decisions and whose voices in the community should have the most weight. Keep an eye out for more governance updates on our Mirror page in the coming weeks as well.
We look forward to experimenting and learning more in public, and are grateful to bring you all along for the ride. 🌊
Water & Music is a newsletter and research DAO building the innovator’s guide to the music business. We’re on a mission to empower the music industry with the knowledge, network and skills to do more collaborative, innovative and progressive work with technology. We’ve been early to report on several cutting-edge industry trends — from music avatars and niche streaming services to several different strands of music and Web3 including music NFT drops, Web3-native music communities and crypto-based royalty payments.
Our community is home to over 1,700 paying members across music and entertainment, spanning everyone from emerging artists and startup founders to marketers, investors and C-Suite executives at major music companies. What makes our work stand out is our relentless curiosity, our penchant for experimentation, our passion for interdisciplinary thinking and our recognition of constructive critique as a driving force of progress in music, tech and culture.
In December 2021, we launched our inaugural collaborative report as a DAO on the state of music and Web3, which you can read below: