Just Because You Have the Data Doesn’t Mean You Should Use It

Thinking through the ethics of Web3—before there’s a problem

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Editor’s note: This is the third in a three-part series on what brands should do before entering Web3.

Web3 does not solely represent a change in technological functions—there are also ethical ramifications to think about. As Web3 continues to develop, so does its ethos, along with how Web3 participants feel about the market, data privacy and collaboration.

Brands who enter the Web3 space may face a significant shift in how they access, analyze and use customer data, and customers increasingly expect that change. Though brand marketers can’t predict the future, they can adopt a sound framework that will help them prepare for and respond to unexpected impacts. Here are three strategies to help develop an ethics playbook.

Embrace the new cultural ethos

Something that’s not talked about enough is that Web3 is also bringing a new set of values: collaboration, transparency, ownership and interoperability. These values are sparked by the power of the blockchain, which allows all transactions to be public, digital assets to be proved and consumers to take those assets to other games across platforms. The ability to prove ownership also opens royalties on secondary sales, which is driving a new wave of collaborations as artists collect royalties every time their art changes hands.

These are new values for Web3 native consumers, not all consumers. While the native segment may remain a small demographic, they are powerful and, like influencers in Web2, they are a marketing lever that can help you reach the masses. One can argue that these values are just as, if not more, important than the actual technology.

This combination of values is laying the foundation for a new cultural ethos in which consumers can elevate their roles to include that of brand collaborator and co-owner. Web2 consumers are only asked to consume; Web3 customers are taking more active roles. Voting on new products, co-building them and co-owning the IP creates a new customer persona, someone who is invested in the brand in a radical way.

Take JUMP, a Web3-native brand. Their reporters are the JUMP community: They’re the ones finding stories and bringing them into the community. The community votes on the best stories, which are then published in the weekly newsletter. Top reporters are awarded social tokens, which has the effect of further vesting them in the brand. Other brands, like CPGClub and BFF, have a similar strategy, but instead of creating content, they are building consumer products.

In this new model of doing business, consumers aren’t just consumers. They are your marketing department, R&D and even customer service. This new ethos is both a tremendous opportunity for a new type of consumer relationships—and also a significant risk that brands must learn to manage.

Understand the new set of ethical considerations

Web3’s technical changes are happening in parallel with a shift toward stakeholder capitalism. The convergence of these two forces are creating a new set of ethical guidelines brands must consider.

Blockchains are networks of computers, and each network operates differently. Some require more energy to run than others. Brands should be aware that creating digital assets and conducting business in this world requires energy. Not a lot—in some cases it’s the equivalent of a few Google searches—but energy nonetheless. All transactions on the chain require energy, and it is on brands to understand the impact your choice of technology has on the planet and to clearly communicate this to your customers as well.

Blockchains are also public databases; however, just because data is on the chain doesn’t mean you should be using it. Consumers are happy to share information when it is used to create value for them; they are not happy to share information when it is used against them. Just because you can access their data on the chain doesn’t mean it is ethical to do so. It all depends on what you are doing with it and whether the consumer consents to allow you to use it.

The ethos of Web3 is not the same as that of Web2, which we’ve gotten familiar with. While the technological changes matter, the values-based changes are just as essential. How will your brand deal with consumers who are also collaborators and co-owners in an environment that is dedicated to transparency, ownership and interoperability? And how will your brand face new ethical challenges surrounding environmental considerations and data use? Brands should be prepared to answer these questions before diving into Web3 projects.

Web3 is an exciting space for brands: There are new customer personas, new products and new types of experiences to unlock—but it’s also a space where glitches and poor understanding of Web3 can quickly undermine the success of your project. The fact that Web3 is a new environment for many brands is also important: You need to think carefully about how you want to engineer the customer experience, engage with the technology and respond to the ethical demands of Web3 before diving in fully.

Most brands have only tested ideas, and only a few have full-fledged departments dedicated to Web3. Brands will soon need to do more and dedicate more resources to gaining practical expertise. As you test and explore what is possible, keeping the ethics in mind will help guide you around some of the largest pitfalls and focus your attention on elements that can make the difference between a failed experiment and a lasting success.