The Novelty Effect
Early adopters, social capital, and Cameo
Welcome to the fourth edition of Black Box. Last time, I wrote up a consumer internet thesis that I developed. This time, we’ll be exploring a topic inspired by my work.
Disclaimer: The views in this article are my own and do not represent those of Cameo.
Since starting at Cameo, I’ve been thinking a lot about what I call the novelty effect. Why are early adopters sometimes rewarded with social capital? How does this happen? And what is the connection to Cameo’s initial product-market fit?
At first blush, the novelty effect shouldn’t exist at all. Most people are risk-averse and therefore favor the familiar. As restaurant critic Anton Ego put it, “The world is often unkind to new talent, new creations. The new needs friends.” And yet, the new almost always has friends. A couple cases may be explained by the curious or adventurous, but these are few by definition. There must be something systematic incentivizing people to try new things.
I think that something is the fundamental human desire to be unique. People base their identities on what makes them different from others, and being part of something new is an easier way to stand out than changing something about yourself. This gives early adopters asymmetric exposure to social upside. Because everyone wants to be unique, people can be convinced to forgo the familiar if the new is shown to be desirable. Early adopters play that advocate role and, in helping make the people they convert more unique, gain social capital within those groups. For example, a friend of mine shared The Weeknd and Billie Eilish years before they were household names; her nickname in our group chat is Music Critic. Conversely, the social downside to early adoption is limited. No one has ever been blamed for linking something for their friends to check out, even if they don’t end up liking it.
Most of the pitches that early adopters give are built on curation, which comes in two flavors. The first is proof of work. Music connoisseurs like my friend love sharing indie music because it proves they’ve spent the time on Spotify or Soundcloud to find artists before they become big. The act of discovery makes their fandom more authentic because it implies they are devoted out of taste rather than popularity1. The second is proof of knowledge, which is easiest to see with cultural goods like clothing and décor. Brand expert Ana Andjelic explained it best:
Modern aspiration is not about having money to buy things, but having the taste to know what to buy. Buying the “right” things conveys one’s distinction and social standing… Curation gives even mundane objects value by connecting them with a point of view, heritage, a subculture or purpose that makes them stand out.
The value proposition of curation is therefore saving non-adopters effort or research. They can use “the answer” given to them to signal their uniqueness straightaway. It is only fair that they compensate the curator with social capital, resulting in the novelty effect. Note that spreading the proof dilutes its value since, by definition, it signals uniqueness only if it is relatively scarce. This is why the novelty effect decays as “the answer” becomes abundant2.
The reason that I’ve been thinking a lot about the novelty effect at Cameo is its original use case of gifting creates a novelty effect for both the recipient and the giver. I believe that it is rare for novelty effects to be double-sided and that Cameo’s ability to do so is responsible for its initial product-market fit.
Creating a novelty effect for the giver is pretty easy. In the one-sided version I described above, early adopters effectively gift their work or knowledge for social capital. This is the exact mechanism that Cameo uses. The giver is rewarded for 1) knowing which celebrity the recipient is a fan of and that Cameo can connect the two, as well as 2) the work of submitting a request tailored to the recipient and the occasion. The multiple types of curation involved make Cameos a particularly personal gift that highlights what makes the recipient unique; the giver receives a proportional influx of social capital.
Creating a novelty effect for the recipient is much harder. Cameo’s solution is introducing a new type of novelty effect — one based not on curation, but on social distance. Cameo enables regular people to gain social capital by being temporarily closer to someone famous. The gift of a Cameo is both the delight of hearing a celebrity say your name and the reactions from family and friends when you share the video on social media. That sharing is the recipient cashing in the Cameo for the social capital of being second-hand famous. Ingeniously, this sharing also generates organic virality for Cameo.
This double-sided novelty effect drives both sides of Cameo’s marketplace and formed the basis of its flywheel. I say formed, past tense, because the defining problem of novelty effects is that people eventually outgrow them. Cameo isn’t a household name, but it is well-known enough that some recipients understand their friends didn’t call in some crazy favor in order to get that video. As a result, some of the magic is lost, and givers don’t get as much credit as they used to. Similarly, some recipients are getting less social capital for sharing their Cameos because a celebrity shoutout is cool only if their social circle thinks getting one is rare. The realization that anyone can buy and receive a Cameo is degrading the novelty effect.
Luckily, Cameo is already moving its strategic foundation from the novelty effect to the celebrity-fan relationship. Cameo Calls launched a few months ago so that folks can directly engage with their idols in meet-and-greets. We are experimenting with Cameo Live, which enables people to do everything from take a workout class with their favorite fitness instructor to have Santa read their kids a bedtime story. As of this evening, people can mint a Cameo Pass to join our NFT-based community of celebrities and fans for Discord chats, IRL events, and exclusive merch. And we have even more types of direct-to-fan interactions in the pipeline. But all of this is possible only because the novelty effect helped Cameo build relationships with both sides. These experiences simply leverage those connections in new ways.
In short, the novelty effect can be an incredibly powerful driver of adoption, but it cannot be the only reason. For new things to last, they must provide real and differentiated value. And smart artists, cultural goods, and startups will use the novelty effect to create that value. ∎
Have you noticed novelty effects in your social groups? Tweet your observations @jwang_18. See you in two weeks!
An interesting use case for creator tokens is enabling creators to financially reward these early fans. Rex Woodbury has a great example of how the economics might work.
Framed this way, moving along the adoption curve is effectively a tragedy of the commons: early adopters deplete the common signaling strength of the proof for individual gains in social capital.