The Best Democracy Money Can Buy – Socios, West Ham and the magic beans of digital fan engagement

Originally, the blockchain was going to destroy government, undermine the global financial system and create a libertarian paradise. Ten years on, it’s reduced to helping the Dildo Brothers monetise their much put upon fans.

How much wood could Edward Woodward ward, if Edward Woodward could ward wood?

Manchester United claim to have 659m supporters worldwide. Which means that, if you put to one side those too young to even know what football is, very nearly one in ten of the entire global population is a Manchester United fan. Which is impressive… and pretty obviously false.

In 2018, Private Eye ran a piece saying Man U’s figure was based on research from 2011 which defined a supporter as someone who “watched live Manchester United matches, followed highlights coverage or read or talked about Manchester United regularly.” [My emphasis.]

By reading this caption, you have become a Manchester United fan. I don’t make the rules.

That’s right. Even if you are a Liverpool season ticket holder, as someone who follows English football, you are automatically – for marketing purposes – a Manchester United fan.

Selling football is a strange business, then. Traditional branding aims to overcharge people by persuading them that a product or service can help define and express themselves. It would be absurd to actually say out loud that it’s worth paying hundreds of pounds more for an iPhone than an android one because it makes you hip, successful and desirable. So they have to hint at it.

For football marketers, the desired, intense, illusory brand identification is real and already exists, almost uncontrollably, among a core group. The difficulty with explicitly selling an authentic and deep-seated human emotion, rather than manufacturing one through focus groups and targeted advertising, is that it’s rather conspicuous when you begin to claim that that a love traditionally grown over a lifetime can now be bought in the club shop for the price of a customised shirt.

Even now, despite decades of relentless commercialisation, fans still chafe when someone at a TV station or in a club commercial department refers to their ‘customers’ – or claims there are 659m of them around the world. And so football marketers must walk the tightrope of driving up revenue – of selling fandom ever more widely – without going too far and devaluing the life-long love of season ticket holders.

Until now, that is, because new ground has been broken. Instead of stretching the definition of fan to incorporate anyone who’s ever even heard the word football, a company – Socios – has emerged with the message that there is something even bigger and better than being a fan. According to their strapline, you can now ‘Be more than a fan.’

Digital wallet inspection goes mainstream

It’s quite the claim, isn’t it? To me, there is nothing beyond being a fan – no higher state of grace to aspire to. Players, owners and stadiums pass away, it is only fans who abide, as custodians; the true spiritual owners of the club. So being more than a fan could logically only mean allowing fans to become the actual owners of their club.

Socios’s CEO and FD pictured recently.

You’ll be surprised, then – shocked even – to discover that this is not in fact what Socios (which has already inked partnerships with Juventus, PSG, Atlético, Roma, Galatasaray and West Ham) means by being more than a fan.

Instead it means, broadly, a fan engagement app allowing you to vote on matters affecting your club. And I suppose that, once you come crashing down off the meth high of imagining yourself owning a stake in the club to which you’ve dedicated your life, some better fan engagement and consultation sounds, well… alright. Maybe it’s like being given a sandwich after you were promised a banquet, but it’s free food nonetheless.

Sadly, though, there’s more to it than that. Mostly bad things, too.

First up, there’s the question of what can you actually vote on. And I have to break it to you, it’s not whether the manager should be sacked. Nor is it whether the club should cut ticket prices.

What it is, according to examples from Socios’s promotional materials, is things like: voting for the man of the match in certain games, choosing which player the camera focuses on pre-match and deciding which music should be played when the team scores a goal.

Control your excitement for a moment and I’ll tell you about the last of these, which actually became a reality in early January, when the first poll of fans using the app decided that Juventus would now celebrate goals to the somewhat clichéd strains of Song 2 by Blur. Socios promoted this achievement wildly – including in this disappointingly Ctrl+C, Ctrl+P piece in the Daily Mail.

History has never felt less historic.

But once the smoke had cleared, and Graham Coxon had quietened down, what had been accomplished seemed decidedly less-than-revolutionary. Radical, digitally-mediated, participatory democracy had spoken. And it said, “Play that song they played at ten thousand other sporting events this weekend. You know, with the woo-hoo.”

The event might’ve had more historical heft if the song had some unique meaning to Juventus. But no, it was simply one chosen from a shortlist of four (drawn up by an unknown person according to unknown criteria), all utterly generic cuts from Now That’s What I Call No Atmosphere! Vol. 12.

The number of votes I cast is simply a reflection of how firmly I believe in his policies

Don’t be such a killjoy, my kids often say. Usually just after I’ve informed them that Father Christmas doesn’t exist or that even Ed Sheeran hates his own music. And, indeed, where’s the harm in an app that lets fans vote on things, even seemingly unimportant stuff?

Glad you asked. Pull up a chair. Because there’s a great deal more to the Socios business model than just helping clubs poll their fans.

Money, of course, is at the heart of it – in this case, real and imagined. Because to vote in a Socios club poll, you have to own a ‘Fan Token’ for the club on whose business you are expressing an opinion. And to own a Fan Token, you have to have bought it using Socios’s own cryptocurrency (‘Chiliz’). And, to own Chiliz, you have to have bought them with real money from your own pocket.

Socios’s model, then, is one of charging football fans for a say over the actions of the organisation to which they already pay huge amounts annually and of which they consider themselves the true spiritual owners.

For each of its clubs, Socios plans to issue different numbers of voting tokens – the bigger the club, the more tokens will be available. In the case of West Ham – which should launch in the next few months – it plans to price the tokens at £1 and give existing season ticket holders and members a free token each. Given there are about 50,000 STHs and another 30,000 members, that’s 80,000 plus people who will soon be able to have their say on club matters.

Unfortunately for the world’s 80,000 most loyal Hammers, Socios are issuing tens of millions of tokens for each club. In other words, just a fraction of 1% of the total number of voting tokens are being given away free to the kind of West Ham fans who regularly attend games.

Alternatively, some people now have 600 times more voting power than fans of the club who may have been going to games for decades. (Dreyfus is Socios’s founder and CEO.)

So who gets the rest? With whom will the remaining 99%+ of the voting power sit?

The answer, quite simply, is with whoever will buy them. Because those tokens will be on sale in the app to anyone who has registered with it. These won’t necessarily be casual West Ham fans – or even obsessive West Ham fans in other countries who’d love to come to more games but can’t. They might not even be football fans at all. Or worse, they could be Spurs fans. Chelsea fans. Leyton Orient fans.

When the Juventus vote was taking place, Socios boasted that the poll was a success because votes were coming in from all around the world.

It wasn’t easy, but nothing is.

Another way of reading the Socios tweet is that over 2,000 fans, many of whom by virtue of their location are not season ticket holders and do not regularly attend Juventus games*, paid to decide what goal music those attending Juventus games will hear. They spoke, now others must listen.

And that is the Socios model: using complex tech that many football fans might not understand to sell the right to almost anyone to vote on your club’s business. The more tokens you buy, the more influence you have.

Here comes the science

If it’s all as bad as I make it sound, why then would a club want to do this to its own fans?

Well, turning to Socios’s brochure, I read, “[It allows clubs] club to monetize their fan base via a custom Fan Token Offering (FTO)… Socios provides an upfront upside, in the form of a high-value cash infusion as a result of this FTO…”

Angry Anderson’s original inspiration.

In other words, when people buy West Ham tokens, the club gets the majority of the purchase price paid immediately into their bank account. Socios, meanwhile, aims to profit by charging small fees for transactions and other services. It is actually West Ham – and Juventus, PSG et al. – who are charging their fans to have a say over the running of the club. Fans are being shafted as well as polled.

This, perhaps, helps explain why the Hammers, whose owners have a pretty poor reputation for fan engagement, were the first Premier League club to embrace Socios.

If they really wanted to, clubs could easily survey fans for free – by email or SMS, or by incorporating voting into their own club apps. That would actually reward those fans who do more than simply ‘read or talk about the club regularly.’

But that aim here isn’t engagement, it’s monetisation. It’s about new things to sell or new ways to charge for what was previously free.

And at that point we have to ask: what’s in it for Socios if most of the money goes to the clubs?

As I said earlier, the company has developed its own cryptocurrency. Cryptocurrencies, of which Bitcoin is the most famous, are digital assets which have some of the properties of money but are not issued by any central bank – so-called fiat money, like US dollars and British pounds. Some cryptocurrencies – including Bitcoin – are accepted by some businesses and can be used to buy some goods or services. But generally you need to sell them on an exchange and convert them to fiat money to spend them.

Underpinning cryptocurrencies is something called a ‘blockchain’. This is a digital ledger, a distributed computerised record of all transactions using the cryptocurrency, making it impossible, in theory, to counterfeit the currency or commit fraud. While initially pitched by libertarians as a way of removing government involvement in the banking system, a precursor of a digital anarchy, it has more recently been seized upon by consulting firms as a way of revolutionising supply chains. Generally, though, it’s famous because of stories of the wild price bubbles and crashes associated with Bitcoin and because of huge frauds, like the extraordinary story of OneCoin, where its founder set up a Ponzi scheme under the guise of a cryptocurrency, and managed to extract billions of Euros from dupes before vanishing.

Won’t someone think of Lucas Leiva?

If you think this all of this sounds a bit over-engineered for voting on Man of the Match, I’d agree. You do not need to sell cryptocurrency to determine what colour your third strip should be. You do not need the blockchain to ensure the authenticity of the vote.

Socios’s argument is that having a blockchain-backed technology means football will be able to avoid problems with online polling. Clubs define the vote and the options, which prevents Boaty McBoatyface incidents, and blockchain prevents tampering. On its website, it points to the case of Liverpool fans repeatedly hijacking Lazio’s player of the year vote. But, in my view, light-hearted sabotage of badly designed polls doesn’t justify using the blockchain and cryptocurrency any more than occasional shoplifting justifies arming checkout staff with AK47s. It’s just not a proportionate or cost effective solution to a small, easily solved problem.

Commercially motived false dichotomy of the week.

Most of all, other than the slight disincentive effect of the time and money taken to buy a token, Socios doesn’t actually solve the problem of Liverpool fans voting in Lazio polls. While there will be a cap on how many tokens a person can own in one club, Socios does not prevent you from buying tokens in as many clubs as you want. Indeed, for its business to prosper, it needs customers to do so.

Being more than a fan, then, doesn’t mean beings an owner of your club nor to even having a meaningful say in its running.

Problem: Anyone can vote in twitter club polls, including fans of other clubs. Solution: Allow up to 45.5m paying people to vote securely in club polls, including fans of other clubs.

So what is it? Well, one way to think about it is like a stockmarket, where the shares of different companies go up and down in value according to investor demand. The resale part of the Socios app with be like a fan engagement stockmarket, with the tokens of different clubs (giving voting rights) available for purchase in their cryptocurrency (‘Chiliz’) and their value rising or falling according to fan demand.

Being more than a fan means owning a portfolio of voting rights in football clubs and trading those rights as and when the spirit moves you. It would be like the next edition of Fifa claiming that gaming makes you ‘More than a player’.

Given how low the value of the actual voting, in my view Socios is best seen as a business trying to recruit sports fans into an online trading game. And that’s because, while the polls are largely pointless, the value of token – like football players – can go up as well as down. At launch, West Ham tokens are being prices at £1 a pop, but their actual resale value may rise or fall over time – and will be different from club to club. (Suppose Juventus, for example, are finally able to win the Champions League again. That might drive up demand for, and the price of, their tokens.)

Different clubs will have different numbers of tokens available. While West Ham have 45.5m, Juventus have 340m. Which means different tokens won’t just have a different price on the resale market, but a different level of influence. (Owning one token of a club with 50,000 tokens obviously gives you more influence than, say, one token in a pool of 250,000.)

And because all the trading takes place in the cryptocurrency, it’s not just the value of tokens that can rise and fall (in Chiliz). The value of the Chiliz themselves can rise and fall against real money, as Chiliz are traded on cryptocurrency exchanges. So, how many Chiliz you get, and therefore how many tokens you can buy, can vary dramatically according to when you buy them.

According to Socios’s literature, there is a maximum of 8.8bn Chiliz available, which is, effectively, the total potential money supply with which to trade in fan tokens. Currently, 3.7bn of these Chiliz are in circulation. How and when the rest will become available isn’t clear. With investment worth $60m, Socios and its backers are presumably hoping that demand for the fan tokens will be so great that their price, in Chiliz, will rise – producing a significant paper profit for investors.

It’s not currently working out like that, however. Since launch in July 2019, the cryptocurrency of West Ham’s official digital wallet-lightening partner has come crashing to earth like Andy Carroll under a heavy challenge. Chiliz have fallen from a peak of about 1.8p and now bump along at between 0.3p and 0.6p a piece. That kind of loss of value on signings recalls the great days of Harry Redknapp.

At the time of writing (mid-January 2020), the current price of Chiliz means the entire circulating supply could be bought for a little over £20m. Given its high profile launch activity, you have to wonder if 2020 will be a year when Socios spends more promoting its cryptocurrency business then it would cost to actually buy every Chiliz in circulation.

This is not to say Socios is a fraud. But just that it is also not a fan engagement business.

Take Facebook. What appears to be a communications business, is actually a data gathering business and advertising platform. Its customers are advertisers, its product is its users’ data.

By extension, Socios isn’t a fan engagement company. It is a cryptocurrency business seeking investors. Its customers are clubs, its product is monetising fans’ loyalty.

If it successfully creates demand for fan tokens, the next logical steps might to build a comprehensive fan rewards programme around the app, a Tesco Clubcard scheme to be sold to football teams. (To support the launch, Socios has been giving away prizes, like signed club merch, and running Pokémon GO-style AR token hunts.) Beyond that, you could imagine it positioning itself as the official cryptocurrency partner for payments in sporting venues, so that if cryptocurrency ever goes mainstream, it will have a part of the retail market sown up.

Fans unheard

I said that West Ham’s involvement suggests something about of the true nature of the scheme. But equally telling is who isn’t taking part. To date, this radical experiment in fan engagement hasn’t unveiled any partners in Germany, where the majority of clubs are owned on a 50+1 basis by fans. Nor has it snagged any of the four Spanish teams that are owned and run by their fans – Real, Barca***, Athletic Bilbao or Osasuna. It is these members or ‘socios’ whose name has been co-opted by the company. For now then, people signing up for the app are quite literally socios in name only.

I believe passionately that fan engagement is an important idea. But this isn’t it. It’s a simulacrum of fan engagement, an opaque tech scheme wearing the clothes of club democracy.

Clearly there is a huge problem in football with clubs being run with no regard for their fans wishes. Supporters are routinely ignored on far more fundamental issues than goal celebration music. You can see it at the top end of the game, where many fans feel the globalisation of football is marginalising them in the dash for cash, or in the middle, where owners are selling stadiums out from under clubs, or at the bottom, where fans are tired of their clubs passing from the hands of one shallow-pocketed chancer to the next.

Solving these problems is a monumental task. It requires radical change to how the game is governed and structured. And it involves hard, costly things like fan ownership. And unglamorous stuff like structured fan communication.

The danger with Socios, beyond people losing a few quid on digital magic beans, is that, by adopting the language of fan engagement, it undermines real attempts at giving fans the voice they need in how their clubs are run.

It’s the promise not of being more than a fan, but the realisation of fans’ greatest fear: that we are now, and will never be anything more than, customers.

Martin Calladine

If you enjoyed this piece, please buy my latest book: No Questions Asked: How football joined the crypto con. That way, I’ll have the money to write more things you might like. Oh, and please spread the word, too. Thanks a lot.

* I should say that I’m not one of those people who laugh at overseas fans. I’m one myself – a supporter of the Cincinnati Bengals for over 30 years – and I think there’s a barely concealed, unpleasant attitude that surfaces whenever there’s discussion of fans of Premier League clubs in, say, China. I don’t think you need to live on the doorstep of a club nor go regularly to count yourself a fan. I’m no Ed Woodward, though; to me it’s obvious that season ticket holders and regular attendees at games ought to have higher status and their views be given more weight in any discussion of their clubs’ futures.

*** Update: On 13^th February 2020, in what is an undeniable coup for Socios, it was announced that – contrary to my expectations – Barcelona would join the programme. That’s right, the club that prides itself on being ‘More than a Club’ will now offer punters the opportunity to be ‘More than a Fan’. From my perspective, it’s deeply disappointing to see a club owned by its fans give support to a business that is literally trading off the name of Spain’s unique form of fan ownership. I can’t help but think this is something of a betrayal of the club’s proud Catalan roots. Socios plan to release 40m Barcelona fan tokens to the club’s “over 300 million fans worldwide.” The Camp Nou can accommodate nearly 100,000 fans, with the club averaging about 75,000 in the league. And Catalonia has a population of just 7.5m. So it remains to be seen what Barca’s season ticket holders and socios will make of Socios and their plans to devolve power over their club to overseas cryptocurrency enthusiasts.