Creator economy + web3
This is the second part of my posts on the creator economy. You can find the first one here.
When it comes to web3, I’m oscillating between being hyper-optimistic about what’s possible and getting really annoyed or frustrated with what’s paid so much attention to instead.
But let’s first talk about the promise web3 offers for the creator economy (excites me) and then some of the open questions and challenges.
The current creator economy suffers from creators getting only a little of the value they generate while platforms take the biggest chunk. However, without these platforms, creators wouldn’t even find an audience to begin with, so things are complicated.
Can web3 fix all of this? Here a few of my thoughts on different web3 aspects and how they impact creators.
Ownership
Creators neither own the content they create nor their audience. Web3 promises to change that.
It shifts the power dynamics from platforms to creators and their communities. As the platform power decreases, creators get more direct access to their fans and receive more from what fans pay them.
Not only that but also the content they create can be owned by them. Sure, if you record a video and then have it on your hard drive, it’s somewhat yours, but when you have a reel on Instagram, they can take it down anytime.
Ownership extends beyond access to your audience up to being part of a platform. Blockchain and tokenization allow the distribution of power and community-operated networks that do not have a single authority. One could imagine a content distribution platform like Youtube, but running on-chain governed by a community of creators.
Projects like Livepeer are working on that. There are obviously many questions about how to manage such platforms regarding content moderation, recommendation algorithms, and allocating voting power, but those are for another day.
There are also communities spinning up their own social apps since none of the existing solutions really fit their ethos; an example here is Friends with Benefits.
NFTs
Non-fungible tokens are often mentioned as the first thing that comes to mind for creators in web3. And for what it’s worth, they played a big role in making digital an actual accepted art form. Previously, digital artists always suffered from copy pasta, and difficulties monetizing.
NFTs introduced a way to do that while enabling digital art to be taken in by big museums and renowned auction houses.
Somehow, as tends to happen when it becomes more about quick gains than anything else, speculation took over, and we saw hundreds of random pfps created, probably peaking for me personally with Kevin.
Fortunately, the days of a videoclip created with Unreal Engine and the promise of some Metaverse game raising millions are over.
NFTs can be a lot more than “just” hosting the metadata displaying artwork, music, or game items. They can also be used for token-gating, similar to how creators already have paywalls on a certain type of content.
Interestingly, by distributing NFTs to their audience, creators could also start thinking about providing value back to their fans — something that’s awfully neglected in the current web2 economy. Sure, we get to view our favorite creator's videos where — we’re being sold to — and then we get to buy their products (awesome but also kinda meh).
There are companies building really fun ways of giving people NFTs, including Sharddog, which takes out the friction of collecting an NFT for someone without a wallet, and SushiTop Marketing, who have used Gacha Pom, and even sound to distribute NFTs. Creators could tap into these when organizing events to capture attendance and later on be able to share further things with attendees, think of a recap video or discounts for the next event.
Something I recently came across is the RMRK standard in the Polkadot ecosystem which allows the embedding of NFTs into an NFT. So you could even have fan NFTs that accumulate all your activities associated with one creator — and that itself is an NFT. Creators like writers could bundle a bunch of their posts into an NFT with this standard, similarly for images. Lots of possibilities.
Fan and Social Tokens
Instead of NFTs, creators can also use fan tokens to better engage with their audience. There are platforms focused on areas like Sports (chilliz), providing the infrastructure for teams to create and manage their fan tokens.
These tend to only provide minimal rights to the token holders, such as voting on where to host the next friendly match or colors for jerseys, but it’s a start. Individual creators can use fan tokens as a social currency representing their own value which could provide fans with tiered systems of access. Or voting.
Lens Protocol is distributing follower NFTs which include built-in governance capabilities like delegation so you can create a DAO made of your followers. I could start NAO-DAO, and then people can vote on what I should write about next (or something along those lines).
You can read more about Fan tokens from me here.
Community-owned creators
This is not about human trafficking. Even though if you wanted to hypothetically discuss how DAOs could be a great tool for crime, feel free to hit me up.
Obviously, you shouldn’t tokenize yourself as a creator and sell pieces, even though I’m sure there was a guy who did that (I dunno, it could be interesting for organ donations, I guess, if you had a matching blood group, but I digress).
Community-owned creators won’t be humans but, for example, mascots or VTubers.
Vtuber, you might wonder… unless you’re in Asia and already know Hatsune Miku or Neuro-sama (an AI Vtuber).
Since VTuber's can be programmed, it’d be possible to own one as a community and then vote on what that VTuber should do, wear, etc. I came across VTuber DAO, which seems to do exactly that. One to keep an eye on also, or maybe even more so if you’re bullish on the metaverse. 👀
Collaboration
In the best case, web3 enables collaboration between creators — and I love to see it. Incentives done right can contribute to more collaborative and less zero-sum thinking.
NFTs projects can either compete or collaborate. I’ve been lucky in picking because the ones I am spending time with are very much collaborating with other projects making things more interesting for everyone involved.
If there are 4 writers writing a newsletter about the exact same topic, there’d be the initial thought that they have to compete. But what if they could work together in a way that removes the trust equation?
Metalabel provides a fascinating framework to enable that. It’s a release club where people with the same interest or niche can drop something together, and everyone receives their share of the revenue. It’s easily set up and provides creators with a shared treasury + tools to define the scope of their partnership.
Another interesting example of a platform fostering collaboration between creatives is StoryCo, previously StoryDAO. It’s an experiment in community world-building with the goal of creating the first open Hollywood production studio.
The idea behind StoryCo is “create to own.” Creatives are incentivized to contribute and expand the IP, while people are provided with the ultimate fan experience: direct access to writers, producers, and the ability to own characters and vote on storylines.
The team just closed a $6 million seed round with backing from crypto VCs, DAOs, but also influencers and executives from Hollywood talent agencies.
Looks like I’m not the only one excited by the idea.
However, not all is rosy in web3 and the creator economy. To maintain some balance in this article, on closing a few of the issues I see.
Royalties and speculation
Remember how we tried to sell artists on NFTs by promising they’d be able to capture the value of their art as it appreciates over time?
Well, I guess that was a lie. At least temporarily. The problem with most royalties is that they are not enforced directly on-chain but through marketplaces.
On Ethereum, that has to do with the token standard, which has only one transfer function, and it’s not possible to differentiate between a transfer from wallet a to b and an actual sale. Long story short, marketplaces have been the ones to enforce royalties, but with the likes of Blur capturing more market share, even the market leader OpenSea has moved to cut royalties. Seems we’re trending to the bottom when it comes to that.
Beyond royalties, speculation can make or break projects. While it helps increase awareness and, of course, money flowing back into the ecosystem, it can also destroy communities. An enhanced focus on floor price has led to shady practices from projects buying their own mints from various wallets to make it look more popular and wash-trading.
Personally, I don’t know what the right business model is for artists and pfp projects. As someone with NFTs, I’ve just sold one once, and therefore, projects made very little royalty from me. I don’t think that an artist should only be able to make a living if their collectors constantly sell.
Open Editions are a fascinating way for artists to monetize their art while removing the fear of not being able to mint. They even open up fun game mechanics where those who collected an open edition can later burn it for something else. On Manifold, a go-to platform for open editions, nearly 9,000 creators have created art totaling 2,8 million claims.
Discovery
Another huge challenge I see is discovery. It currently happens mostly outside of web3 native platforms like Twitter. Sure, marketplaces contribute to artists getting discovered, but often they feature the high volume collections making it harder for up-and-coming creators.
I believe there is value in curation. An idea here is that creators could start putting together galleries of other artists’ creations they enjoy, and whenever one of their fans purchases it through their site, they’d receive a cut. Something like a Pinterest for NFTs. Mintbase has built a mechanism where it’s possible using links; the next step could be enabling purchases straight on the creators’ site.
There is also an argument for every creator having their own marketplace, but obviously, then the question is, where do you even get potential buyers from? The answer, for now, tends to be Twitter, Medium, YouTube, and other platforms with their respective problems.
Hyperfinancialization
While I get the appeal from financializing everything, I don’t know if, in the long run, it’s the healthiest way to value things. Especially when introducing tokens that indirectly represent a creator’s value, there could be some psychological impact whenever that is dropping. It might just be for the very resilient.
Copyright and licensing
Just because you have minted something doesn’t prevent others from using the associated art or creation (unfortunately). So far, we’re early when it comes to detecting the unlicensed use of images, art, etc. Creators still struggle with others copying their work and selling it.
Overall, I’m still optimistic about the potential web3 can have to empower creators when done in a thoughtful way.
I also still have many open questions.
- Will the royalties debate fade? Will we all just agree to pay (or not pay) royalties?
- Will we get robust tools to recognize and report illegitimate use of other creators’ work? How will we deal with it in a decentralized world where it’s so easy to create a new wallet?
- Will discovery continue happening mostly on web2?
- What will the impact of AI be when suddenly it’s so cheap and easy to create a lot of things? There are now even tools that create full 3D shapes from just 2D images. How do we then value human-generated content?
We’ll see what happens. One thing is for sure; it won’t be boring.
