The New Creator Economy
Read time: 4 minutes
The Creator Economy is one of the fastest growing industries with over 156 million new creators in the last two years.
Yet over 50% of creators earn less than the minimum wage on an annual basis.
For the creator economy to mature and become a viable career path for the next generation, creators must embrace web3 tools and services.
The Creator Economy
Let’s first define a few terms:
Creator: Anyone that makes and publishes unique content that audiences can access and respond to.
Creator Economy: The class of businesses built by independent creators and companies that serve their needs.
Web3/New Creator Economy: A community-led ecosystem powered by blockchain technology where both creators and consumers have the opportunity for greater upside based on their contributions.
There are three distinct factors that differentiate the Web3 Creator Economy from its traditional Web2 counter part:
Ownership. Monetization. Community.
You can think of these as the three pillars that support the new creator economy.
Before the creation of blockchain technology, ownership on the internet was essentially non-existent.
As the second iteration of the internet (Web2) allowed for user-generated content to be published, major corporations reaped the benefits as the “aggregators.”
Web2 platforms enabled creators to build massive social followings but also took ownership of all the content uploaded to their sites.
A user’s digital identity was in the hands of corporations like Meta and Google rather than the individual.
Instead of relying on third-party platforms to promote and monetize their content, creators can use decentralized applications and keep ownership over their work.
This is possible through Non-Fungible Tokens (NFTs), which you can think of as a unique digital file stored on a blockchain.
When content is stored on a blockchain, it verifiably belongs to to the creator rather than the platform the content is displayed on. This is what makes the third iteration of the internet (Web3) so powerful.
You may think of NFTs as just cartoon profile pictures or tools used by scammers to make a quick buck. But the potential of NFTs is much greater.
While art is the first iteration of NFTs to go mainstream, NFTs can also be:
Creators no longer have to give up control of their work to make a living. Instead, they can now keep full ownership over their content and benefit from their creativity.
Creator monetization in Web2 is broken.
A study funded by Meta found that more than 50% of creators make $10,000 or less per year.
This discrepancy in pay is a result of the internet running on advertising.
Google, Meta, Twitter, and TikTok all became billion dollar companies by selling advertising slots on top of user-generated content.
Creators rely heavily on ad share revenue and brand sponsorships to make a living.
This has two specific detrimental effects on the creator economy.
First, brands only sponsor the top tier creators and advertising revenue flows to creators with the largest audiences.
This means the top one percent of creators earn most of the money while the bottom 99% are left picking up the scraps.
Second, creators are incentivized to make content as broad as possible to appeal to a larger audience as that will attract more advertisers.
Making niche content does not make financial sense when the only option for monetization is advertising.
In Web3, there are new tools and opportunities to directly support creators.
By leveraging blockchain technology, creators are able to use autonomous, decentralized applications and services to generate revenue.
NFTs allow creators to sell their content directly to consumers.
Social tokens allow audiences to provide upfront capital to their favorite creators and invest in their work.
Decentralized social platforms allow creators to post on-chain content that is directly monetized by fans through micropayments and crowdsourcing.
As monetization moves away from a sole reliance on ad revenue, niche content has the ability to actually be profitable for creators.
The final pillar of the new creator economy is community empowerment.
Because payment infrastructure was not natively built into Web2 platforms, fans support their favorite creators with attention rather than money.
A super fan does not receive any extra benefit for being twice or three times as engaged with a creator’s content compared to a casual fan.
If you are an early supporter of a creator, you don’t receive any added benefit if that creator gains popularity, aside from bragging rights.
In Web3, there is significantly more upside for fans and community members.
Fans have a financial incentive to support creators rather than just altruistic motivations.
Social tokens offer fans the opportunity to not only fund a creator’s journey, but also potentially profit as a holder if the token appreciates in value.
Because NFTs are verifiable and on-chain, fans can establish a closer bond with a creator by owning a digitally scarce and unique asset.
Lastly, fans can enter memberships with other like-minded supporters in the form of Decentralized Autonomous Organizations (DAOs) or token-gated communities.
In these exclusive communities, fans have better access to each other and potential input surrounding future decisions for the community.
Instead of being forced to create algorithm-friendly content, creators can allow fans to have a direct say in how they create and distribute content.
Some fans are even becoming creators themselves thanks to more lenient copyright laws such as Creative Commons (CC0) licenses .
In communities like Nouns DAO , members are spinning up their own products based on the Nouns NFTs that they own.
A simple way to break this down:
In Web2, fans are able to:
In Web3, fans are able to:
Join the New Creator Economy
The new creator economy gives creators the ability to take ownership of their content, better monetize their work and build a stronger community.
While still only in the early stages of adoption, joining the movement on the ground floor will allow you to shape the future of the new creator economy.
Thanks for reading and I will see you next week!