The Creator Economy & web3: An Overview

What is the Creator Economy?

The creator economy emerged with the rise of web2 social media and creator platforms like YouTube, Instagram, Facebook, TikTok, Twitch, Spotify, and Patreon. The introduction of these platforms allowed independent creators to monetize their work online for the first time.

Most creators on web2 platforms, after establishing large followings, generate revenue through paid partnerships, affiliate marketing, or platform creator funds.

What is the Creator Economy Crisis?

In web2, creators are not paid equitably, nor are they prioritized at the core of a platform’s business.

Aside from a small percentage of creators with audiences in the millions, a majority of creators are not able to generate enough revenue on web2 platforms to make a living. In a 2021 Twitch data leak, it was reported that 10% of the top 10,000 streamers on Twitch comprise 49% of total streamer earnings.

Furthermore, in web2, creators do not own their content or audiences, meaning that if a platform were to shut-down, so would the creator’s entire career, content library, and audience.

How Did the Creator Economy Crisis Emerge?

The algorithms on platforms like Twitch, Instagram, and TikTok are structured to reward “viral content,” often amplifying the content of larger creators over smaller ones, making it difficult for new creators to emerge and thrive.

Creator funds developed by web2 platforms also tend to reward only the largest creators, further perpetuating the gap.

Without an equitable way to earn money for creating content, most creators are left underpaid while working overtime in an attempt to continue to grow their audiences.

Web2 vs web3 for the Creator Economy

In web3, creators are paid more. Web3 platforms prioritize creators by maintaining drastically lower take rates than web2 platforms.

YouTube has a 40% take rate.

Facebook, Instagram, and Twitter have a 100% take rate.

Web3 Platforms like OpenSea or TofuNFT have a 2.5% or lower take rate.

Creator Revenues in web2 vs web3

In 2021…

Spotify recorded $7B in creator revenue with a total of 11M artists, averaging $636 per artist.

Facebook recorded $300M in user revenue with a total of 2.9B users, averaging $.10 per user.

YouTube recorded 15B in revenue across 37M channels, averaging$405 per channel.

The NFT industry recorded $3.9B in creator revenue with a total of 22,400 creators, averaging $174,000 per creator.

The proof is in the numbers.

With NFTs, The Creator Calls the Shots

When a creator mints an NFT, they are in control. NFT value is determined by creators and collectors rather than algorithms or curators. The creator can set the price, set the royalty percentage, and market their work to their communities.

With NFTs, The Creator Can Earn Income Forever

In web2, a creator might sell a work to someone for $5,000. They keep building their career and their work keeps increasing in value. One day, that collector sells the creator’s work for 2x, 5x, or 10x the price. Their piece disappears in storage and reappears in a popular gallery for $10M. How much does the creator get? $0.

In web3, the creator can set the royalties for their work and receive them in perpetuity. Therefore, had the creator’s work been in the form of an NFT with a 5% royalty commission, the creator would have made $500K from the gallery sale in the aforementioned scenario.

NFTs Reward Creators AND Communities

Creators spend countless, unpaid hours building their communities online. The community values the creator’s work, and the creator values the community, but in web2 there are scarce opportunities for value exchange and shared ownership.

In web3, when a community purchases an NFT from a creator, they are actively investing in that creator and sharing the value of their career by holding their work.

NFTs help creators and communities reward each other, instead of being exploited by platforms.

NFTs Are More Than Just Art and Content

NFT technology allows creators to innovate their work beyond the canvas and the screen. Blockchains like Oasis allow creators to make confidential NFTs that connect NFT identity with ownership rights and access (via Oasis’ privacy preserving technology called “Parcel”).

For example, in the “Army of Minions” NFT Collection by bishop on Oasis, the owners of the NFTs have exclusive access to the underlying mathematical function that created their Minions.?

Data-Backed NFTs Will Revolutionize the Future

Data-backed NFTs allow NFT holders to sell read-only access to their data to interested companies. If a company wants access to an individual’s data, they can purchase the NFT. In this scenario, a company would not be able to see individual data, and instead only be granted the ability to compute and analyze the data — meaning that the individual retains complete control over their data and privacy.

What are Social Tokens?

A social token is a cryptocurrency tied to a single person, organization, or community.

Creators can mint their own social tokens on various platforms and offer those tokens to their communities.

Community members can then exchange those social tokens for specific rewards — like exclusive perks, merchandise, experiences, or discount codes — or convert them into other currencies.

How Do Social Tokens Work?

Purchasing a social token can be seen as a direct investment in a creator or community.?

With a limited token supply, demand increases the value of the social token. Holders can redeem those tokens for the benefits offered by the creator, hold them as an investment in the creator’s career, or swap them for other currencies, while creators can take out distributions of the token to augment their income.

How are NFTs Different Than Social Tokens?

While NFTs allow creators to monetize a specific creation or digital good, social tokens allow creators to monetize their career, their community, and the services and experiences they can offer.

In short, NFTs monetize digital creations, while social tokens monetize creators and communities. In other words, NFTs can be used to monetize digital goods, while social tokens can monetize services or experiences.

How Do Social Tokens Help the Creator Economy?

Social tokens put creators and communities at the center of the economic model.

Social tokens also enable an important community building tactic that can create a more equitable web3 at large — access via contribution as opposed to access via investment. Access via contribution allows a person to enter and share ownership of a community or economy by contributing something of value in exchange for a token reward, as opposed to investing money upfront into that token.

Many creators are using their social token to reward their community members for helping them create new projects, amplify campaigns on social media, and manage online communities.