Web3: The Golden Age of Creator Economy

In January 1996, Bill Gates published an article titled “Content is King”, which later became one of the early classic Internet articles. In this article, he describes the characteristics of the Internet, it is these characteristics laid creator economic base (creator economy) is. He wrote: “One of the exciting things about the Internet is that anyone with a personal computer and a modem can publish anything they create.”

Gates’ article is remembered for his foresight about the direction of the Internet, but what’s not well known is that he also issued a warning: “If the Internet is to flourish, content providers must learn from their own works. Get paid. ” “The long-term outlook is good, but I expect there will be a lot of disappointments in the short term.”

Gates’ analysis is ahead of the time. It is true that the Internet makes it possible for almost everyone to publish content online , but it is also undeniable that today, 25 years after the publication of “Content is King”, it has been proven that a content creator wants to earn a considerable income. It is difficult to achieve in .

The creators’ personal experience illustrates this point: 90% of Spotify’s streaming media royalties went to the top 1.4% of musicians; the top 1% of anchors received more than half of Twitch’s revenue; 1% of podcasts received Accounted for most of the podcast advertising revenue.

“In my opinion, we are not in a period of expansion,” a musician told the New York Times when talking about streaming revenue on Spotify. “From the individual musician’s point of view, our labor remuneration is on a downward trend.” This is not inevitable, nor is it a problem unique to fledgling artists-this affects 99% of creators, including those who have digital Celebrities with millions of fans. When they are even struggling to maintain a basic life online, something artificially hinders them.

The Internet should have ushered in the golden age of media-an infinitely rich world, where anyone can create what they want, and everyone can find what they are interested in. But even though Gates ’ predictions about making money from online content proved to be correct, most of the money bypassed the creators who created the content and instead fell into the pockets of the platforms that aggregate the content .

This will be a story of how the Web2 Internet broke the traditional media business model, and how the emergence of Web3 marked the subversion of this business model and tilted the balance in a direction that was beneficial to creators . Since there is no native profit method built into the Web2 Internet, the mainstream business model is opaque, advertising-based, and relying on a closed garden network, which gives the platform a huge advantage; and what is coming is the new business of Web3 Mode and technology are expected to open up an economic opportunity, bringing a true golden age of creation for artists and creators .

Attention Economy & the Original Sin of the Internet

In this story of how the Web2 Internet broke the traditional media business model, the core is the simple fact that the Internet was not built to facilitate the flow of funds Payments are not embedded in the infrastructure of the Internet -because this is considered too risky. Mark Anderson (a16z co-founder) called this “the original sin of the Internet.”

The lack of payment infrastructure is why the Internet is largely profitable through advertising . Rather than requiring users to take out a credit card and enter their information on the website, Internet platforms can make money through another asset without barriers and indirectly : the user’s attention . This has prompted a shift of power from the traditional media gatekeepers that control content creation and distribution—publishers, record companies, and movie studios—to those Internet platforms that attract consumers’ attention on a large scale .

Ben Thompson, the founder of the tech blog Stratechery, has written a lot about how platforms (which he calls “aggregators” ) have gained the attention of consumers by aggregating demand, and have gained huge revenue and influence. For example, YouTube has more than 2 billion monthly active users, Facebook has nearly 3 billion users, and Spotify has 365 million users. These huge audiences have brought huge advertising revenue . In fact, Google and Facebook alone accounted for more than half of digital advertising revenue in 2020 .

The advertising business model has profoundly shaped the way the platform designs products. Pageviews (views) are pooled into already popular content and creators, creating a successful power law. Data about user preferences and behavior is the most valuable asset of the platform , so they close their ecosystems and lock users in their own networks to accumulate the largest proprietary database .

The advertising-based revenue model also has a huge (negative) impact on content creators . Creators are forced to seek the widest possible audience and create content that appeals to advertisers. This business model —or lack of it— has a profound impact on the way creators earn a living and the content they create (encourage viral, eye-catching, and motivational content, while suppressing niche, In-depth content). The biggest impact of the Web2 Internet may be creators who cannot be born due to no viable business model and creations that have never been created .

From attention economy to ownership economy

The platform-centric and advertising-driven attention economy may have won the Web2 era, but its victory is not inevitable or final . The patience of creators with the platform is gradually disappearing in the rapidly growing crisis of legitimacy —that is, creators are beginning to question the platform’s right to exert such immense control over their work, their relationship with fans, and the way they get rewards .

At the same time, a new generation of technology is emerging, which is expected to change the balance of power in the creator’s economy . If the early Internet/Web1 era favored publishers and the Web2 era favored platforms, then the next generation of innovations—collectively referred to as Web3 — returned the balance of power and ownership to creators and users .

This situation will mainly occur in four ways:

  1. Introduce digital scarcity and restore creators’ pricing power.
  2. Let supporting creators become an investment behavior , not just an altruistic behavior.
  3. Introduce a new programmable economy model to spread wealth to the entire creator domain.
  4. Most importantly, by creating ways for creators, creators not only own the content they create, but also own the platform itself .

Taken together, these four changes are converging to create a new era in which new incentives will reward new behaviors, giving the Internet the opportunity to press the “reset” button in a collective manner, and move towards fairer Value distribution .

Let us discuss them in turn.

  • NFTs & the introduction of digital scarcity

Scarcity has a bad reputation, but it’s not just a question of consumers’ lack of choice: it’s more about the power of producers, that is, in the context of texts, the ability of creators to earn considerable income from their creators . In our current world full of platform-based content, scarcity does not exist , and content can be easily copied on the Internet . Although sometimes it is possible to bring creators close to scarcity through membership or digital purchases (such as selling e-books, albums, or content subscriptions), the underlying content can still be copied endlessly. This lack of scarcity has led to the problem of illegal copying and distribution of creators’ content.

One reason why NFTs (non- fungible tokens) are so exciting as a technology is that they allow creators to regain control of their content and reintroduce scarcity that helps to achieve profitability . In the process of tokenizing their work into NFT , creators were able to create a verifiable chain record of the ownership and source of the work . This process will eventually cast a unique asset (NFT) that can be traced back to the artist. Fans who are passionate about the creator’s work will be willing to pay more for this authoritative work, so that the creator can better capture the fan’s willingness to pay. The ultimate impact cannot be underestimated: Content creators no longer need to have millions of fans to make ends meet, but can rely on the funding of a few passionate people to survive .

For example, the booming music NFT market demonstrates this effect. On streaming media platforms, a piece of streaming music contributes the same revenue every time it is played (on Spotify, each song played by a paid account generates a copyright fee of $0.004), no matter how deeply fans love the singer. In contrast, in the Catalog or Sound on other platforms, a big fan of thousands of dollars to the price of purchase NFT music , while creators need to play tens of millions of times in the past to get these revenues. Brett Shear is an NFT music collector who owns 45 songs on the Catalog platform. He told Time magazine: “Just like you bought a piece of art that you want to put in your apartment, I also want to listen to the music and enjoy it-owning it is a different feeling.”

Purchasing NFT is similar to collecting real-world goods, making fans feel closer to the artist and owning some rare things. Digital scarcity and uniqueness – which is missing in Web2 – realized in the block chain has brought a new business model for creators and reduce economic control platform .

The exciting thing is that the introduction of scarcity through NFT does not mean that access to the underlying media (such as a song) is restricted, just like a paywall or paid digital download. The actual media at the bottom of the NFT is still a public product, and anyone can use it for free. Those who think this weakens the scarcity of NFTs (“right-click and save”) have not grasped the point at all.

  • Funding +: Supporting creators as an investment, not just an altruistic behavior

In the previous “100 True Fans” article, I described that creators can use the egoism of fans to make money at a higher price. By delivering substantial value and results, creators can make money and make a living with fewer fans more effectively :

This represents the traditional funding model (ie, users pay the creators benefit ) to the value of the mode change, the value mode, the user is willing to make their own benefit to pay more money for something.

Web3 takes this idea to a new level, because all tokens are an investment, not only can provide funds (income) for creators , but if the value of tokens increases, holders will also benefit . Jesse Walden defines ” patronage ” (patronage+) as funding with the possibility of profit , which is a phenomenon introduced through tokenized ownership. In Web2, since there is no on-chain ownership record such as NFT or social tokens, this investment element is impossible (imagine the view reselling a video downloaded from TikTok, which is impossible).

Are there any practical examples of “funding +”? Earlier this year, Mario Gabriele of the blogging platform The Generalist crowdfunded 20 ETH (Editor’s note: buyers can get a corresponding share of GENERALIST tokens) , with the purpose of allowing a group of analysts to conduct in-depth research on Coinbase and entrust creation to accompany it. The artwork of the thesis. Crowdfunders obtained a certain percentage of shares in presentations and artwork, all of which were cast into NFTs. The related NFT sales totaled 28.6 ETH, allowing crowdfunders to obtain a 43% return in just a few weeks.

In addition to funding and investment, another benefit is to be a member of a group of like-minded individuals (community) . Many successful crowdfunding and NFT transactions in the Crypto field are driven by users’ desire to become members of a certain community, and the community requires token ownership to enter. This echoes a phenomenon I wrote in the article “100 True Fans”: “People are willing to pay high prices for exclusive and differentiated content and enter a network of like-minded people.”

For fans, the possibility of profit increases their motivation to support creators. Interestingly, this also introduces a completely new part of Web2 that has never existed before in the creator track: speculators . The important thing is that all these users—by becoming owners of assets related to the creator’s success—have incentives to help expand the creator’s work.

  • New programmable economy model

A fact of the creator economy is that creation is usually a collaborative act . YouTube creators play each other’s videos as protagonists; musicians draw inspiration from each other’s work; TikTok’s videos are often composed of the works of multiple creators: one creator’s original soundtrack, another The choreography of a creator.

Unfortunately, the Web2 system is not designed to reward or track this kind of collaboration. In this winner-takes-all algorithm platform world, value often flows only to the viral creators, while ignoring other people involved in the creation of the work. This has led to strikes and dissatisfaction among creators, who feel that their contributions have not been recognized and benefited.

In Web3, the promise of tokenization means that royalties can be established so that the entire contribution chain (that is, each contributor) of a collaborative work can benefit from it. Early examples include the revenue diversion function of Mirror and Foundation , which automatically routes revenue to various Ethereum addresses that contribute to a project.

It is conceivable that any digital work can use elements from the general media library, and revenue sharing and attribution are automatically included. Nir Kabessa wrote about the “memetic economy” in which ideas that are remixed and disseminated on the Internet can become the basis for value creation:

Those well-known memes (emoticons) GIFs will be linked to their NFT addresses , so that when someone wants to share the original NFT in his article, he can extract the address on the chain. For memes, this is very powerful because it allows them to maintain their attributes and background information on every platform. Therefore, any behavior related to a meme NFT can be accessed, read, and available on almost all platforms, and any bids, exchanges, and transactions for a specific NFT will be added to its metadata.

Except for memes, if every creative work is recorded on the chain linked to its source, it is possible to track the work on the Internet, and creators can also make money from the subsequent use of their work.

  • DAOs & community ownership

We believe that one of the fundamental reasons for the inequality in the creator field is that the platform exerts excessive control over creators and their works by owning the way in which content is produced and disseminated. The most direct way to challenge this control is to change who owns the means of production .

DAOs Decentralized Autonomous Organizations) and other collective ownership mechanisms have created a way to break the platform’s centralized control over the creator’s environment, enabling creators to collaborate without external intermediaries stipulating terms of participation . In DAO, the governance system is determined by members, and there is no pressure from external shareholders to squeeze profits. On the contrary, in the creator DAO , the owner is also the participant: the person who creates the content, distributes the content, consumes and values ​​the content.

An early example of a gradually decentralized creator platform is SuperRare : it is an NFT market that distributes tokens to artists and collectors on the platform, who are responsible for curating, managing the DAO vault and future product directions . Some organizations are starting communities and tokens first: ElektraDAO is a community of 42 musicians, visual artists, developers, and strategists who have developed an interactive music-centric

The promise brought by DAOs is to coordinate the incentive mechanism through stakeholder supremacy and eliminate the need to capture value. The result: a democratized and disintermediated content structure, where creators have control over their works, their distribution methods, and valuation methods .

In addition to DAOs, the inherent interoperability of Web3 makes platform lock-in possibly a much less harmful problem than in Web2. The atomic unit of Web3 is an account (address). Users can control their account with their key pair, and can use the account in any application or protocol. Since all smart contracts are transparent and can be publicly inspected, making opaque and arbitrary behind-the-scenes transactions more difficult to achieve. Although Web3 is still in its infancy, it is moving towards a more open and standards-based concept, which benefits creators and users.

Creator’s power and ownership

Since the existence of the Internet, thinkers and philosophers have been describing the utopian vision of what the Internet will make possible—especially in the media field. This utopian vision has not been realized. At least not yet.

In the past, I referred to ownership as the initial system condition, and everything else started from it. Ownership determines the incentive mechanism. It determines the opportunity. It determines how wealth is created—and for whom. In the past ten years, we have lived in an era where ownership is concentrated on a few centralized technology platforms that have data, end-user relationships, and the means to distribute content and make money from them. During this period, although the creation of user-generated content has exploded, this has also led to the dependence of the vast majority of creators on a few new gatekeepers and widespread burnout, as well as the unsustainability of the creator’s economy.

Fortunately, the upcoming new developments represent a shift in the balance of power to creators. With the key new capabilities of Web3 — digital scarcity, multiplication of funding as investment activities, programmable business models, and community ownership —we are on the cusp of a new creative renaissance on the Internet. I believe that Web3 has the potential to open up incredible opportunities for everyone who contributes and creates on the Internet: a true golden age of content that we have been looking forward to .

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/web3-the-golden-age-of-creator-economy/
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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