Why Web3 will be a game-changer for the “creator economy”

The creator economy is a brand-new business model developed in today’s Internet era. Under this business model, everyone can become a content creator. The creator economy has undergone tremendous changes from its birth to its current status, from being dominated by professional companies to being dominated by ordinary users on large platforms, but major changes have yet to come.

This article will explore new insights into the future creator economy: Blockchain, membership tokens, and other Web3 technologies will create a collaborative mechanism between creators and users (and even platforms).

Let’s face it: Young people want to be creators

According to a CNBC study, young people in the United States today dream of becoming content creators three times as much as astronauts. In Brazil, 75% of young people want to join the creator economy.

Over 50 million people in the world consider themselves creators, while only 2 million are professionals. The creator economy was born more than a decade ago, when many creators were still young.

Additionally, the number of creators is expected to continue to rise in the near future as more young people join today’s digital environment.

Internet payment service provider Stripe analyzed 50 creator platforms to determine the growth trend in the number of creators, as shown in the chart below:

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Okay, we know the market is big. But more importantly, the creator economy has yet to reach its full potential:

According to a report by Influencer Marketing Hub, the global market size of the creator economy is estimated to be around $104.2 billion. Additionally, the creator economy received record funding in 2021, with $1.3 billion invested in startups in the industry.

There are many similarities to the sharing or collaboration economy, which underpinned the emergence of unicorns like Airbnb, and the creator economy, which is known to be huge, making it difficult to gauge its market size and future forecasts:

  • Creators are everywhere, creating and making money in many different ways.

Although the creator economy is still in its early stages, experts from a16z and several other venture capital firms see it as one of the most promising markets in the new tech wave.

OK, we know this has a lot of potential. Now, let’s briefly summarize how the proliferation of smartphones and the democratization of the Internet, the so-called Web2, led to the rise of the creator economy.

Web2 allows creators to surface. Here’s the thing:

If you are unfamiliar with the terms Web1 and Web2, please note that in the remainder of the explanation, our focus will be on the creator’s perspective. Long story short, the transformation of the web gave birth to the foundations of today’s creator economy:

  • Web1 | The Information Economy: Consumption Only (1985-2005):

The internet is basically made up of read-only pages where a handful of creators upload their content online for users to access and read the information on the home page.

With little interaction, people can only read content on their computers on blogs and homepages produced by a handful of companies such as Yahoo and Google. So almost all of the value goes to the builders of those content.

  • Web2 | The Platform Economy: Reading and Writing (2005-Present)

With stronger internet connections, smartphones and user-friendly apps, more people can join the internet and connect with others effortlessly. Now anyone can easily interact with other users and create content in the most diverse formats, and best of all: no coding knowledge required.

This new reality has brought the creator industry to the surface and finally began to make money from their content, whether it’s through advertising, subscriptions, digital products or partnerships with brands. The creator economy quickly spread to almost every country in the world, showing huge signs of growth that were quickly spotted by big tech companies.

Web2 allows creators to join the Internet and share some of its value as follows:

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Tech giants built the platforms that currently provide the foundation for nearly every creator. Today, whether online musicians, video producers, game producers, writers or kitchens, almost 100% of creators are associated with a platform: you’ll find them on social networks like Instagram, video networks like Youtube They, or download their apps on the AppStore or Playstore, and finally subscribe to them on platforms like Patreon and OnlyFans to gain access to private content.

In short, Web2 has the creator in it. But as good as it looks, it also creates an economy better suited to platforms than creators. Let’s explore this question.

After a friendly start, give the majority of creators a “slap”:

With a few platforms monopolizing the market, the Web2 model has become greedy and not suitable for the creator economy. Due to extreme economic inequality and unreasonable compensation rates among creators, only a few creators are able to make their careers stand out:

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Additionally, platforms have so much control that they don’t allow creators to own their content, values, and relationships. As a result, with no control over the monetization of their work , most creators are forced to partner with brands for some kind of income.

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While this may seem like an opportunity, many experts believe the situation is very fluid, as most creators do not have firm contracts and often need to negotiate new deals with different brands. Additionally, we believe creators should spend more time focusing on unleashing their creativity rather than finding new partners every month.

Last but not least, it is necessary to state the fact that creators are decreasing, faster than ever.

Creators need to adapt to the algorithms of each platform, and algorithms change the rules on a regular basis. Social networks in particular have created a hamster wheel effect, where creators need to go through a series of activities to stay relevant.

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Web3 lets us start solving these problems, bringing the ideal technology to the creator economy:

Now more than ever is the time for a thriving creator economy. If Web1 is the information economy and Web2 is the platform economy, then Web3 can be thought of as the property economy.

  • Web3 | The Property Economy: Read, Write and Own (Today – Tomorrow)

Web3 is a new generation of Internet based on blockchain infrastructure. Unlike the previous two eras, in Web3, user data, property and contributions are no longer limited to the original platform, but can be opened on the Internet through a secure public network. Therefore, the network effect is shared and users are not locked into a particular platform.

Instagram CEO Adam Mosserri argued in his “Blockchain-based Creator-Led Internet” speech that creating a blockchain-based creator economy will shift power to creators, which means Creators will no longer be tied to social networks X or Y only, and in the future, creators will truly own their audience, no matter how a particular platform develops.

But how is this possible?

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“As a creator, you should be able to use technology to raise money to fund your ambitions. If you choose, you should be able to sell equity in the future, and you should be able to set the terms. (…) We can put The terms are programmed into smart contracts on the blockchain. We can link your revenue share on Youtube, your subscription fees on Patreon, your merchandise sales on Instagram, all to your own token.”

–Adam Mossery

Blockchain technology brings a lot of impetus to this idea: digital ownership, interoperability, governance and incentives, and composability.

Here are the important impacts blockchain can have on the creator economy, in our view:

Digital Ownership:

With the advent of blockchain technology, records previously centralized in one authority (with the power to change or delete them) became “digital” and “public”, enabling a secure and legal way of attributing ownership to specific assets. In this sense, the personalization of databases on blockchain networks like Ethereum gave rise to tokens.

Through tokenization, creators can work with their backers to finance their projects by creating and marketing scarce and exclusive digital assets. These digital assets can be associated with unique experiences in the real world, such as providing access to communities, forums, specific content, and even co-owning royalties in the future.

Decentralized protocols designed to empower creators by building exclusive communities are now a reality in the Web3 world.

Interoperability:

At Web3, you can display your personal items across different platforms. With the public network, the application is just integrating the data by the third party, so you can use your assets in various places.

This means, for example, if you buy a costume in a game on the blockchain, even if the game suddenly disappears, you still own the costume and can use it in other games that support it.

In this sense, it is natural for many platforms to embrace such assets to bring them more use cases. Instagram and Twitter are already testing the integration of NFTs into people’s profiles.

Governance and Incentives:

Another great transformation is the ease with which platforms can create equity tokens that provide governance rights to holders. Generally, these people can be actively involved in the direction of the platform in a process similar to an investor meeting.

But what about creators?

The distribution of governance tokens can incentivize creators to contribute to the development of the platform, create a sense of belonging, and align the future of the platform with the creators’ purpose.

How can Web3 be a game-changer for the creator economy?

Dear reader, this topic is extremely futuristic, and obviously, given all the uncertainty surrounding Web3, it is difficult to confidently predict what changes Web3 will bring to the creator economy in the coming years.

However, to expand our vision for the future, we’ll dive into our 3 key insights:

(1) Redistribute the value and power of the current major platforms to creators;

(2) To provide a new perspective for people who want to start their creative journey;

(3) For the first time, users have the opportunity to earn rewards and own a part of the Internet.

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(1) Redistribute the value and power of the current major platforms to creators

First, we believe that platforms can redistribute value and power into the hands of creators through the independent mechanisms of blockchain such as tokenization and smart contracts. Creators will be able to set rules such as the number of people who will become community members, the price of becoming a community member (most commonly through membership tokens), the benefits of participation, the duration of benefits, and royalties associated with their commercialization percentage.

If previously, creators relied on large platforms to attract audiences and monetize their content through the platform’s algorithms, now they will have another way to fund and grow their careers, including:

  • Most important users: their most loyal fans.
  • Most important job: only create quality content they love.

Also, worth mentioning is the emergence of new platforms on Web3. Many of these are decentralized decentralized autonomous organizations ( DAOs ), built by creators. So expect creators to have additional platforms to choose from, and these new platforms will take up more space on the internet.

For example, Audius has been dubbed the Spotify of the Web3 era by the public. The platform is a “modern streaming service built on the blockchain, designed for artists, to create, grow and monetize musicians of all types”. As of January 2022, Audius has a repertoire of over 200,000 songs with an average monthly audience of 6 million.

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(2) To provide a new perspective for people who want to start their creative journey

Second, considering Audius’ new scene, it’s a fresh perspective for those who want to start their journey as creators.

As we’ve seen at Web2, there’s no shortage of would-be creators, but the resources available allow only a subset of creators to thrive.

Now, with the availability of more value, the flexibility to change platforms, and the stability that comes with ownership, millions of people are expected to join the Web3 creator economy and start their creative journey.

For example, the Rally platform allows creators to create their fan community crypto assets (or “creator tokens”), and through Rally, creators can issue their own tokens, allow their token holders to access exclusive content, and send Their most loyal fans return value. This opens the door for independent monetization of creators and new partnerships between creators and fans.

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(3) The first opportunity for users to earn rewards and own a part of the Internet

At Web3, users don’t just consume or create content, they can invest in their favorite projects, whether it’s a new game being made, the career of a creator who’s already doing well, or another project that’s just getting started .

Can you imagine if you invest in a creator as a fan, after 5 years he/she is really famous?

The situation can also be a game-changer for creators, as it opens up a new way of connecting with fans that goes well beyond subscriptions. By investing in their favorite creators, users are not just super fans, they are also investors in the creator’s success.

Instagram CEO Adam Mosseri also mentioned in the speech just mentioned that people can invest in creators the same way they invest in startups. That means more creators are more content-focused because they have enough money to make a living and take the next step in their careers.

At this point, you might be wondering what’s the difference between subscriptions and tokens. Peter Yang mentioned in the article “Is NFT the future of subscriptions?” that membership tokens surpass subscriptions for two main reasons:

①. Tokens are not built on a platform that may change rules and fees at any time

②. Tokens allow users to be willing to spend a higher amount in exchange for revenue and jointly own the creator’s career.

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As shown above, we have 3 different user scopes:

  • Casual followers: unwilling to pay anything to watch creators’ free content through advertising-based platforms;
  • Subscribers: Willing to pay a certain amount, usually by subscribing to get more premium and exclusive content;
  • Superfans: Willing to spend more value, money and support to share a business with creators and seek success together.

All in all, in this new paradigm of Web3, we see a relatively more balanced relationship where everyone involved can add some value to the creator’s work. By forming an alliance based on the cooperation between builders (platforms), creators and users, creators have a community where they can share content, and the community will accompany his/her career growth for a long time.

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At Web3, every stakeholder has a role to play in supporting the success of creators, so we call it a “community”.

  • Builders provide the infrastructure and support to adapt their platforms to creators and provide the best experience for platform users (who are fans of creators) so they can consume content and interact in the best way possible.
  • Users collectively own the creator’s career, become their biggest fans, and provide creators with feedback.
  • Creators have the financial backing and stability to do what they do best: produce great content.

This is an encouraging scenario for the creator economy. The transition from Web2 to Web3 is first and foremost a cultural shift that will undoubtedly bring more opportunities to today’s society.

Posted by:CoinYuppie,Reprinted with attribution to:https://coinyuppie.com/why-web3-will-be-a-game-changer-for-the-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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