Can Web 3.0 break the creator economy monopolized by social oligopoly?

Author: Laoyapi (Public ID: laoyapi)

Attention Economy

What is the scarcest resource? When we think of scarce resources, we think of tangible goods, like oil or diamonds. They are commodities that have become overused and are no longer sufficient to meet our needs. However, in today's information age, our own attention has become a scarce resource. In the past, we were the customer, now, our attention has become the product. In the so-called "attention economy," our attention is constantly bombarded with information from social media, television, or news sources.

At its core, the attention economy is about commoditizing users’ attention. The attention economy has emerged alongside the rise of social media platforms. These platforms are free for people to use; users simply “pay” by providing their personal data to the platform, which can then sell ads to companies based on the promise that the ads will reach a specific target audience. Users also “pay” by paying attention to content, because the more views and engagement creators get, the more money they can make from the platform or by doing brand deals.

At its core, the attention economy is enabled by a vicious cycle in which we are both its products and its customers, unwittingly manipulated to reinforce it.

Creator Economy Derived from Attention Economy

Many talented creators have emerged on social media platforms, and creators are eager to be noticed. This means that they need to continue to create content that appeals to a wide range of people. In addition, creators can become familiar with the algorithms of different platforms and create content that they believe the algorithms will recommend to more people, thus expanding their audience.

Platforms are also incentivized to have many creators who can bring more user attention. Because of this, platforms provide creators with tools such as filters, smart analytics, and automatic advertising. These tools, combined with the influence of the platform, can give creators the opportunity to monetize their traffic. This phenomenon is what many people call the "creator economy."

This rising independent economy disrupts the traditional ways consumers interact with content. As the creator economy grows, thought leaders and visionaries consider Web 3.0 to be the next phase of the internet, predicted to replace the current version of the internet and the backbone of future growth.

While social media is currently the most effective way for creators to connect directly with followers, in the future, it may not be the right solution. While anyone can post on social media, users give up some control because they are subject to the guidelines of these platforms. In addition, platforms like TikTok and Instagram try to "flip creator partnerships" through their rent-seeking advantages, squeezing dividends from users and creators because they are already doing business directly with advertisers. That is, social media giants are "positioning themselves to take a cut of creators' revenues"

Creator-friendly platform

Substack, Ko-fi, Patreon, and Twitch, which allow creators to sell their content directly, can be considered "creator-friendly" platforms. In a study conducted by Forbes, 63% of people said they had tipped content creators. These platforms still take a percentage of creators' earnings, but it's significantly lower than other social media platforms. For example, YouTube takes about 32% of a YouTuber's ad revenue, while Patreon takes 5%, 8%, or 12% of a creator's monthly Patreon earnings (based on that creator's membership plan). They also don't have as strict censorship rules as other social media platforms, which can give creators more freedom.

However, the appeal is no longer apparent. Now, these platforms are seen as a liability, and they also have a degree of ownership and control over creators’ work, as they have the power to delete posts or hide creators’ content from their fans. They also have content control, with creators adapting their content to fit the platform’s advertising rules and algorithms.

Pain points of traditional social media platforms and creator platforms:

1. Data Privacy:

Web 2.0: Facebook, Google, Twitter Centralized companies have a large amount of personal data. Once they are attacked by hackers or the company goes bankrupt, user data will be leaked and the company can tamper with the internal database.

2. Data sovereignty: Although users exchange personal information (data) for a good user experience, most centralized companies sell data in exchange for advertising revenue.

3. Gatekeeper’s Review:

Web 2.0: Many social media platforms censor creators based on their political beliefs, arbitrarily delete some content, and ownership of content creation is in the hands of centralized platforms.

How to use blockchain technology to reshape the creator economy?

Blockchain is a decentralized digital transaction ledger that uses encryption technology to make all transactions traceable and transparent.

The fact that blockchain is decentralized and completely transparent initially made it very attractive to the financial sector through cryptocurrencies. However, people have started using blockchain for other things as well, and it has become very beneficial to content creators and the media industry.

NFTs give creators ownership

Non-fungible tokens (NFTs) are unique digital tokens that exist on a blockchain. “Unique” means they can’t be copied or divided — they’re one-of-a-kind. Right now, much of the hype around NFTs is for digital art. However, NFTs can be any digital product: songs, movies, videos, even tweets. Because they exist on a blockchain, they’re trackable. This is attractive to creators because, unlike in real life, creators can tell where their work is once it’s sold. They can also program the NFT to give themselves and all previous owners a percentage of the sale if it’s resold, incentivizing owners to retain its value.

FTs (Fungible Tokens, e.g. BTC)

Fungible tokens (FTs) are interchangeable with each other. They are not unique. Fungible tokens have the same value as each other. An example of a fungible token is Bitcoin: one Bitcoin is always worth the same as another Bitcoin. FTs also exist on the blockchain, making them traceable, and creators can mint their own social tokens to sell to fans.

DAO

A Decentralized Autonomous Organization (DAO) can be thought of as a shared, fully digital bank account for a community that exists on the blockchain. They are a way for communities to act like cooperatives or companies and build a sustainable model for themselves. A community can issue FTs (Fungible Tokens) and use them to decide what privileges members get, and members can vote to make changes to the DAO.

How do these technologies impact the creator economy?

Creators can upload their content as NFTs to decentralized social media platforms. When the NFTs are resold, the revenue can be attributed to the creator. Creators can also create and issue their own FTs (social tokens) that their fans can purchase directly. These token holders can organize a DAO and use the DAO as a way to connect with each other and content creators, allowing for a community-driven approach that integrates fans into the creator's community and thrives together, rather than just being a follower. The DAO can also receive a portion of all NFT sales, and high NFT sales can even increase the value of the creator's social token, which will benefit token holders.

The difference between this token-based decentralized system and creator-friendly platforms is that by purchasing a creator's social token, fans are essentially investing in that creator. Social tokens can increase in value, which makes them valuable to token holders. This solves the current rent-seeking problem of traditional social platforms, where fans cannot choose to receive monetary benefits based on the success of their favorite creators, and all benefits belong to the platform.

Companies already exploring blockchain technology as a tool for creators

The potential role of these technologies in the creator economy is already being realized, with companies like Rally and Roll allowing creators to create their own social tokens. There are also many NFT marketplaces, such as OpenSea, for creators to mint NFTs and sell them to market users. At the same time, there are tools and infrastructure for creating DAOs, which make it easier for creators to build their own fan economy.

Overall, the creator economy, combined with NFTs and DAOs, lays the foundation for a new collective ownership model. This means shifting the focus to the creativity of creators and audiences, allowing them to benefit directly rather than relying on intermediaries.

The creator economy gives creators more agency. They can rely on the income from their loyal supporters. It also changes the profit model of content creators. Now no single centralized platform can monopolize the huge profits of its creators, which will motivate creators to unleash their true potential and promote competition and innovation in the entire creator economy.

References

1. https://www.martechalliance.com/stories/nfts-their-upcoming-role-in-the-creator-economy

2. https://medium.com/@jillianfarrell00/how-blockchain-can-fuel-the-creator-economy-94a4d8f1957b

3. https://productmint.com/patreon-business-model-how-does-patreon-make-money/

4. https://journal.businesstoday.org/bt-online/2021/the-attention-economy-asher-joy

5. https://athelogroup.com/blog/content-is-king-how-web-3-0-can-impact-the-creator-economy/