When you think of an economy, you think of people producing, distributing and trading goods and services to a consumer. In the past centuries, we have had the emergence of four major economies. The Industrial Economy of the 19th century gave birth to many of the inventions we continue to use today. The Consumer Economy of the early 1900s gave rise to an appreciation of leisure in life. The Information Economy came with the birth of the internet and made information more accessible across the board.
Currently, the Creator Economy is growing exponentially as creators in various fields continue to innovate and make their content accessible to consumers. It’s interesting that as the creator economy grows, we have begun to enter a new era of the internet, web3.0. What does this mean for how this new economy takes shape? Let’s find out in this article.
What Exactly Is the Creator Economy?
The creator economy is made up of three main entities:
- The creator who makes the product for consumption.
- The consumer, who enjoys the product.
- The means which allows the creator to get paid.
A creator creates an experience for an audience, which gets them to come back and, in turn, forms a community around that experience. If you are capable of doing that, then you are a creator.
What Makes the Creator Economy So Important?
Today, advertising is a difficult challenge. There is so much content out there that it’s almost impossible to grab someone’s attention. Companies have started using content creators, just as they used to use celebrities to push their product to their communities. The use of branding and paid advertising has helped creators generate money by building their communities.
Youtube made headlines in 2007 when it gave the creators on their platforms a share of their revenue. Since then, many other platforms such as Twitch, TikTok and even Instagram have adopted business models to gain revenue through the creators on their platforms.
Okay, so What’s the Problem?
This all sounds amazing, however there are a few problems that arise where the creator is concerned. The first issue is that the creator technically doesn’t own their community on these platforms. Let’s say a community is generated on Youtube and a problem arises with that account, you no longer have access to this community. You can’t take that community with you to Instagram or TikTok, that community is lost.
The other issue is when the content can’t reach your audience due to the algorithm. This forces creators to keep generating content that adheres to whatever latest changes made by the platform owner. As a result, they are prone to burn out.
Finally, creators don’t have much control over the content they can produce. The YouTube of a decade ago is not the same YouTube we have now. Things that content creators were able to post and get away with before, may now threaten to get them demonetized on the platform. This can definitely stifle the creative process.
Now How Can Web3 Fix This?
Web3.0 has introduced some promising solutions for the creator economy. Web3 is the third iteration of what we know as the internet. Its primary feature is that it is built on the idea of a decentralized network. If you would like to find out more on how we got here, check out our upcoming article about iterations of the internet. With web3 came NFTs, DAOs, Tokenized economies and interoperability. Here is how all of these can benefit the creator economy.
Decentralized Autonomous Organizations are bottom-up entity structures with no central authority. This means that the end user has control over what happens with the organization. It works by giving members authority through distributed tokens which they can use during the voting processes on the DAO. If a platform operates as a DAO, the creators and their fans will take part in the voting process.
DAOs offer transparency, democracy and equity to its users. It incentivizes token holders to make the best decisions for the community as otherwise, there is a risk of devaluing the tokens they all hold. Content creators can use DAOs in order for them and their fans to decide what they should create on these platforms and how the content should be utilized.
Tokenized Economies and NFTs
A creator can also create tokens based on their community. These tokens can be used to purchase products, attend events and gain access to exclusive content. Web2.0 has already given creators mediums for their fans to pay and show support, such as Patreon. The problem is that these platforms usually take a percentage of the earnings raised by a creator.
With the advent of tokenization, fans may earn utility tokens by doing certain activities for the community like sharing their content, participating in and winning competitions, or joining certain events. This tokenized economy gives the creator some control and allows fans to have more engagement. Luckily, creating your own tokens is not a difficult process! You might want to pause here to find out how to create a token.
Non-Fungible Tokens, or NFTs, are a special class of token. They’re essentially digital collectibles that can be purchased and traded in an online marketplace using Blockchain technology. What makes these special is the non-fungibility or unique nature of each one. Creators may limit the quantity of the NFTs to make it a rare collectible item. Whenever the NFT is sold, the creator is paid a specified royalty amount. These NFTs can be distributed as gifts, used to promote access to certain events, or as a way to allow fans to benefit from a creator’s products.
Interoperability allows for standard operations to continue across different settings with minimal friction. In the web2.0 world if you created a community on one platform, you can’t carry that community to another platform. Let’s take having both a Youtube and Twitch account. In order for a fan to follow you on both Youtube and Twitch they need to sign into both platforms and follow your profile. Web3.0 will allow creators to move through different platforms with their one community, which will save them from needing to rebuild if something were to happen, like getting blocked (which also technically wouldn’t happen on a decentralized platform).
The creator economy is expanding rapidly and is unlikely to stop anytime soon. As it continues to advance along with web3.0, many more use cases that can benefit this economy will organically emerge. As with all developing technologies and applications, they will grow to strengthen and support each other. The only question is, will you be a part of that growth?
Have a skill, talent or interest you’d like to share with the world? We’ll be right here to help you navigate through this new era in technology.
Looking to get into the Blockchain space, create your own NFT or to continue growing your DAO? Unpluggd Digital provides services in on-chain software development including dApp creation, protocol implementation and more.