Crypto is laying down the foundation for the future of the Creator Economy. The Crypto Creator Economy shifts the principles and industry value back to the creator. Creators are empowered with greater business models, creative freedom, and control. Audiences are becoming owners as collectors of content and a part of the creator’s journey. The landscape is shifting quicker than we can predict, for the better, and NFTs are at the heart of the movement.
The foundation of the Creator Economy is creators and their content. Content includes all types of Art including visual art, music, videos, articles, books, podcasts, film, and more. Content goes through a life cycle from creation to distribution, curation, and engagement. Communities are coordinated around the creator and their content. The relationships formed between the creator and their audience are surfaced at the web3 social layer. All media, entertainment, and social platforms are built on top of creators and depend on their content; Spotify for music, YouTube for videos, Netflix for Film, Instagram, and TikTok for relationships with the creators. The Crypto Creator Economy is underway with NFTs as the rails for content, communities, and relationships empowering the next generation of creators.
The evolution of progress made up until now for the Creator Economy is massive and has created a lot of success for creators and amazing experiences for audiences. There is still much progress to come and Web3 has made the possible areas of improvement clear. Here are some weaknesses that lay the foundation for a better future.
Current Web2 business models limit the value of the content and the creator's ability to monetize. The current Creator Economy business models include; freemium subscriptions which provide unlimited consumption of the content for a flat monthly fee, or an advertising model which charges advertisers for the traffic driven by the ads on the creator’s content. In the current business model, platforms retain the majority of the value generated by the content by providing a “royalty” back to the creator. The “royalty” has become a minimized fraction of the platform's entire revenue stream distributed to creators pro-rata based on content performance metrics. The core of the inefficiency is not enabling communities to value the content and their relationship with the artists on their own terms or share together in the success.
Creators are limited in their creative freedom, their content rights ownership, and their relationships with their audiences. Platforms and agencies put restrictions on what, how, and when content can be distributed and monetized. Many platform terms affect the ownership and control of the content uploaded to their platform, while agencies oftentimes end up with more ownership of content than the creators. Platforms restrict the relationship between the creator and their audience, with no ability to port their audience across platforms or interact with them directly into custom solutions.
The entire life cycle of content from creation to distribution, curation, engagement, and social is confined to specific apps within certain types of content. These applications build their own experiences for end users and control all the ways users can interact and engage with their content. Content gets wall gardened by distribution licenses that keep content from being openly integrated into any applications to build upon the user experience and content proliferation. For example, Spotify owns the full experience of uploading, discovering, and interacting with music, just like YouTube with Videos. This creates a platform-controlled curation and discovery process of the content that other applications cannot utilize and further develop the experience for audiences.
The only way to monetize content is by distributing it to services that pay for content usage and consumption. That limits the content to only being distributed on those platforms. Although limiting distribution is the only option to monetize, content is inherently more valuable when its more widely appreciated. This creates a conflict in that creators need to limit the distribution of their content and, therefore, its inherent value potential, to get any monetization on the content they create.
Creators, their content, and their communities are the highest priority actors in the Crypto Creator Economy. The content life cycle and the relationship between creators and their communities are being disrupted and rebuilt at every layer. Rebuilding the Creator Economy on Crypto rails brings a magnitude of order improvements to the industry.
The new economic model for content is communities valuing content directly as Content NFTs. Communities can opt-in to value the content from a creator directly because of what it means for them to own the content. There is no limit to the value of content when it is valued directly by collectors, and platforms are no longer determining the price of content consumption. The value of Content NFTs to collectors consists of the emotional attachment to the particular piece of content and the creator, the relationship developing with the creator, and the social signal to the existing and future developing community around the creator. As the creators’ content increases in value over time and their community grows, creators earn revenue from resales of their content and future issuances of new content. In addition to the value of the content, creators can add functionality to enable abilities for the NFT holders of the community.
Creators have creative freedom, sovereignty from platforms, and an immutable community. They decide however they want to release content, when they release it, and what they release. Content is fully owned by the creator and up to them how to distribute, monetize, and what rights to give to their collectors. This puts creators in control of letting their community value their content directly. The relationships formed with their community are onchain forever and portable across any platform.
Content NFTs act as a value settlement layer. The value of the content is captured in the Content NFT natively by audiences collecting the content. This enables the creator and their community to focus on growth and embrace all the potential distribution options and internet virality without worrying about tracking down the value created. A native settlement layer for content incentivizes a model that keeps content free to consume and valuable to own.
Communities of a creator have an opportunity to value the creator’s content by collecting it. By owning the Content NFTs they own a piece of cultural equity in the creator's journey. As the creator continues to grow in popularity and release more Content NFTs to meet the demand of the growing community, the value of their Content NFTs may increase. It’s very analogous to owning a painting from a painter you think will succeed, and when they do the painting your holding becomes more in demand and more valuable. In addition to the shared upside potential between the creator and their community, when a community member or contributor values a creator’s content directly and holds their NFT it creates the deepest possible digital relationship. Creators strive to have their work valued and collectors strive to be connected to creators they love.
Content released as Content NFTs creates a foundational pluggable layer for any applications or protocols to integrate the Content and build further experiences, essentially acting as “Media Legos.” Once the content is composable, any builder can create additional protocols that focus on elevating the ways the content is interacted with. Composable content leads to competitive innovation, where protocols and applications iterate on creating the best developer and user experiences.
The Content NFT Life Cycle is the flow of Content NFTs through upstream protocol layers of shared infrastructure including co-creation, minting, distribution, curation, and engagement layers. Content traditionally goes through a similar life cycle however siloed to certain applications, whether its distribution and playlist curation in Spotify, live engagement via emotes on Twitch and Tik Tok, or follows and likes on Instagram. In the Crypto Creator Economy, the upstream layers of the Content NFT Life Cycle are unbundled into protocols as shared infrastructure that natively integrate Content NFTs.
Not only is the Content moving onchain but also the pieces that make up the content itself. For instance, not only the song but the stems of the song. The contents within Content NFTs can be available for further creation from creators outside the original creator.
With all content onchain and the pieces that make it up, they can all be collected and organized in one place to be easily discoverable for creators to reuse. When creators reuse the content of another creator they can point back to the original content which makes a lineage of how content links to its predecessors. Original creators may set standards around percentages of reuse content sales they’d expect to receive that would also give credit to the original creators onchain.
Considering that the value of the content accrues to its NFTs and their sales, the original creators will be more inclined to provide their usable content freely to enable more reuse which would either tie back more value to the original or split back payments from the reused Content NFT sales back to the original creator. This incentivizes a situation where content is free to use upfront and the original creators share in the upside of the success of reused content.
The minting phase is the inception point for all content coming onchain. Minting protocols enable creators to permissionlessly release their content as NFTs and are emerging for specific content verticals, or different types of content, as content creators of all types begin to release NFTs. At the time of minting, the content immediately has a settlement layer where the content can be valued directly and acts as a potential funding layer for artists.
Minting protocols create a network effect between creators supplying content and applications surfacing the content. It’s easier for applications to find and distribute content on an established minting protocol while creators receive the distribution of content by minting on the same protocol.
Minting protocols are emerging for specific verticals of content for a more focused go to market, specific content repository, tailored creator experience, and focused feature roadmap for the content vertical. Over time these protocols can innovate for the creator with more features around auction methods, content generation tools, and content vertical building blocks for more complex content releases.
Application builders can permissionlessly develop distribution interfaces that integrate and surface minted Content NFTs. This looks like music listeners, video players, article browsers, and more.
Distribution interfaces are focusing on specific content verticals and the integration of upstream protocol layers of the content life cycle such as curation and engagement to optimize for the best consumer experience. These applications are integrating content across multiple outstanding minting protocols and provide content vertical marketplaces for audiences to become collectors.
End users can consume the content while having the opportunity to value and collect the content they’re consuming. Since the creator now monetizes via NFT sales and the distribution applications convert listeners to collectors, the distribution rights of the content are flipped to being free to distribute and even incentivize the creator to include their content in distribution applications.
Content starts vast with all content permissionlessly minted to minting protocols and curation is the process of selecting the content for further discovery. At the core of curation is the ownership of Content NFTs, where the curation is backed by the value of the content itself.
Traditionally, the experience is purely centralized with playlist-like collections of content run by specific people or even by the platforms they’re distributed on. In the early days of content NFTs, curation also started centralized and curated by the founders and teams of platforms selecting artists for access. There’s a spectrum of curation from centralized to decentralized and manual to automated. Over time more decentralized and automated curation methods will start to surface.
Decentralized curation brings more stakeholders around the decision process of selecting content into playlists and gives accepted creators access to more distribution. Democratically curated playlists are likely to have niches of communities focusing on different types of content and their genres, essentially bringing the foremost experts of content to focus on discovering and curating the best content together. Potential automation within curation protocols could arise beyond group voting, and begin to utilize onchain metrics around content NFTs and ownership based curation such as the number of holders, the volume of sales, overlapping holders, and further onchain social graph relationships.
With shared ownership of content between creators and their collectors, curation also organically happens through the act of collecting. Individuals or groups of collectors are incentivized to further proliferate the collected content and contribute to the distribution of the creators they collect.
Engagement layers will integrate Content NFTs natively and create interactive onchain experiences with the content that will result in value backed expressions, earning opportunities, and deeper ownership.
Value backed expressions are purchasing of emote NFTs and reacting with them directly on Content NFTs and releasing the value backing the expression directly to the creator of the content. These present a lower barrier of entry to collecting and result in a value backed onchain reaction representing a relationship in the creators’ social graph. Traditionally, we see behavior like this in applications with live streaming features and emote packs purchased by audiences and used on creators’ streams.
Another form of engagement may be earning opportunities through onchain revenue or engagement yield for existing community members or holders of Content NFTs. Being an early contributor, curator, and ambassador of the content may lead to additional earned tokens from the creator. Earning opportunities will likely also extend in some capacity to audiences looking to join and add value to a creator’s community by providing value via work instead of monetarily.
In most cases of engagement, the audience or community members have opportunities to create deeper ownership in the creator’s outstanding tokens and cultural equity, whether via participating in the social graph through expression, earning onchain, or deepening ownership within the creator’s network. Current early categories of engagement protocols are emote NFTs, content rating rewards, and social token-yielding Content NFTs.
When creators are releasing their content as NFTs they’re creating their community as a group of token holders which requires NFT native infrastructure to coordinate effectively. The community needs to be able to coordinate within itself to act on the goal of growing in community size and proliferating the creator and their content. There are several layers of infrastructure needed to support and further develop community coordination.
A major priority for a community of Content NFT holders becomes the need to communicate. All of the holders have shared ownership of the NFTs in common and have a shared interest in the artist. This shared ownership layer should convert to an abundance of conversations between collectors discussing the creator's content. These messages can range from creator to collector, collector to collector, and groups of collectors all communicating at the wallet-to-wallet level. Users will be able to organize and filter their messaging based on their wallet holdings.
All of the NFT holders have valued the creator's work and therefore have displayed their conviction and enthusiasm for the artist and their success. It's probable they will want to have a voice in the future of the artist. By coordinating with the community, the artist can find ways to set aside a portion of the proceeds from NFT sales or self controlled marketplace fees into a treasury that goes back to the community to control. The creator could also designate control over the treasury to the community to be further organized and governed around budgeting and potentially even creative direction.
As creators grow their audiences, their community can still find ways to provide other types of value in exchange for ownership of the content. Creators will continue make more opportunities for their audience to gain ownership of their content in the future. The communities that form around their favorite creator's content have diverse skill sets that can benefit the creator to achieve their main goal of proliferating their content. This creates a way for fans to be compensated via content ownership for their contributions to the artist's success.
Creators at a certain point will need to scale their community and there is an opportunity to release their own content-backed currency or social tokens. Social Tokens become a way for creators to take their communities to the next level at the point their audience for their content ownership outweighs the artist's desire to dilute their collectors by expanding the supply of their content releases and editions. Social Tokens offer a scaling point for the creator's community beyond owning the content directly and at a lower entry price. They also can represent broader exposure to the community via a diversified holding across all of the outstanding content. The social tokens can also integrate better with community earning opportunities which helps scale via smaller units of ownership per task versus the entire content NFTs. A creator releasing a social token to solve for an inflection point of demand would also probably give some portion of them to their existing NFT holders.
The Web3 Social graph is happening natively onchain from all the interactions and relationships around Content NFTs, the Content NFT Life Cycle, and the Community Coordination. The social graph is an umbrella of data from all the onchain recordings of the interactions between creators, collectors, curators, and engagers from the Content Life Cycle, and all the data from the interactions of active contributors, votes, and earners from the Community Coordination. This social graph lives onchain and is immutable to the creator and their community to port anywhere necessary and lives simultaneously across relevant applications from the same source of truth.
Web3 Social becomes significantly more powerful than current web2 based applications because the social graph is backed by ownership based relationships. All the onchain relationships forming between creators, content, and communities are meaningful value backed ownership based relationships that can be surfaced by any builder as creatively as possible and with the best user experience.
Developers have an opportunity to create new social features that emphasize ownership-based relationships created on-chain. As well as integrate and further build on the pieces of the content life cycle and community coordination in social oriented ways. Asking the social questions around ownership and Content NFT interactions and displaying them in social ways is the major opportunity in Web3 Social.
The first form of content to move onchain and have dedicated vertical marketplaces was Visual Art. Even before then there was an existing Digital Art market that didn't have a way to sell because digital files weren’t sellable before NFTs. The same business model in traditional art where physical art is valued directly by holding the physical goods, digital artists could now replicate with collectors of their Crypto Art. NFTs made it possible. Questions people asked at the beginning of Crypto Art in 2018 was; Can digital art be valuable? If anyone can see it why is it valuable to own? Fast forward, the Crypto Art industry grew from virtually $0 to north of $1B of market cap within a few years with the ability to value digital art directly.
Crypto Art makes sense to be the first category of Content NFTs given the existing marketplace around traditional art was collectors valuing artist’s work directly. But NFTs are a technology for all files and therefore all types of content. Culturally the next shift of content moved to Music and now what is called the Music NFT space in 2022.
The traditional art industry does ~$65B in sales per annum versus the traditional music industry at ~$30B per annum in sales. The art industry brings in more value annually than music, but music is significantly more consumed. The largest limitation to the value of the music industry is the way music is valued. Music NFTs as a form of Content NFTs unlock that value to a gaming like industry size.
It doesn’t stop at music, it carries onto all other verticals of content like videos, podcasts, film, writings, and more. The way music is valued and consumed is significantly more alike to these later forms of content than visual art. And the Content NFT Life Cycle, Community Coordination, and Web3 Social pillars of the Crypto Creator Economy are forming examples of these stacks around the Music NFT space. Other verticals of content, community tools, and social products should look to this space, contribute, and learn from it to further advance themeslves.
The Creator Economy is continuing to evolve to provide the best solutions for creators, content, and communities. Its future looks promising on Crypto rails. Creators can now make content that is immediately valued by their audiences becoming their collectors. NFTs lay the foundation for the future of content monetization and distribution for creators and audiences. There’s still much more to come beyond what we’ve imagined so far.
In the spirit of Content NFTs, myself as a creator and the future community around my content, I’m minting this article as a Writing NFT to be collected.
This is the first and foundational piece of the newsletter, Creators GMI, covering thought provoking categories of the Crypto Creator Economy. I'll continue to cover the Crypto Creator Economy as I invest from PTC Crypto, write from Creators GMI, and tweet from my twitter.