Web3 and the creator economy

The rise of social media has led to the emergence of a multi-billion dollar “creator economy” that makes it possible for anyone to earn a living by creating and sharing content with their fans. While it’s almost impossible to know how much money the creator economy is worth, one estimate suggests that creators could generate as much as $20 billion globally. 

That’s a lot of money, but not all of it ends up in the pockets of the creators themselves. While today’s social media sites are the ones that have given rise to a new generation of influencers, they’re also heavily criticized for leeching off many of the contemporary artists that use their platforms. The likes of YouTube, TikTok and Instagram rely heavily on creators to grow their user base and drive engagement, and yet those influencers tend to receive but a fraction of the revenue they generate.  

It’s for this reason that many creators see the rise of Web3 as an opportunity to break their reliance on the traditional, highly centralized platforms that first propelled them to fame. With Web3, blockchain and decentralization, creators can regain full ownership of the content they create and take back control of the way it’s disseminated and monetized across platforms.

The Limitations Of Centralized Social Media 

Some creators may not believe there’s any real reason to switch from tried-and-tested platforms like YouTube or Instagram. Indeed, some of the most popular creators on YouTube reportedly rake in millions of dollars a year from their endeavors. Take Logan Paul for example, who began his YouTube channel back in 2015 and quickly saw his subscriber base explode. As of January 2022, his YouTube channel had more than 23.2 million subscribers and over 5.8 billion views. While his exact earnings aren’t clear, Forbes reported in 2018 that he made $14.5 million in revenue the previous year. 

So it’s clear that some creators are absolutely rolling in but not everyone has achieved the same level of success as Logan Paul. Far more common in fact are the so-called “micro-influencers” who typically have somewhere around 6,000 to 10,000 followers on platforms such as Instagram and TikTok. These people pay the price for having a much smaller audience, typically making an average of $88 per post, according to a recent survey by Influence.co. 

It’s difficult to actually estimate micro influencers’ earnings as any revenue they generate comes from multiple sources. In the case of TikTok for instance, creators can make money receiving “digital gifts” from their fans which can be converted into cash. They may also be able to receive something from TikTok’s Creator Fund, which is set up to reward users with at least 10,000 followers and 100,000 views over a 30-day period. 

However, TikTok’s Creator Fund has been criticized in the past for its low payouts, which are as measly as a few cents for every one thousand views they rack up. The TikToker Preston Seo, a personal finance influencer with more than 2.1 million followers, earned just $1,664 from the Creator Fund through January 2021 to May 2021, Business Insider reported. On average, he earns between $9 and $38 per day from the fund. 

Creators can also get paid by sponsors, which might mean promoting products from certain brands or creating their own rendition of a popular song in the hope that it goes viral. In such cases, it’s possible to earn a lot more, with Seo telling Business Insider he typically charges $600 per sponsored post. 

That is however still a far cry from the millions of dollars in annual earnings generated by some of the world’s biggest influencers. Moreover, for micro-influencers who generally have less than 10,000 followers, the earnings opportunities with sponsored posts are generally much lower, perhaps as low as $20 to $30 per post. 

Take Back Control 

It’s for these reasons that so many creators are getting excited about the potential of Web3 and the newer, decentralized platforms and technologies that enable them to create content they can retain control of. 

One of the disadvantages of traditional social media sites is that creators essentially have to give up ownership of the content they create the moment they post it online. Instagram’s parent company Meta Platforms retains the right to use anything posted on its platform for its own promotional purposes. That includes retaining the right to copy, modify and sell that material and those rights to third parties.  

In other words, most creators are getting a sore deal. The videos they spend hours creating are not their own. Companies like Instagram and TikTok might be able to make millions of dollars in revenue from their content, while the ones who make it will be repaid with just a fraction of that amount. 

With Web3-based platforms, that’s no longer the case. Creators have the opportunity to use blockchain to assert digital copyright. Videos can be tokenized as NFTs, which can be used to prove ownership and transfer the rights of that content to someone else. 

The key advantage of NFTs is that they eliminate piracy of digital media. With traditional social media, it’s all too easy to download a video posted on YouTube or Facebook and duplicate that content. Thus, creators have no way of monetizing the media they produce, except through indirect means such as brand collaborations and advertising. 

However, the existing market for NFTs has demonstrated how people are willing to pay a lot of money to own the exclusive rights to digital media and content. Creators now have the opportunity to capitalize on this mindset by selling NFT-based content directly to followers. They can offer their fans tokenized copies of media, giving them a chance to own their favorite videos and images. 

Bigger Rewards 

Web3 has also enabled the creation of entirely new and decentralized social media platforms that focus on rewarding both creators and users alike. Taki describes itself as an “engage-to-earn” social network that enables users to own a stake in the platform itself. On Taki, people can earn TAKI cryptocurrency by engaging with content or creating it, such as by writing posts and commenting on them. TAKI coins can then be used to send “Gold Taki” tips to other users on the platform when they see content they feel is deserving of a reward. Each Gold Taki tip sends 0.2 TAKI from the tipper to the recipient. The platform also gives users the chance to complete daily tasks, providing rewards for users who interact with content and give and receive Gold Taki tips, to encourage greater engagement. 

The real advantage of Taki is that both creators and their followers can earn money from engaging with the platform. It’s a unique model that has caught the attention of dozens of prominent backers. To date, Taki has raised $3.5 million through a seed funding round led by Coinbase Ventures, FTX, OKX Blockdream Ventures and Solana Labs, plus an additional $3 million from the Superlayer incubator that’s backed by names including Paris Hilton, Nas, Michael Ovitz, Gary Vaynerchuk, Keisuke Honda, Anthony Pompliano, Packy McCormick, Joe Montana, Chris Dixon, Marc Andreessen, Yat Sui and Raghu Yarlaggada.

There’s another major benefit of Taki too. It allows creators to escape the restrictive bounds of centralized platforms like Instagram and YouTube, which rely on algorithms that privilege certain kinds of content over others in order to maximize company profits. These algorithms, which also change over time according to the latest trends, force influencers to create content in a very specific way to ensure it can be discovered. It’s a huge limitation on their artistic expression.

Without this pressure to optimize their content for algorithms, creators on Taki have far greater artistic license to create content as they see fit. This also drives more collaboration, as Taki users are no longer in a position where they’re competing against one another for views among the same audience. Meanwhile, for users, the creator economy becomes easier to navigate as they’re no longer force-fed almost identical content through their feeds. Instead, they can discover and invest in the creators they truly appreciate. 

Peer-To-Peer Payments

One less well-known fact about Web3 is the way it can also potentially revolutionize the way creators monetize their content on traditional Web 2.0 platforms. New cryptocurrency protocols enable monetary value to be transmitted in a permissionless way across social media networks in much the same way as those platforms disseminate information. 

This is the mission of PIP, which leverages existing connections across platforms like Twitter and Facebook to enable users to transact without any fees or the permission of a centralized authority. The company acts as a bridge between Web 2.0 platforms and Web3, giving creators a way to escape from the proprietary payment systems they were previously compelled to use, and receive tips from their fans in cryptocurrency. 

The product does this by linking social identities to crypto wallets, allowing anyone on Twitter, Facebook, Instagram, TikTok, LinkedIn, YouTube or any other social network you care to think of, to send crypto to any other user on one of those platforms. 

All users have to do is download the browser extension and they can start sending payments to creators via their social media profile. For creators, they need to generate and post a simple tag, which is a human-readable crypto address that’s linked to their crypto wallet, in order to receive tips. The browser extension will then highlight this tag on their profile, to make it easy for their followers to find. 

Creators can also set up a PIP.ME Web3 profile to connect to their audiences and receive tips with no fees. There’s even a button that can be embedded into websites via a simple JavaScript snippet, allowing users to offer various functions such as donations, tips, checkout and more, meaning they can also create and sell merchandise to their followers. 

The company is planning greater functionality too, including the ability for creators to set up a paywall to access their social media content. With this, they’ll be able to charge followers a fee to watch their latest videos or read new blog posts. Finally, it will soon launch a PIP Card for creators who’re not familiar with crypto to make it easier to spend those funds in stores. 

The power of the product promises to revolutionize the creator economy. The venture capitalist Li Jin wrote in a 2020 blog post that creators can make an extremely comfortable living by amassing just 100 “true fans” who’re willing to pay $1,000 a year for their content, merchandise or access. 

For the thousands of “micro influencers” across the web who already have several thousand fans, the prospect of finding just 100 people who’re willing to pay for their content is certainly very achievable. If 100 fans each send them $1,000 a year, that’s $100,000 per year – plenty enough for most people to live on. 

These dedicated fans can send payments directly to their favorite creators, independent of any service that would normally take a huge cut of that money in fees. Web3 meanwhile ensures creators have multiple options to extract that revenue from these fans. Besides a simple paywall, they could offer their followers exclusive access to their own social tokens issued through PIP, giving them a unique opportunity to play a role in the communities they build. They can also sell art and other content as NFTs, receive tips, sell subscriptions and more. The only limit for creators will be their own creativity.  

By building closer, tight-knit communities, taking back control over their content and creating new revenue-generating opportunities, it’s possible for creators to leverage Web3 in multiple ways to expand their audience and develop a more lucrative fan base. Web 2.0 might have been what kicked off the creator economy, but it will be Web3 that finally allows it to reach its full potential. 

Image: Depositphotos

This article, “With Web3, Social Media Creators and SMBS Can Get A Much Better Deal” was first published on Small Business Trends

Source: Small Business Trends

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