The Future of Creator Economy
The internet as we know is undergoing a phase of massive transformation. It has now become possible for individuals to create a substantial livelihood solely through the quality of their content. What is known as the creator economy will soon be a major source of employment as we tread towards the future. However, it comes with its own share of risk and dependencies. One way this plays out is through reliance on financial intermediaries for the processing of payments. A different angle it could take is through platforms removing creators from them. Even worse, nation-states may outright ban platforms. I sat down to think about what would the creator economy of the future look like through the lens of Web 3.0. Here are some of the core tenets I thought they should have.
Ownership - NFTs have blown up in the public psyche because it links ownership to the individual that created a piece of work in the first place. The lack of ownership creates compounded risk in the context of being de-platformed. A creator that finds themselves unable to export their content may discover years of their work gone to waste with little to show. Ownership in the context of Web 3.0 will have two counterbalancing angles to it. One is the intellectual property behind a piece of work, and the second is ownership of the platform itself.
Decentralization - Present-day democracies are at risk in two ways. On one end, platforms hold the power to determine who gets access to what kinds of information. That is they can restrict the distribution of content to create uneven playing grounds. More dangerously, they can sell data to counterparties that misuse it. The Cambridge Analytica incident is one instance where data from social networks was used to tear apart societies. Decentralizing creator economies in Web 3.0 should ideally ensure consumers and creators have a say in what is censored and what is left online. I do not believe complete censorship resistance or immutability is a desirable state when it comes to decentralization. Especially in the context of revenge porn or intellectual property being leaked. Platform decentralization in the context of Web 3.0 would require tools to minimize censorship while simultaneously creating instruments to moderate platforms. One way this is happening online already is through vote-based systems such as those on Reddit and Hackernews. These have their own inherent flaws. A different angle decentralization takes in the context of Web 3.0 platforms is in terms of data ownership. In an ideal world - users should have the right to export, permit and trace access to their own data-sets
Governance - Individuals giving attention to an emergent creator are paying something they cannot redeem later on. Their time. Creators understand this fairly well and use audience input to iterate on the content they create. With individual creators like MKBHD branching out into their own brands, it becomes important to create systems that allow each party in the value chain to derive equitable value. Creator economies are fairly similar to start-ups in that there is an inherent risk involved, uncapped upside, and multiple individuals can contribute with specialist skillsets as a creator takes off. DAOs are a primitive that can solve for exactly this. Distributing partial ownership in a creator's work is one way for individuals to create distribution and interest in what they are creating. A different mechanism would be rewarding individual contributors for what they bring to the table. We talk about DAOs specifically in the context of venture and hopefully soon enough, SaaS businesses. But in my opinion, individual creators going the DAO route will be the fastest way to reduce the barrier to entry for the average retail user on the internet.
Financialization - The current state of the web uses view counts, likes, and retweets to measure an individual creator's success. Creators are incentivized to make what appeals to the lowest common denominator in comprehension and pack it with the most clickbaity titles to grab attention. One way creators are circumventing this is through focusing on the revenue generated from their audience. Substack writers like Packy have launched their venture funds. Selling merchandise is another way creators generate income. There needs to be avenues and outlets that allow creators to financialise what they are doing to assist individual creators with finding scale. Selling a portion of future revenues to sustain themselves until they make a meaningful audience may solve for this. Fan tokens and social tokens are early variants of this. Platforms like Rally will inevitably make it easy for everyone to financialise their success but it will be a while before there is regulatory clarity on the nature of these instruments.
I set out to think about how a Web 3.0 native creative economy could be built with these matters in mind. There are a few inherent flaws I could see at the outset. For instance, I still don't have the answer for how content removal and moderation could occur. In addition, I am fairly confused about whether every user on the internet wants to be involved in the governance and trading of a creator's content. 90% of the internet lurks, while 9% contributes, and 1% are the power users that create the vast majority of content. Lastly, I am not entirely clear on how regulators would react to the rapid decentralization of the internet. It is equal parts desirable and undesirable for them. While platform monopolies left unregulated create bad outcomes, they also have someone interfacing as the "face" of the company if something goes wrong. How would that play out for a purely decentralized network? These are questions I am still pondering on. I will love to hear from you if you have been spending time thinking of it. Maybe I could set up a clubhouse to discuss this if there's sufficient interest.
The model shown below is heavily influenced by the convergence stack pioneered by Lawrence Lundy. I had the pleasure of working with him early on in my career. I have also taken help from Mason Nystrom's recent NFT market map. Also, make sure to read Kyle Samani's piece on the Web 3.0 stack piece from the Multicoin website. He wrote about this way back in 2019.
A Web 3.0 Native Creator Economy
The market map shown above is by no means comprehensive and is designed only to lay out what would be needed to create a truly decentralized creator economy. Each of these layers will have entirely different incentivization models as the stakeholders are wildly different. Arweave, for instance, offers storage and is designed to reward miners by providing storage space. On the other hand, a platform like Mirror is focused exclusively on those creating content and as such does not reward individuals plugging hardware into the network. Similarly, each of these layers will have applications differentiating on the use-case and need. Under interfaces, for instance, I have both hardware-based authentication systems like HTC's Exodus and a simple browser like Brave marked. I will explain why as we go through each section. With these caveats out of the way, let's dig in
AWS played a critical role in enabling the likes of Facebook and Instagram to scale. The AWS of blockchains is still AWS. My reasoning for this argument is the number of nodes of networks that currently exist on AWS already. A new generation of ventures in the ecosystem are solving for what AWS cannot today in terms of decentralization and censorship resistance. Storage systems such as those offered by Storj, Filecoin, and Arweave can offer immutable file storage at competitive rates for developers looking for storage. Golem allows individuals to rent out idle compute power to earn tokens from a decentralized network. These are still early days in the hardware marketplace stack, though. About 783 providers exist on Golem's network today who collectively hold approximately 31.68 TB of memory for computation between them. About 776 unique providers are running north of 3000 miners on Filecoin's network. In my observation, contrary to what most would believe - the problem is not with the supply side for hardware markets but rather the demand side. Developers may avoid using decentralized alternatives unless they know that the costs and uptimes can be reliably predicted. There is likely a thin layer to be built as a marketplace for decentralized hardware providers here. Do write to me if you are making that.
Once we have a fairly distributed network of hardware providers, one needs to secure the networks that transfer information between them. It is not only state actors that take a proactive interest in taking down public networks. It could also be miscreants on the web. In 2016, a botnet named Mirai was used to take down the internet in Liberia. Web 3.0 native firms have been slowly decentralizing systems here too. In an ideal, utopian world - we have satellites beaming down free, uncensored internet to the whole world, but we are far from there. Helium Network is a significant project backed by Khosla Ventures, SV Angels, and Multicoin, incentivizing the setting up of hotspots that beam out the internet in a vicinity. As of writing this piece, they claim to have close to 150,000 hotspots in 13,000 cities distributed over 119 countries. Effectively making them the largest LoRaWan hotspot network. While Helium focuses on creating a decentralized network, Handshake is focused on the naming system. Every time you enter a website on the internet, a naming system is used to redirect web traffic to the appropriate source. These can be censored or taken down at will. More importantly, they are managed by centralized corporations like Google at this point. Handshake allows creating a distributed, consensus-based naming system to keep a single party from taking down a website. Going into the technical aspects of how it works maybe a distraction for this piece, but you can refer to their documentation here for more details. If you have the time, consider playing with Handshake and Blockstack this weekend.
Once the networks and hardware layer are secured and decentralized, one looks for the interfaces that enable users to interact with the new internet. This can take multiple forms. Brave, is a browser-based interface, whereas Trust is just a mobile application that can plug into various DeFi projects today. In the future, it would be common to see the content pulled into your wallet interface so you can directly tip them through it. Super-Apps like WeChat in Asia are already pointing towards this being a possibility. A single app that combines payments, services, content, and e-commerce securely makes it easier for users to interact with the new internet. In my opinion, this is one of the ways the new internet will seep into the average user's hands. Hardware will also play a crucial role here. HTC's Exodus device and Ledger's software integration through Ledger Live are two instances where hardware providers separate themselves from the rest. Lastly, interfaces may find distribution through being thin layers atop today's distribution networks like Twitter. Mask.io lets users post encrypted content that can be accessed only by those with the necessary permission.
The new internet will also need authentication and identification layers that allow individuals to have pseudonymous identities. Depending on the nature of the application and context, these will take entirely different forms. Shyft Network enables users to port their actual AML/KYC documents to an on-chain authentication system. They are already in talks with exchanges for being used. Netki and ENS, on the other hand, are systems that allow wallet identification through human-readable names and Bloom is focused on verifying financial documentation. Authentication systems on the internet today are increasingly trending towards single sign-on - which in turn gives firms like Apple and Google an incredible amount of both power and insights into user behavior. Pseudonymous authentication systems allow users to engage with content without revealing much about themselves. We see early variations of this on Reddit, Discord, and Telegram, where users are known by their handles more than real-life identities.
Lastly, context-specific payment networks will be needed to move value between consumer and creator. Depending on the use case, these could be entirely different. Flow and Ronin chains today focus on consumer-specific use-cases and have practically negligible fees. Players like Polkadot and Biconomy are more focused on cross-chain liquidity, while Arbitrum helps DeFi applications scale. Traditional fintech rails rarely have customization, depending on the nature of the application. That is, we use somewhat similar payment rails for everything from Twitch streaming to remittance. Web 3.0 native payment rails have been creating entirely new use-cases by upending how these systems work. Superfluid is one example of this. They are a token standard that allows describing cashflows to program them. Sablier enables you to stream money over a given period. Creators and freelancers will mix and match these in unique ways to handle payments over the next decade.
As with much of the rest of the internet, users will need to find an audience and engage with them. In its current form, Web 3.0 has two ways of engaging with users. Through feeds (like on Mirror and ShowTime) or marketplaces like OpenSea and Zora. These distribution outlets capture the public psyche by having prominent celebrities and known brands issue assets on them. In March of this year, Time released a 3-pack NFT series covering the cover of a few major issues. Mike Shinoda from Linkin Park has been tinkering with NFTs. Public endorsement from known individuals has given these platforms much-needed credibility. The users will trickle in as an increasing number of creators think about better monetizing their audience. Once you line up the incentives, creators transition and, with them, their follower base. The challenge I find here is discovery. How do you realistically distribute content in a newsfeed without surveilling user data? What would a TikTok-like app use to determine whether an upcoming video clip is interesting for a user? I frankly don't know. One way to do it would be to cluster transactional data and determine whether a user may be interested in a piece of content. For instance, if I have done a transaction on NBA TopShots, a video from a basketball-related creator could be interesting for me. More thought needs to go into this regard.
On Platform Modularity and DAOs Cooperatives
All platforms won't be decentralized right from the beginning. Depending on the use case, different aspects of the venture will push for decentralization. One way this is playing out already is with NBA Topshots. The website and general user experience are off-chain. The core assets used to trade on the platform have gone on-chain. Hardware and network-based restrictions have not hit developers trying to scale applications just yet. The vast majority of "clogging" we see is on public blockchains trying to enable transactions. We may see the limits on decentralized storage and compute power when someone tries building a fully decentralized Youtube or Instagram. For the moment, it is safe to say that the internet is trending towards a period of modularity. Developers will mix and match different parts of the stack shown above. Gradual decentralization may occur with platforms too. They start with only some parts of it on-chain and eventually trend towards being entirely on-chain with community members owning it. This leads me to my final thought on the creator economy.
Packy McCormick famously described cryptocurrency as an in-game currency in the great online game in this brilliant piece. Being one of the internet's most prolific creators today, he has written it from the point of view of someone that is constantly creating. I was thinking about how a truly decentralized Web 3.0 creator economy lets everybody play infinite games on the internet. When somebody consumes content online, they trade an intangible asset (time) for the piece of content. It does not necessarily have to be that way. Users can and should be rewarded for the time they spend on platforms. This creates increasing engagement and curates buy-in from people who genuinely care about the platform. Axie Infinity's play to earn economy is one instance where this has already happened. Instead of paying to buy assets (like in GTA 5), gamers are paid to play the game. All of a sudden, the shift has gone from mere consumption to partial ownership. How will those with ownership coordinate? In the form of a DAO. This may feel far-fetched, but publications like Bankless DAO are already turning into community ownership. I envision a future where more creatives allocate resources, sign contracts and distribute incentives entirely on-chain. Snippets of each creator's work could be distributed through modular interfaces unlocked with token-based payments. The ideal creator economy of the future is one that is not built on mindless consumption but a collaborative effort towards building a better future. That shift is one worth fighting for.