As a semi-creator (note: limited writing ability, unable to work full-time), I have been paying attention to the topic of "creator economy" since entering the web3 track. Taking advantage of the recent launch of the "Subscribe to Mint" feature on the Mirror platform, I also want to talk about some of my thoughts on this track and spark some discussions. (Original article Mirror link: https://mirror.xyz/arthurwu.eth/JtyFaRn8AzN2KXEmQIxocbXqVUo0DbY06BsPSqDQ6gI)
What is the "Creator Economy"#
According to the definition on Wikipedia, the term "Creator Economy" refers to a new economic model that allows creators to earn income by creating digital content with the assistance of internet platforms. In short, there is a group of people who contribute content on the internet and generate income from it. We call these people "creators," and we call this model the "Creator Economy."
"It's not that easy for a group of people to contribute content on the internet," you might say. Indeed, as early as 1996, Bill Gates wrote an article titled "Content is King," which stated that one of the most exciting things about the internet is that anyone with a personal computer and a modem can publish any content they create. However, the difficulty lies in "generating income." I looked up the current situation of creators on several major content platforms. On Spotify, 90% of streaming royalties are taken by the top 1.4% of musicians, and on Twitch, over 50% of the revenue is taken by the top 1% of streamers...
The "Creator Economy" is a track that is far more extreme than the "80/20 rule." Basically, almost every platform you can think of operates in this way, where the winners take all and creators below the top tier (not even the middle tier) struggle to survive.
The descriptions above are all about the current situation on Web2 platforms. What about Web3? Will the situation be different?
Web2 vs Web3#
The "Creator Economy" ecosystem will undergo significant changes in focus and business models between Web2 and Web3, and the relationship between users, creators, and platforms will also face changes.
Creator Economy on Web2#
On Web2 platforms, the relationship between the three can be summarized as follows:
- In terms of influence, platform >> creators >>> users, with the platform being dominant
- Creators provide content to the platform, which generates traffic; users provide data value to the platform, which generates revenue through advertising business models
- There is only a "weak connection" between creators and users (reflected through light interactions such as comments, follows, shares, etc.), mainly because if a strong connection is formed between the two, creators will inevitably move to private domains, which is not what the platform wants. Therefore, the platform can only maintain a weak relationship between creators and users.
This is an unfair and distorted business ecosystem. The platform itself does not create content but attracts creators to join and then attracts users and generates commercial revenue due to its huge brand advantage, forming a closed loop.
The creators at the top of the chain have no pricing power, no bargaining power, and even no control over the content they create. As soon as you publish your content, it becomes unrelated to you. You often see several phenomena: the content created by creators is prohibited from being published by the platform due to not meeting requirements; the platform arbitrarily modifies the revenue sharing logic, leaving creators with no say; some creators' content does not attract much user attention, resulting in the platform downgrading their visibility...
For users, they are completely exploited. If we are not exaggerating, more than 60% of the platform's profits are contributed by users. The platform makes money by using user data, which means that users' data is not only completely exposed on the internet but also users cannot share any profits in this commercial chain.
The platform acts as both the "referee" and the "player," controlling the profit distribution logic, permission management strategies, and even intervening in the flow and distribution of "content" and "business" without any constraints.
Users complain, creators complain, but everyone knows that as long as you are in the Web2 arena, you can never escape the control of the giants, and starting a new platform to fight against them is just wishful thinking. The ultimate result is that everyone is striving to become part of the top 1%, because once you become part of that 1%, even without complete control or pricing power, the profit that comes to you is still considerable. This is the best compromise in this situation.
Creator Economy on Web3#
I refer to the creator economy on Web2 as the "traffic business," but in the Web3 era, we truly transition to a "user-centric business."
In Web3, because the content produced by creators has the added value of "transactions," it can directly generate revenue. Therefore, the difference from Web2 is that content becomes more important in Web3. Users come because of the content and pay more attention to the "people" layer above the content. As a result, the relationship between users, creators, and platforms has changed.
- In terms of influence, there is a mutually beneficial and synergistic relationship between platforms, creators, and users, with no clear distinction
- Platforms provide "tools" and "transaction" functions to maximize the interests of creators and users, forming a positive cycle
- There is a "strong connection" between creators and users, and the value generated by the content provided by creators can be shared with users
This is a multi-win business ecosystem where everyone plays their role and contributes to the growth of the "Creator Economy" cake, and everyone can receive corresponding benefits.
Thoughts and Reflections#
Rally, invested by a16z and as a pioneer in exploring the creator economy ecosystem in the Web3 track, also declared failure in February 2023. I had the opportunity to consult with the co-founders of Rally and learned several key points as to why a project with significant investment funds and a luxurious team background would ultimately fail:
- In the current environment, Web2 and Web3 are completely disconnected, and over 90% (possibly even higher) of Web2 users consider Web3 to be a scam. So when a Web3 brand wants to enter the Web2 field and find some influential spokespersons, it is extremely difficult.
- Having a lot of money has its downsides. This means that the team's strategy can only be high-risk and high-reward, and they cannot start by focusing on a small vertical area and then expand horizontally.
In addition to Rally, there are many Web3 projects, both domestically and internationally, that are deeply cultivating the creator economy ecosystem. In 2022, there were over 100 projects in this track, with a total funding amount of approximately $662 million.
In the current Web3 environment, the valuation of "Creator Economy" ecosystem projects is not high. Many investors may not be interested in this field because it takes time to see results and the returns are low. However, it is definitely a good track because the issue of exploitation of creators and users in Web2 can indeed be effectively addressed at the technical level in Web3. The project just needs to consider two major questions: Where to start? How to start?
I will write a separate article to share my personal thoughts on these two questions.
Feel free to reach out to me for further discussions and communication. TG: Arthurwu24, WeChat: arthurwu2020