“I’m not a businessman. I’m a business, man”- Jay Z
Paris Hilton might just be the world’s first influencer. She is the self-proclaimed inventor of the selfie, after all. She even served as the mentor of (at the time) up and comer Kim Kardashian, who was able to turn herself into a full-blown social media brand, and that brand, into a business empire. If you’re amongst the crowd that thinks that she has no talent and is only famous for being famous, here’s 1 Billion reasons why you might want to re-think your position.
Thanks to the possibilities of Web 2.0, Kim hasn’t been the only one in the last ten years to help launch the creator economy. Today, there are over 50 million people that consider themselves to be creators, 2 million of which are doing so professionally (that’s right — from YouTubers, to Bloggers, to Podcasters, to Online Educators, to Artists, to Videographers, to Instagrammers, to Twitchers, and most recently, TikTokers). How did this happen? And where do we go from here?
Web 2.0 and the Birth of the Creator Economy
Before we can look forward we must first look back. What is the creator economy and how did it come about?
According to Signalfire, the creator economy can be defined as “the class of businesses centered around independent content creators, curators, and community builders including social media influencers, bloggers, and videographers, plus the software and finance tools designed to help them with growth and monetization.”
It All Started with a Single Video
On Valentines Day, 2005, YouTube was launched and Me at the Zoo became the first video to be uploaded on the platform (Never seen it? It’s worth the time to check out the co-founder of YouTube describing elephant trunks for 18 seconds).
In its first months of launch, it averaged 30,000 viewers per day (YouTube, that is, not the elephant trunk video), and by the end of the year, visitors were watching over 2 million videos per day. By 2006, more than 20,000 videos were being uploaded on a daily basis. The creator economy was born.
The turn of the 21st century saw popularity increases in blogging sites like Xanga (launched 1999) Blogger.com (launched 1999), and Wordpress (launched 2003), and with their rise, an uptick in advertising revenue. However, these platforms never quite reached the heights of success of YouTube, which arguably was the only one at the true creator economy party for a long time. It would be another five years before Instagram was launched (2010), and six years before Snapchat (2011).
Unsurprisingly, as the adoption of smartphones increased, and wireless speeds improved (3G/4G/5G), the services and experience provided by these apps also improved. Along the way, the content quality on these apps increased substantially — from Me at the Zoo to Zach King’s Harry Potter Illusion, everything from the video quality to the video content improved drastically.
Additionally, with the rise of built-in app tools, such as video editing software, these apps, which once were filled with poor quality (technical and content-wise) uploads, now can churn out professional-grade videos and photos by anyone willing to invest the time and effort into learning these tools. As a result, the advertising dollars have poured into these platforms, taking advantage of the billions of views that these platforms see every single day.
To encourage users to upload more quality content, YouTube launched the YouTube Partner Program (YPP), allowing its users who meet a minimum set of criteria to take part in a revenue-sharing model through an AdSense account. Basically giving its creators a cut of the advertising dollars which are viewed through a YouTuber’s video.
And so, the first creator economy millionaires were born — with the likes of PewDiePie and Nigahiga achieving massive success with their YouTube channels. But with billions of dollars on the line, how much longer can this model last with both sides (platforms + creators) fighting for more share of the pie?
At the end of the day, who’s really benefiting from the content these creators are producing? The creators themselves, or the big tech platforms that rely on them?
Current State of the Creator Economy
In an iconic quote from last year's documentary The Social Dilemma, — “If you are not paying for the product, you are the product.”
Platforms like YouTube grew their user base by offering their content for free. In turn, as the user base grew, advertisers became more attracted to the platforms as more and more eyeballs were spending time on the sites. In parallel, these platforms also controlled the distribution of funds to its creators — as they served as the intermediaries between the advertisers and the creators.
As the user bases have grown on these platforms, so too has the power that these platforms yield, over its end users, its advertisers, and its creators.
These platforms have created an ecosystem so powerful that it would be difficult for anyone to leave and still continue monetizing their work like they currently do. A platform’s stickiness allows them to now change things at will — often impacting significantly all of its participants (e.g. end-users and their data privacy, advertisers and their advertising rates, creators and their revenue sharing).
In fact, this is exactly what happened at the end of 2020, as YouTube changed its policies on running ads on videos created by users not part of the YPP (which was not a practice in years past). Worst of all, there would be no revenue sharing for these ads — with YouTube taking 100% of the cut. Understandably, some YouTubers were quite upset with this new move — seen as greedy and disruptive to those creators looking to grow their base.
With the number of creators expected to double in the next 5–10 years — from 50M today to 100M+ by the start of the 2030s, major moves like these by existing platforms will be heavily scrutinized by existing and aspiring creators. With Gen Z heavily leading this expected growth of creators, you can bet that they will be watching the closest of all.
Enter Web 3.0 — the Future of the Creator Economy
2021 has brought about a renewed interest in blockchain and cryptocurrency and introduced to the masses the concept of NFTs.
As existing Web 2.0 platforms continue to leverage their leadership positions in the marketplace, the next generation of creators are now looking for alternatives that will serve them best, and allow them to put their user base first, rather than playing by the rules of the platforms on which their content may be hosted on.
More recent popular Web 2.0 platforms such as Patreon (launched 2013) and OnlyFans (launched 2016) are paving the way towards a more direct-to-consumer experience between the creator and their fans.
Patreon currently has over 200,000 creators on its platform, supported by over 7 million patrons. Creators of these platforms are not subject to the same kinds of control that earlier Web 2.0 platforms have over them — from the type of allowable content to be published, to the kinds of ads that are displayed over their creations. This type of model gives more control to the creator.
Yet even with these platforms that are, in theory, “built for creators”— the platform itself still pockets a lion's share of the creator profits and serves as an intermediary between the creator and their community.
As the power shifts back to the creators, new, decentralized platforms will arise where the control lies not only with the creator, but the community that they have cultivated. Instead of creators soliciting funds through Patreon, they may mint their own social tokens, and fully own their content, on decentralized social platforms such as Privi.
Wait. What’s Privi?
We’re glad you asked. Privi allows for the creation of content and communities that are self-governed, driving a completely different type of online social experience than that which exists today. Creators can create their own communities, mint their own social tokens, mint their own NFTs, and then get straight to work on creating a truly direct experience with their fans, followers, and community where all parties can participate and benefit. All in one social ecosystem.
And with that, a new type of social experience is born.
Creator Minted Tokens? Say More, Please.
That’s right. Creators can create their own tokens, distribute them to their most loyal fans, or have their fans purchase their own set of coins.
Let us imagine for a moment Taylor Swift minted her own token (maybe if we type this, it will manifest into reality). Taylor aptly names her new token, the Swifty Token. The power and utility of such a token cannot be understated, especially if the creator (in this case, Taylor) eventually puts all of their content behind a paywall governed by these tokens, accessible only to the ‘Swifties Community.’
In such a world, Ms. Swift may share exclusive updates to her community of fans, which are only accessible to individuals holding a minimum number of ‘Swifty Tokens’. Or perhaps Taylor is selling limited edition cardigans (again, can we manifest this into reality?)— available for purchase only by transacting through Swifty Tokens.
Want to get your hands on a limited edition Taylor NFT music video? That might cost you 500 Swiftos (new lingo for the token? Anyone?)
As the demand for the token rises, you as a true Swifty are essentially a mini-investor in one of your favorite creators. When a video does well, so does the token, thus rising in value. And now your Swifty Token is worth even more.
Through all this, Taylor is able to have direct, social interactions with her fans, without the addition of an intermediary to facilitate the interaction or to help with financial transactions between her and her fans. Just as importantly, as the creator, Taylor has full control over the content which she has generated on the blockchain. For you non-Swifties out there — Taylor Swift lost most of the rights to her own music when the record label that she signed with sold her master recordings for her first six albums. Taylor had no say in the matter or knowledge of the transaction until after it went through. Meanwhile, the record label banked $300M USD from the sale. Oofta.
Unfortunately for Scooter Braun, this wouldn’t happen if the musician was using blockchain technology. As the Swifty Community grows, so too does the value of the Swifty Token, as it sees growing demand among a limited supply.
Done right, the entire community benefits — something that simply cannot happen today. Not only because of the existence of Web 2.0 intermediaries but just in general. Believe me, nobody in the r/wallstreetbets community benefitted when the community swelled from 2M members to 9M members in one month and the post quality went to trash — “GME to the moon!”.
And So, Back to the Original Question — Where Do We Go From Here?
Before we can move forward, we must know where we stand. Web 2.0 has given rise to the Creator Economy and ushered in a new world where anyone who wants to create can participate. However, the platforms which gave rise to this new world are now so powerful that they control all of the participants on their platform — stifling creativity, impacting output, and bringing down the very communities of people they once sought to bring up.
The possibilities that blockchain technology brings are changing that. As you read this, companies like Privi are preparing solutions to decentralize the web, bring the power back into the hands of the creators and their communities, and all the while creating a new type of value and experience between creator and consumer that simply cannot exist in today’s Web 2.0 world.
If any of this sounds like something that exists in a far-off reality, think again.
Remember the OG influencer Paris Hilton we mentioned at the beginning of this article? She’s become quite the leading voice in the NFT space already. If history is to repeat itself, Ms. Hilton (aka the inventor of the selfie) could once again be at the forefront of a cultural revolution.