If a service is free, you’re the product – and nobody knows this better than the content creators who rely on tech giants like Meta and TikTok to make a living. But even though this old adage has long been an unavoidable reality for digital creatives, emerging Web 3 technologies are finally disrupting this broken revenue model and putting consumers in the driver’s seat. These next-gen content sharing platforms are using crypto to reward creators and their fans for their engagement and create new ways to directly connect with one another.
Let’s take a step back. In 2006, the world witnessed one of the first viral social media videos, “Evolution of Dance,” on YouTube, and the internet was never the same. Since then, society has been transformed by the mass adoption of media platforms like Twitter, TikTok and Instagram. Digital creators – the artists, musicians, gamers and influencers who have become celebrities in their own right – are power users that have collectively enabled the success of social media.
James Kuk is CEO of FreshCut. This article is part of CoinDesk’s Payments Week series.
But Big Tech companies have taken advantage of the very creators that drive so much revenue, value and demand for their platforms – turning creators into products.Web 2 platforms further omit or limit monetization features that would compensate high-performing creators.
That’s not to say some social media “influencers” haven’t made money. Likes and views may not pay the bills, but brands recognize the value of exposure to engaged audiences and greatly increased online advertising spend, hence the #sponsored content that rules our feeds.
The inability for creators to be natively rewarded by platforms for high quality, entertaining content has forced a synergy between artists and brands that need not exist. Sure, these content platforms pay lip service to their users and make incremental changes that provide small concessions to the creators they feed off of. But at the end of the day their core business model is exploitative and based on third-party advertising, jammed between creators and viewers in endless, self-serving iterations.
See also: Don't Let Web 3 Repeat Web 2's Mistakes | Opinion
This is all changing. A new generation of Web 3 content platforms is rewarding their users’ creativity and engagement via crypto assets that are used both for communal governance and as a form of social currency. The fact that these crypto-based platforms involve minimal service fees and other commercial middlemen means they are increasingly adopted for online payments – in addition to being used by creators to spin up new offerings and engagement opportunities.
Crypto and the blockchain enables new revenue streams for creators. NFTs, for instance, have opened a new paradigm of creative financing in the form of perpetual and automated royalties. In the future, we might also see innovations around tipping or micropayments – a field that hasn’t exactly taken off. The existing Web 2 models work – like Patreon or Kickstarter – but they also take a significant percentage of fan patronage (sometimes siphoning off half of the revenue creators generate).
Perhaps most importantly, with these systems more value will go to the individual users helping power the underlying network, rather than a centralized enterprise. Said another way, the rising tide of Web 3 social media and content sharing platforms helps content creators get more and better value for their time and effort.
Web 3 woes
But it’s important to realize that amidst the legitimate Web 3 platforms disrupting the social media value paradigm, there are opportunists out there disguising themselves as allies to the cause in order to turn a profit.
Take Meta (nee Facebook). Meta is testing a new tool that will allow creators to sell virtual products in Horizon, their new metaverse platform. But creators will have to hand over up to 47.5% of their revenue to Meta and Oracle for every sale they make. A Meta executive claimed that the company's fees were set at a pretty competitive rate – but that’s exactly the point! Unfair revenue sharing models are standard across the major tech platforms today – even the ones that are trying to reposition themselves as creator friendly.
Much has already been said about how Meta’s centralized operations and profit-driven ethos are incompatible with the budding Web 3 industry – but this story drives home the fact that companies like Facebook will not be the future of content sharing, no matter how many rebrands they undergo.
Community-centric, user-focused online platforms will continue to take power away from traditional tech giants, creating a virtuous cycle as fans contribute directly to creators’ growth and creators receive immediate and direct feedback from their followers. The current ad model is predicated on the need for centralized entities that can divide and conquer the communities they rely on, but next-gen content platforms are using crypto to redistribute more value back to content creators.
Up until now the internet has been a double-edged sword for content creators, but with the rise of provably scarce digital collectibles and open payments networks, creators now have more ways to monetize their craft and engage their communities.
Users will flock to the platforms that offer them the most ownership over their online experience, and this new, community-focused business model will increasingly be the norm.