These days, it seems everything is fair game for monetizable content.
The creator economy is, simply put, the era of decentralized media. Similar to traditional media corporations, individual creators can now earn money through a wide variety of methods — including affiliate links, sponsorships, ad revenue, digital sales and more. That means all the cat videos, hair tutorials and TikTok recipes we share with friends and family could be someone’s meal ticket.
Many creators are earning consistently enough from content to leave their full-time jobs. But the current model forces creators to give control – and a huge percentage of their revenue – to platforms like YouTube and Spotify that host their content and build their audiences. Now, thanks to crypto, artists and creators in this new creator economy, we can explore new tools that can help them maintain ownership of their content and intellectual property, or even share ownership with their fans if they want to.
The applications making this new reality possible are called dapps – short for decentralized applications. Let’s have a look at what dapps are and how creators are using them.
What is a dapp?
Dapps are blockchain-based applications that run code for a specific function or use case. They are just like any app on your smartphone or desktop, with a front-end interface allowing users to easily perform functions like clicking, scrolling, typing into text fields and submitting data or content to be used for a particular purpose. From a user perspective, dapps are the same as a normal application like Instagram except for one key difference: They utilize blockchain technology on the back end to record data linked to users’ crypto wallets.
There are dapps for all uses, including financial purposes — such as DeFi (decentralized finance) protocols that let users swap one currency for another — and creative ones, such as marketplaces for non-fungible tokens (NFTs).
Dapps utilize smart contracts to plan, execute and settle transactions automatically. This somewhat eliminates the need for a centralized corporation like Meta to act as the mediator, though companies that build dapps still put forth user agreements and policies.
Why do creators need dapps?
Hopeful Web3 developers and creators argue we have an opportunity to use dapp technology wisely and learn from some of the mistakes we made with Web2 platforms, such as data breaches and centralized profit-sharing models that siphon revenue and royalties away from the creators themselves.
If Web3 works the way early adopters want it to, dapps will unlock higher earning potential and greater transparency for artists and creators who traditionally get the short end of the revenue stick on traditional platforms.
Take Spotify, for instance. Regarding artist payouts, it's one of the most forthcoming of the Web2 streaming platforms. Spotify publishes its earnings data for the artists who contribute every year. Just 1,040 artists broke $1 million in streaming proceeds on Spotify last year, and only 16,500 artists made more than $50,000 – barely a middle-class salary in the U.S. The success stories represent a fraction of the 8 million contributing artists on Spotify (though only 2.6 million contributed more than 10 songs).
The frustrations we saw in Web2’s paradigm are not entirely Spotify’s fault: Traditional publishing and/or streaming platforms of any kind must answer to big-time stakeholders in their respective industries. This is how traditional revenue models have always worked. Spotify paid out more than $1 billion to holders of music publishing rights last year, and the record industry made $4 billion from streaming alone, according to the service provider.
So, how could dapps change things for artists? Let’s have a look.
How will dapps help creators?
According to a tweet from leading crypto venture capital firm Andreessen Horowitz, Web3 platforms paid out $174,000 per creator in 2021. In comparison, Meta paid out 10 cents per user, and YouTube paid out $2.47 per channel, amounting to a $15 billion total.
There are, of course, fewer users currently creating on decentralized platforms than on traditional Web2 platforms. But according to a ConsenSys representative, MetaMask, the leading Ethereum self-custody wallet, now has 30 million active monthly users, many of whom opened their wallets during the NFT hype of 2021. Now that so many supporters, fans, collectors and investors have onboarded to crypto and Web3, those in the industry see a reason to keep building and refining products with creator empowerment in mind.
According to Monahan, a prominent conversation among the MetaMask team is about how to serve musicians, artists and creators. “How do we give creatives the ability to disintermediate all the people who currently stand in their way, preventing them from accessing the value that ultimately they're creating?” she asks.
However, until today’s emerging dapps are as widely tested and commonplace as Facebook, pioneering Web3 creators will likely experience some trial and error as developers experiment and innovate.
Examples of dapps
Dapp development is a burgeoning industry, and demand is only going up.
Creators need tools that help them “very simply leverage Web3 technology to be able to showcase their artwork,” says Nayana Singh, global product lead for Infura, an Ethereum software company.
In the meantime, there are some trends and forecasts to keep an eye on:
For instance, a creator can upload a video to the Ethereum-based NFT marketplace Rarible and code smart contracts to distribute a certain percentage of royalties from all secondary marketplace sales into wallets chosen by the creator. If you have a team of collaborators, such as graphic designers, producers, editors, etc., you can add their wallets to the smart contract and share the royalties from future sales.
Read more: Minting Your First NFT
OpenSea is the most popular NFT marketplace, but McClain argues that creators should consider making their own. It’s totally possible (and worth the investment, argues McClain) to assemble a development team and build a marketplace with website-like functionality.
“Everything goes back to the idea of having a place where you can tell your story,” McClain says. “OpenSea is great,” she says, but its popularity has attracted some collectors more interested in the floor price than the artist.
Making your own NFT marketplace is not a requirement, but it’s a lot more accessible than you’d think thanks to resources like GitHub, an open-source code library, and Zora, an NFT marketplace protocol that offers developer toolkits for people who don’t know coding language. This won’t be quite as simple (not yet, anyway) as building a Squarespace website, but McClain forecasts that proprietary marketplaces will be standard for creators going forward.
This approach lets you control the narrative and mint on the blockchain and/or metaverse worlds you like best. It also lets you become better acquainted with the users who come to your site, McClain says: “It’s literally like having daily active users in the same way that we look at a social media platform. Marketplaces are the first step in making that happen.”
Case in point: LimeWire is back – just not in the way we think of it. The old-school peer-to-peer music-sharing network’s return from the dead is well-timed for Web3 because it resurrected itself in the form of a music-based NFT platform.
Audius is perhaps the most talked-about Web3 music-streaming platform. It runs on social tokens, specifically audio token rewards. Users earn tokens for uploading music, listening to other artists’ songs and sharing their favorites with friends and the broader community. The audio token is also a governance token, meaning audio holders have a say in certain changes to Audius and can vote on proposals that are submitted on the blockchain.
See also: What Are Music NFTs?
Similar to streaming platforms, creator-centric social platforms let fans earn tokens for engaging with and sharing content. For example, P00LS releases regular music drops and lets artists release their own token so that fans can hold it in their wallets.
This distinction between earning tokens and buying them matters, says McClain: “When it comes to our marketplace, people earn tokens. They don't buy tokens with ETH. They don't buy with a credit card.”
Fans earn through engagement with the P00LS marketplace and their favorite creators’ content. There are options to read about the artist and take quizzes to get rewarded.
“People know these things that they care about and they want to learn more about, then get rewarded for it – I think there needs to be way more of that,” says McClain.
Social platforms that reward fans are particularly advantageous for loyal followers, curators and trendsetters. Thought leaders and tastemakers who forecast up-and-coming artists on TikTok, for example, rarely (if ever) see monetary rewards when their predictions come true. In Web3, McClain says, people should be rewarded for being a fan from the early days of an artist's career or for influencing industry-level decision makers about what’s hot. Having great taste should make someone a known subject matter expert in Web3 and open up better processes for compensating those who influence top industry decision makers.
“What are ways, in Web3, that we cannot leave them behind and not just give them brownie points, but really give them tokens, give them equity, give them something that can really have value?” asks McClain.
Support for dapps and a fully decentralized creator economy is steadily growing, especially in light of Meta announcing sky-high creator fees, up to 47%. Creators want a way to prevent excessive fees, determine their own royalty structures and maintain agency over their intellectual property and fan base.
For new artists, acquiring a Web3 skill set may feel like a lot of pressure, but developers and industry experts predict the creator economy will ultimately make things better – and more fun – for artists and fans alike.