How NFTs Are Overhauling the Creator Economy

Web2 enabled internet users to contribute to the digital economy by becoming entrepreneurs in their own right. Using Facebook, Instagram, TikTok, Snapchat, and the likes, content creators can now increasingly monetize their virtual fanbase. Consequently, market estimates suggest that the creator economy was worth $13.8 billion in 2021, and is expected to reach over $104 billion in the coming years. 

However, while the above data indicates fabulous positive growth, the oligarchs in control of the current webspace deprive creators severely. The lion’s share of generated revenues goes into the company coffers while the creators get almost nothing. And the problem isn’t limited to revenue distribution. The tentacles of malice go deep, as we shall see in the following paragraphs, thereby exploring possible solutions.  

The Detrimental Effects of Centralization On Creators

Both amateur and professional creators contribute enormous volumes of content to social media platforms daily. According to Statista, YouTube users uploaded as much as 500 hours of video every 60 seconds in 2020. On the other hand, Facebook produces a whopping 4 petabytes (4 million gigabytes) of data per day from its 2.9 billion active users. 

The reasons for the extraordinary success of these platforms are manifold. Originally, Web2 promised to keep out intermediaries and deliver content directly from creators to consumers. For example, users can freely share their opinions, images, or videos on social media for others to view and respond to, without worrying about editorial censorship. But it has become pretty clear in recent years that this sense of freedom is only apparent and not real. Web2 giants are very much the intermediaries acting as digital gatekeepers with convoluted and anti-user policies.

Most of the existing social media platforms run on advertisement revenue, often subjugating the creator’s freedom and choice. The infrastructure suppresses individuality to favor algorithmic promotions and inserts ads almost coercively. Moreover, fans do not get direct access to creators while the latter cannot generate sufficient income for themselves. And another relevant question to ask here is, who owns this massive volume of online content? 

Creators often live under the impression that they ‘own’ the content they upload from their accounts

But it’s unfortunately not so. Convoluted Terms & Conditions grant companies absolute ownership of the data uploaded on their platforms. Even when such clauses aren’t hidden in fine print, it’s practically impossible for any ordinary user to read these winding documents before ‘agree’-ing to them. Creators gain access to vast distribution networks, which binds them to these platforms while the facilitating corporation monetizes the content at will and scale. 

Furthermore, the problematic effect of centralization extends beyond specific ownership, into property rights in general. Simply put, Web2 doesn’t have efficient means to ascertain who owns what piece of content. The chances of fraud are of course high and copyright infringement becomes the norm. 

YouTube, for one, enables ‘copyright strikes’ against malicious actors, although the process is quite cumbersome and often misused. In general, however, the provisions for owning one’s content are extremely shabby and open to violations.

For example, Emily Ratajkowski had to buy back her own image on Instagram.

How an NFT-Enabled Creator Economy Can Help

Non-Fungible Tokens (NFTs) became a sensation recently, with fresh data estimating market size of over $40 billion in 2021. One main reason for such growth is the technology’s potential to address the challenges facing traditional creator economies and their user experience. 

NFTs offer indisputable and irrefutable ownership rights by immutably storing transaction history on the distributed ledger. When a creator mints an NFT on-chain, it continues to exist forever and is practically indestructible. NFTs turn every fan or consumer into an active owner or stakeholder by eliminating the need for rent-seeking, centralized intermediaries. Better still, asset provenance becomes much easier which makes owner tracking faster and more efficient. 

Creator economies can replace the advertising-based business model with a multi-tiered pricing structure using NFTs. Ownership becomes more granular and democratic, enabling every fan to own whatever they can afford. Moreover, legacy social media platforms cannot differentiate between new and old subscribers and thus take a one-size-fits-all approach. On the contrary, some NFT-powered platforms reward early supporters with special airdrops and limited-edition releases. 

NFT platforms can build a strong community based on authentic stories from the creators

Users become co-owners in this community-first approach, with equal rights in the economy. Community-oriented tokens offer a unique way to provide equity to token holders, ensuring their skin in the game. Leveraging unique token standards, it is moreover possible to generate revenue through in-built royalties architecture. Thus, creative professionals get remunerated for every secondary sale of their work, and not just the primary sale. Simultaneously, NFTs significantly reduce customer acquisition costs to almost zero, coupled with massive new user uptake. 

As a whole, NFTs provide a one-of-its-kind digital experience within new-age creator economies. Supporters and fans no longer remain passive consumers but contribute actively to the creative process by directly patronizing their work. In the near future, with the rise of the metaverse economy, NFTs will become an even more integral part of virtual reality. As more people come on board to create something in the metaverse, NFTs will empower them to do so in a free and fair manner. And in these ways, they will play a crucial role in transforming our digital existence overall for creators and consumers alike.