Link: The Web3 Renaissance: A Golden Age for Content

Intro

It's no news that many creators (artists, journalists, YouTubers) don't like big tech companies nowadays, because big content platforms the companies control have an intrinsic conflict with creators in today's setup.

In this article, the author advocated that Web3 will bring Renaissance to online content creation.

Highlights

In 1996, Bill Gates published an essay named "Content is King" on the Microsoft website. (You can only access it in Wayback Machine now.)

In it, he describes the very characteristics of the internet that would lay the foundation for the Creator Economy. “One of the exciting things about the internet is that anyone with a PC and a modem can publish whatever content they create,” he writes.

what’s less well-remembered is that he also sounded a warning: “For the internet to thrive, content providers must be paid for their work,” he writes. “The long-term prospects are good, but I expect a lot of disappointment in the short-term.”

Bill Gates's prediction was right. Most content creators weren't doing well.

First, Matthew effect:

The lived experiences of creators tell the story: 90% of streaming royalties on Spotify go to the top 1.4% of musicians. The top 1% of all streamers earn more than half of all revenue on Twitch. 1% of podcasters claim the majority of podcast ad revenue.

Second, platforms are over-powerful:

much of that money has bypassed the creators that produce the content, landing instead in the pockets of the platforms that aggregate it.

Platforms also decide which account got blocked, canceled, or suspended from monetization.

But how did we get to this broken, or at least sub-optimal, place?

At the heart of the story of how the internet broke the media business model is the simple fact that the internet was not built to facilitate the flow of money.

The lack of payment infrastructure is the reason why so much of the internet is monetized via advertising. Rather than requiring users to pull out a credit card and type their information into a website, users could be monetized frictionlessly and indirectly, paying not with their money but with a different asset: their attention.

This is only half the story. The other half is that society hasn't shifted its mindset to the new information world. Even though there had been an easy payment method at the inception of the Internet, people still need reasons to pay when they can enjoy the free ones. Nevertheless, this problem is also addressed later in the article.

The business model of advertising has profoundly shaped most of the contents we consume and the dynamic of their creators:

Views are funneled to content and creators that are already popular, creating a power law in success.

Data about user preferences and behavior is the platforms’ most valuable asset, so they close off their ecosystems and lock users into their networks to amass the largest corpus of proprietary data.

The ad-based revenue model has enormous implications for content creators, as well. Creators are compelled to seek the broadest possible audiences and to create content that attracts advertisers.

The last point -- creators are compelled to seek the broadest audiences -- is also one of the reasons I believe we need more curators to better serve the niches.

There is also another reason why creators are unhappy with platforms:

creators’ patience with the platforms is wearing thin in a burgeoning legitimacy crisis—they are starting to question the platforms’ right to exert such outsized control over their work, their relationship with fans, and how they’re rewarded for it.

Of course, platforms want to own such relationships. They call it traffic or engagement. To be fair, it's very understandable that platforms want to keep moats.

This business model—or lack thereof—has a profound impact on which creators can make a living and what they create (incentivizing viral, attention-grabbing, and aspirational content, while disincentivizing niche, in-depth content).

OK, background set up, now the hero of this story, Web3, is going to debut:

On the horizon, new business models and technologies hold promise to unlock the kind of economic opportunity and control that will lead to a true creative Golden Age for artists and creators.

If the pre-internet/web1 era favored publishers, and the web2 era favored the platforms, the next generation of innovations—collectively known as web3—is all about tilting the scales of power and ownership back toward creators and users.

NFTs and the introduction of digital scarcity

Scarcity itself is not a bad thing:

it’s about producer power—in this case, the ability of creators to derive meaningful income from their creations.

And while contents are abundant thanks to the Internet, the good contents are always scarce.

In our current world of infinite, platform-mediated content, scarcity does not exist. On social platforms, content is endlessly commoditized—one video is more or less the same as the next video, one song is the same as the next song, and content can be easily duplicated across the internet.

This caused creators with certain focuses not to be able to make a living. But now they could use NFT:

In tokenizing their work as an NFT, creators create a verifiable on-chain record of a piece of media’s ownership and provenance. The end result is a unique digital asset that traces back to the artist. Fans who are passionate about the creator’s work are willing to pay more for this canonical piece of media, enabling creators to better capture fans’ full willingness to pay.

The end impact cannot be understated: content creators no longer need millions of fans to make a living, but can survive on the contributions of a passionate few.

Early real-world example:

On streaming platforms,  each stream of a song contributes the same amount of revenue (approximately $0.004 per stream on Spotify), regardless of that fan’s particular intensity of affinity towards the artist. In contrast, on platforms like Catalog or Sound, superfans are purchasing NFT music for thousands of dollars each, with creators earning what previously would have required tens of millions of plays.

NFT is like a more serious version of the like button on Facebook or Twitter:

Purchasing an NFT is akin to collecting real-world merchandise, enabling fans to feel closer to the artist and own something rare, akin to a “non-fungible super-like.”

I prefer the concept of super-like to owning a piece as the interpretation of such type NFTs. Ownership as a concept is overloaded and misleading in the context of the digital world. We need better words to precisely describe the relationships between people and information.

By the way, this man-made scarcity doesn't mean limited access.

The actual media underpinning NFTs can remain public goods, available to be consumed by anyone at no cost.

Besides the scarcity which can be introduced by NFTs, there are a few other factors how Web3 could help content creators.

First, supporting creators could become an investment, not just an act of altruism.

Jesse Walden defines “patronage+” as patronage with the possibility of profit, a phenomenon that is introduced through tokenized ownership.

all tokens are investments that not only fund the creator, but also could benefit the holder if the value appreciates.

Earlier this year, Mario Gabriele of The Generalist crowdfunded 20 ETH for a group of analysts to create a deep-dive on Coinbase, as well as to commission artwork to accompany the essay. Crowdfunders received proportional stakes in the briefing and artwork, all of which were minted as NFTs. In total, the NFT sales earned 28.6 ETH, leading to a return of 43% to crowdfunders in just a few weeks.

Second, content economics can be programmable and automated.

A truth of the creator economy is that creation is often a collaborative act. YouTube creators star in each others’ videos. Musicians sample from and are inspired by each other’s work.

In the winner-take-all world of algorithmic platforms, too often the value only flows to the creators that go viral, leaving out everyone else involved in the creation of the work. This has led to strikes and discontent among creators who feel that their contributions go unrecognized and uncredited.

In web3, the promise of tokenization means that it’s possible to build in royalties such that the entire chain of attribution is able to profit from a collaborative work.

Early examples of this include Mirror and Foundation’s splits functionality, which automatically routes earnings to various Ethereum addresses that contributed to a project.

Finally, DAOs and community ownership could disrupt over-powered platforms.

DAOs (decentralized autonomous organizations) and other mechanisms of collective ownership create a pathway to disrupt the centralized hold that the platforms have over the creator landscape by making it possible for creators to work collaboratively without an external mediator dictating the terms of engagement.

a creator platform that progressively decentralized is SuperRare, an NFT marketplace that distributed tokens to its artists and collectors, who will govern curation, the DAO treasury, and future product direction.

ElektraDAO is a community of 42 musicians, visual artists, developers and strategists, who developed an interactive choose-your-own-adventure web3 game with music at its core

Content creators want to not only play the game but also have a say about the rules.

Ownership determines incentives. It determines opportunities. It determines how wealth is created—and for whom.

In the end, the author summarised her altitude toward the creator economy in Web3:

I believe web3 has the potential to unlock incredible opportunities for everyone who contributes and creates on the internet: a true Golden Age of content that we’ve all been looking forward to.

Closing Comments

Emotionally, I hope there is going to be a Renaissance in the near future as the author depicted in the article. I have experienced the degradation of online content personally: more and more frequently I got disappointed by the Google search result because SEO-oriented content farms took the first page. The Internet is filled with disingenuous content.

While I'm generally optimistic about the Web3, I think there is an uphill battle in front of us:

1. For NFTs introducing scarcity, we as a society have some mindset shifting to be done. But it's already happening thanks to the NFT hype.
2. For supporting creators as investments, it can be a messy market for a while: how to prevent fraud, insider trading, and how we will view aesthetics through the lens of financial return.
3. For an automated content economy, we still need to figure out fair and good rules to be automated.
4. For DAO, Yes, it reveals a new space to explore how an organization could work. But it's not the silver bullet as it is hyped nowadays. People still need to work out the governance approach that suits them. The good news is that there is some prior art that may help.