The creator economy is exploding. New platforms are launching to help creators grow their audiences, while existing social media platforms are rapidly churning out new functionality that gets creators monetizing their content. So much so that resource platform Influencer Marketing Hub reckons the industry will be worth $31.8 billion in 2021, up from just $6.5 billion in 2019. But with that comes a growing conversation about power dynamics in the creator economy.
Despite relying on content creators to give their platforms credibility and to build an audience for advertisers, social media networks still keep a disproportionate amount of revenue – which wouldn’t even exist were it not for the creators themselves. So, creators are starting to take back control of their content, along with the audiences they’ve built – and blockchain is a big part of how they’re doing that.
In essence, a blockchain is made up of a series of pieces of data that are linked together. Each piece of data is stored in a ‘block’, which has its own unique code: a hash. Apart from the very first block in the chain, each block is also connected to the hash of the previous block. If, in theory, data in one of the blocks was compromised, the hash changes, which would break the links throughout the rest of the blockchain and show that it had been tampered with.
Blockchains are not only highly secure, but can also allow for better traceability and transparency. Each of the blocks and the data within them are timestamped. ‘Blockchain is used a lot in the finance and banking industries, and logistics and supply-chain industries, because it allows for a full record of all transactions,’ says Erica Stanford, a blockchain expert and founder of Crypto Curry Club, a UK-based tech and networking hub for blockchain specialists.
Here are some of the key terms in the world of blockchain to keep in mind.
Ledger. In non-technical terms, this refers to a record of financial accounts, and it’s not dissimilar in the blockchain space: it’s the string or history of transactions.
Decentralized finance (DeFi). Traditional financial records or ledgers are kept in one place, making them susceptible to hacks; spreading them out in a decentralized network makes them harder to manipulate.
Cryptocurrency. A currency that doesn’t come from a central bank or financial institution. Since it relies on the blockchain, cryptocurrency transactions are public. Bitcoin is one example.
Metadata. If each block in a blockchain is storing a piece of information, metadata is the information about the block itself. That includes the unique code (the hash), the hash of the previous block, and the block’s timestamp.
Non-fungible tokens (NFTs). NFTs are digital assets that are traded using cryptocurrency. Because they can be attributed back to the original creator and the creator can get paid every time the asset is traded, NFTs in the digital art space have ballooned in recent months.
The art industry is just one of the creative industries that has benefited from adopting the blockchain. Textiles and diamonds can be traced back to their origins, allowing for greater transparency in the apparel and jewelry industries. Apparel traceability platform TextileGenesis and jewelry company Brilliant Earth’s conflict-free diamonds are two great case studies.
In the film and music industries, blockchain-based smart contracts can guarantee better distribution of royalties, as well as the ability to register original ideas like scripts and songs as your own.
For Joe Horner, a photographer and artist working with flowers, turning his physical artwork into NFTs provided an alternative source of revenue when freelance photography work and print sales were drying up in early 2021. He currently sells on ‘creative playground’ Foundation (which uses cryptocurrency Ether, or ETH), as well as experimenting with lower-priced items on popular NFT marketplace Hic et nunc. ‘Pricing can be a big challenge for artists,’ he adds. ‘You can end up underselling yourself if you’re just jumping on to make a quick bit of money, especially if people can see on the blockchain that your work has sold for low prices before.’
Joe warns it’s not only a challenge to wrap your head around the technology, but there are still real business risks for artists in what is largely an unregulated space. ‘I found I had to keep paying transaction fees to mint and list my art,’ he says. ‘There is also a lot of scamming, and it takes a lot of time to do the due diligence. People are also replicating artists’ work and selling it as their own.’
Carolyn Dailey, founder of London-based online membership platform Creative Entrepreneurs, shares these mixed feelings about blockchain. ‘NFTs let creators sell directly to their communities, without going through their traditional “routes to market”, [which] also take a cut of their profits,’ she says. ‘Artists no longer have to use galleries, music producers or record labels.’ Given the many unknowns about where blockchain is heading, Carolyn also notes that customers still think of it as a risky investment, and that the tax implications for creatives are unclear.
Blockchain is still a relatively nascent technology, but even content creators are finding ways for it to benefit their businesses. Erica sees blockchain enabling more micropayments in the future, where audience members can pay for individual snippets of content from their favorite creators – it’s what she calls a ‘pay-per-content’ model, rather than a subscription. From fairer and more ethical models of monetization to preventing counterfeiting, here are other ways that blockchain is transforming the creator and creative economies.
It’s hard to monetize your content and your audience as a creator. There’s a big financial divide between those at the top who are getting better algorithmic coverage from social media platforms, and the micro or nano influencers trying to break in. And that’s despite having dedicated and engaged followers. The formula isn’t quite working.
For Spencer Dinwiddie – NBA player for the Washington Wizards, and the founder of open social marketplace Calaxy – that meant finding a way that his fans could interact with him and other influencers digitally. Outside of social media, people like Spencer could have more control over the price they charge for their time and content, and in general over their financial wellbeing as creators. Calaxy, short for ‘creator galaxy’, facilitates this by attributing unique cryptocurrency tokens to each creator, giving users the ability to ‘buy’ their time. Calaxy’s co-founder and chief operating officer Solo Ceesay tells us how it all works.
What was the need you saw that led you to start Calaxy?
A. ‘Fans want to get closer to creators and there isn’t a way for that to take place. Creators – and the growing “creator middle class” – are also looking to monetize their reach. Legacy [social media] frameworks like YouTube and TikTok will turn around and tell you as a creator what you’re worth to them. On Calaxy, you can set your pricing and what your time is worth.’
How has the growing interest in the creator economy shaped your proposition?
A. ‘This is a platform for everybody. There are a lot of different types of creators, and often they’re in direct competition with one another and with influencers that are much larger than themselves. For us, we recognize that even that “middle-class” creator is famous to somebody.’
How do you think Calaxy is going to evolve from here?
A. ‘We want Calaxy to become the standard for personal monetization. On centralized platforms, your [pay] checks are determined by somebody else, and the only way you can get paid is to be the best on that platform. Decentralized finance allows that power to be put back into the hands of creators.’
Foundation is one of the most popular NFT marketplaces for creatives to sell their work on, and many artists working in non-digital formats have opened up another revenue stream by listing their work on it, too. ‘Before NFTs, there was no financial demand for my work, although a lot of people definitely liked it,’ says Sasha Zuyeva, a painter based in St Petersburg. ‘Now, interest in my work has clearly grown.’ For Sasha, the challenge comes in guaranteeing sustainable revenue from these platforms. ‘Being in demand in the NFT world is not an easy task. You need to be in the community all the time, working on your reputation and building relationships with people. A much bigger problem is the lack of social tools to make it easier for artists and collectors to find each other. Current NFT tools and platforms are far from ideal – you have to study for a long time to work out what works.’
One of the key concepts of the blockchain is that it’s open for everybody to see. Peer-to-peer transactions mean that creators and users can interact without third-party intermediaries, in what’s called a decentralized autonomous organization (DAO). Each DAO is self-governing, and makes all financial transactions using cryptocurrency on the blockchain, for full transparency.
This means that creators can manage their own transactions and relationships with viewers and customers using unique cryptocurrency tokens. Viewers and fan communities are also given much more control: they can not only spend cryptocurrency tokens on creators’ material and help them build their profiles up – but, on certain platforms, users also earn tokens by giving their consent to view advertising and promotional material.
It also allows creators to be in direct contact with their communities, and develop content that keeps those communities coming back. Since the creators and users both are invested in the same cryptocurrency, there’s an incentive for both parties to create and interact with high-value content. And because there is a limited number of the tokens, viewers are likely to be more discerning in rewarding the content they really enjoy, which drives up the value of the whole creator economy. Here are a few platforms to watch.
Flixxo is one of the original pioneers of community-based video distribution, launched in 2017 as a competitor to YouTube. Using Flixx tokens, creators can monetize their content, and those who have downloaded the content – known as ‘seeders’ – can also benefit by sharing it to their networks.
Friends With Benefits is a new token-based community that is hosted on a private server on chat and digital distribution platform Discord. Prospective members have to purchase at least 75 $FWB tokens, and there are only 1 million of the tokens in existence. Members can earn tokens by participating in community activities, and can vote on the future of the community.
Privi, a blockchain-based platform built specifically for the creator economy, allows creators to manage self-governed communities, and enhance them with a suite of features and plug-ins. Creators can mint any assets as NFTs, and viewers can pay for content they interact with by the second.
Protecting intellectual property
The transparency that blockchain technology affords could do wonders for independent creators and creatives. That was the premise on which Geoff Osler co-founded S!NG, a blockchain-based app that allows users to store original ideas – in the form of files, voice notes or images – in a digital wallet. These are minted as NFTs, and digitally attributed to the original creator as their idea. So, however that idea might progress, there will always be a record of its inception, and, more importantly, who should be reimbursed for it. We sat down with Geoff and chief product officer Raine Maida to learn more.
The challenge. Relying on copyright can become cumbersome, Geoff says, especially when creators collaborate with one another. As a former musician, Raine adds that technology can be a double-edged sword for creators, especially today. ‘The advent of Twitch, YouTube and TikTok – all socially driven and with a sharing culture – means that content creation is exponential. Every piece of content is going to be remixed, cut up or sampled.’
The solution. After recognizing that content was essentially being used as a social currency, Geoff and Raine realized that protecting the origin of that content was key to being able to monetize it in the future. ‘But tech is no good if it’s not accessible,’ they add. Although blockchain and NFTs can be complex to understand, the S!NG team have structured all of its branding and positioning to make the technology palatable to people who don’t necessarily understand cryptocurrency. ‘The system also needs to be fast enough so that a 16-year-old kid who is used to TikTok can use it,’ Geoff says. For Raine, the best part about a piece of tech like S!NG is that he doesn’t necessarily need to learn the ins and outs of how it works. ‘All the deep blockchain technology happens in the background. I don’t need to understand or see it.’
The learning curve. ‘The next generation of creators are more focused on clout, followers, shares, likes and the social validation that comes with that,’ Raine says. ‘This is about helping them understand that if someone steals their idea, they can make a claim and it’ll hold [up] in court.’ Geoff and Raine know that the average content creator probably isn’t aware of copyright laws, and so, to a certain extent, want to take creators on that learning journey, too. Eventually, though, they hope that the technology will become second nature, like driving a car: ‘We all drive, but most of us only have a fleeting understanding of what is under the hood,’ Geoff says.
It’s not just digital assets that need protection. For creative entrepreneurs who produce physical goods, counterfeiting threatens the longevity of their businesses; a fraudulent copy of an original artwork could end up selling for millions. And in the fashion industry, inauthentic designer goods make up a massive sub-industry in their own right – the Organisation for Economic Co-operation and Development estimates the value of the counterfeit fashion industry to be more than $509 billion. But blockchain technology has the potential to sniff out fake goods, as well as following the life cycle and trades of authentic luxury products. These three startups are using blockchain to help creative businesses with just that.
Certify your creations. Whether it’s paintings, prints, digital art or video content, Verisart provides authenticity certifications for creative business owners. The patent-pending tech allows artists to track the movement of their artworks. That, in turn, helps to strengthen their careers as creatives. ‘The way that artists have created certificates of authenticity as paper documents is not well-suited for the digital age,’ says Robert Norton, CEO and co-founder of Verisart, adding that more than 10,000 artists are now using the platform for digital certification of around 45,000 pieces of work. The Verisart team have also integrated the technology with NFT marketplaces after seeing the demand skyrocket since late last year, Robert adds, which gives digital art producers leverage in a collectors’ market. That said, the majority of the businesses using Verisart are still working on non-digital and print formats. But, Robert says, it’s likely that more collectors will veer towards gathering virtual collections, which is why Verisart also provides functionality for collectors to secure their assets.
Give physical products a digital footprint. LUKSO is a new platform that registers both physical and digital products on the blockchain with the aim of keeping track of ownership. The founding duo, Marjorie Hernandez de Vogelsteller and Fabian Vogelsteller, see LUKSO disrupting the luxury fashion and accessories industries.
Drive the resale and rental market. As the demand for secondhand and pre-loved products skyrockets, brands are looking to get a piece of the pie, too. Reflaunt connects fashion brands and consumers to secondhand marketplaces, using authentication technology. When someone buys a luxury item, the first transaction is registered onto the blockchain. If the person decides to resell the item, they can do that by connecting directly back to the brand, rather than having to find the right secondhand platform to sell the product on.