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As with most game-changing innovations, there’s a mix of excitement, speculation and confusion about the role Web3 technologies will play in the evolution of our digital lives. For Web3 evangelists, the technology promises to help people regain control of their data and monetize who they are and what they know and do in new and exciting ways.
As a result, Web3 has attracted billions in VC funding for projects and startups spanning its various components, including blockchain, cryptocurrency, non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), AI and the Semantic Web. And for creators, the size and scope of investments in these new developments are exciting news.
What is Web3, anyway?
Before jumping into what it means for creators, it’s good to have a working definition of Web3. IDC defines it as ”a collection of open technologies and protocols, including blockchain, that supports the natively trusted use and storage of decentralized data, knowledge, and value.”
If you’re a creator, that definition should be music to your ears. With issues of control, privacy, security, ownership and trust continuing to plague the current iteration of the internet, Web3 offers a beacon of hope. Reading between the lines, what IDC is saying is that Web3 will offer a better dynamic between those who create and those who consume. It will enable the seamless, transparent and cost-efficient interactions and transactions that are needed to grow the creator economy.
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The problem with centralized platforms
As it stands, the current ecosystems most creators are feeding are completely centralized. And although some creators have made a great living thanks to these platforms, in the end, it’s the platforms themselves that make the real money. Take YouTube for example.
According to Statista, during the first quarter of 2022 alone, YouTube’s worldwide advertising revenues reached $6.9 billion, a 14% year-over-year increase. Yet despite this success, many of YouTube’s creators cannot quit their day jobs. According to an August 2022 report, 97.5% of YouTubers fail to make $12,140, the recognized U.S. poverty line.
To be fair, YouTube isn’t the only platform with this dynamic. Despite making popular platforms billions, a vast majority of creators struggle to make a living wage. Linktree data revealed that of the 200 million people participating in the creator economy, only 12% of those doing it full-time make more than $50,000 per year. The company also found that 46% of full-time creators make less than $1,000 annually.
Most creator platforms own the audience, the data and the revenue. The primary way for creators to make money is by securing sponsors or attracting massive numbers of fans and followers to advertisements placed by a platform’s algorithm, which some feel favors certain creators over others. Web3 essentially cuts out these middlemen and allows creators to connect directly with their audiences and earn the bulk of the revenue for themselves.
In essence, the mantra for the current creator ecosystems is that creators create the content and companies earn money. At any moment, these ecosystems can change their algorithms and rules and take over the audience (and monetization) a creator has painstakingly built over the years. And if a creator decides they want to take their audience someplace new, they can’t. They don’t have access to the data needed to connect directly with their audience outside the platform’s environment.
Web3 is set to change the current internet dynamic by enabling creators to monetize their work directly, without the interference of a third party. But you might be wondering, “How, exactly, does that work?”
Putting Web3 to work for creators
The key to leveraging Web3 as a creator begins with finding the right platform. And of the utmost importance is retaining full control of your content and the revenue you earn. It’s also important that the platform you choose provides the tools and services you need to run your business. That is the approach we have taken at Kajabi, and according to a recent study, Kajabi customers make an average of $30,000 per year.
NFT marketplace Rarible is another good example when it comes to controlling the money you and your team earn. With Rarible, if you have a team of collaborators, you can add their wallets to the smart contract and share the royalties from future sales. That way, the earnings equation is completely transparent and nobody gets left out.
Another model to consider comes from a company called Rally, which enables creators to launch their own creator coins. These fungible tokens are an interesting way for creators to monetize their work and themselves with their communities by creating an economy around everything they do. Essentially, fans and investors can buy your creator coin, sell it, and use it as currency in the platforms that are built on that blockchain.
Decentralized social platforms such as Mastodon and Diaspora take this a step further. With these platforms, creators retain full ownership of their content and identity, and they can monetize via their fans, not advertisers. Fans invest in their favorite creators and every account has a monetary value that can go up or down. In addition, what’s owned on these platforms goes with holders from platform to platform.
We are at the beginning stages of Web3. And in the same way that artists contribute to the revitalization of neighborhoods, creators will drive Web3 forward. Without creators and their fans as early adopters, the growth of Web3 will stagnate and the centralized Web will only become more controlling. That’s why there is no time like the present to begin the Web3 journey.
Sean Kim is president and Chief Product Officer at Kajabi