Platform providers make billions of dollars from the content users create for free.1 They created the platforms and they deserve to be compensated for it. Without the App store, Snapchat wouldn’t exist.
However, users, influencers and artists create most of the value in a well-established platform through social network effects. Yet they only get a slice of the pie, the size of which is determined by the platform.
Facebook (parent company of Instagram), Alphabet (parent company of Android, Google and YouTube), Spotify, the App store and most other digital platforms take user or creator content, monetize it via ads, subscriptions or a flat percentage of revenue generated, and pass the value along to shareholders.2
This is one part of Web 2.0:
Platform companies facilitate our network effects. Facebook, Instagram and Twitter provide us a place where we can share photos, memes and information instantly. Most of the value comes when your friends join the platform.
We have been spoiled by this system. Think about how much you’ve learned from free YouTube videos, Wikipedia pages and news articles because you put up with a few ads rather than pay for the content you value.
The shift to value culture has already begun. Paywalls on news sites, Twitter Spaces tickets and Twitch subscriptions are just some examples of Web 2.0 solutions shifting value from platforms to creators.3
Value culture refers to a social system where individuals pay for what they consume because they:
Understand it provides them value;
Care about supporting content creation; and
Expect the platform provider and content creators to share proceeds equitably.
Epic Games v. Apple and TikTok’s opaque Creator Fund exemplify the importance of platforms sharing value with creators.
One reason many of us have been hesitant to embrace this cultural shift is because we aren’t convinced our money will end up in our favourite creator’s pocket.
Where do most of our paid subscriptions go: our favourite journalist or their boss? Our favourite influencers or platform shareholders?
This would help explain why Patreon, Substack and many other platforms that allow producers to monetize their content have been so successful.4 It would make sense that people would be more willing to pay for content they consume if they knew it was going to the creator.
“The first NFT that Anjos sold was called Elephant Dreams and made him $26,000. “That would’ve taken me three years to make on Spotify,” he says.”
— Matthew Leising, Bloomberg
Embracing value culture while adopting Web 3.0 solutions will allow more creators to control the monetization of their content.5
For our purposes, Web 3.0 means decentralized systems: blockchain, NFTs, cryptocurrencies, etc. In general, Web 3.0 encompasses the broad technological trends we are likely to see over the coming years:
If we embrace value culture, people will think about buying an NFT linked to an MP3 file like purchasing a signed record from their favourite artist. Sure, a copy will still do the trick, but value culture assumes members of society care about supporting the underlying artist or content creator.6
3LAU (a DJ), Grimes, Kings of Leon and Tory Lanez have already gotten in on the NFT action: 3LAU made $11.7 million, Grimes made $6.3 million and Kings of Leon made more than $2 million, $500,000 of which was donated to charity.7
Fans who purchased these NFTs have adopted value culture: they pay for them because they are authentic and the proceeds went directly to the artists, or a charity of their choice.
In the future, platform developers could adopt a decentralized autonomous organization (“DAO”) structure to get compensated. In fact, developers, creators and even users could hold DAO “tokens” that grant them the right to vote on governance and other matters.
A structure of this nature could provide platform builders and content providers a decentralized way to negotiate an equitable division of the economic pie.
“Yes, there’s idealism, but there’s also a sense of building a new economy in which the value accrues to the people who create the value. That’s capitalism, baby.”
— Packy McCormick, Not Boring
A societal shift towards value culture is among us. One where we get used to paying for things we enjoy consuming. It’s not a new concept. Groceries aren’t free and we all hate ads on our social media feeds anyways.
The faster we embrace it, the faster others will start to see value in authenticity. If we can create a world where authentic content is valued, more people will be able to generate income directly from their passions, talents and skills without having to give most of it away to a gatekeeper.
Thank you for reading! If you enjoyed, please consider sharing with a friend who may also enjoy, or subscribe to keep the knowledge coming.
If you want to learn more about the creator economy, crypto fundamentals, NFTs and DAOs before we cover them here at no jargon, I highly recommend the following sources that inspired this post:
Packy McCormick’s “unintentional and ongoing series about how the internet and web3 are shaking everything up”:
Crypto fundamentals and NFTs, Patrick Rivera
Please contact me at justin@nojargon.org if you have any questions, comments or suggestions for future topics: I’d love to hear them!
I am always looking to learn new things, refine my understanding, correct any errors and expand on the sources that influence my thinking.
The new rules of the “creator economy”, the Economist
Crypto fundamentals and NFTs, Patrick Rivera
This point has been made by many, I just happened to think of these examples. Check out The Passion Economy and the Future of Work by Lin Jin for some OG work on the subject.
The new rules of the “creator economy”, the Economist
This thought is heavily indebted to the sources linked throughout this piece.