What NFTs Mean For The Creator Economy

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What NFTs Mean For The Creator Economy

In an increasingly digital world, it has long been difficult for artists to earn any kind of decent money from digital-only artworks. In contrast, Blockchain driven NFTs allow any creator to take true ownership of their achievements and creative output, no matter how abstract and put them on the market: either as one-of-a-kind items or limited-run series.

It was only a short time ago that creators responsible for content with millions of views worldwide, much of which considered highly influential now, had little to show for their achievements. Sad times. Having been published at a time when the public was largely unassuming of the endurance of these platforms (and the impending explosion of the creator economy), the largest figures the creators of iconic “memes” have historically enjoyed are those next to the words …..“view count” on their videos.

Nowadays the same creators have the opportunity to claim ownership and sell these creations directly to their fans, no matter how digital or abstract, thanks to non-fungible tokens (NFTs). It’s one of the only ways for some creators to make a living off their creations during a time when hosting platforms and portals own a larger market share than ever in the digital creative economy. With the market dominance comes exorbitant fees and, sometimes, unreasonable, crippling restrictions on content – ouch! 

The dynamic where creators are dependent on centralized content platforms is perhaps thankfully antiquated and the reliability of centralized platforms has unfortunately been brought into question on both ethical and security grounds. It hardly seems fair in 2021 but thanks to NFTs this no longer has to be the case.

That said it seems like an appropriate time to take a look into how ever increasing volumes of creators are using NFTs and blockchain technology to circumvent the issues posed by centralized content platforms and donation networks. All whilst earning an income in the process and maintaining total control over their creative output and audience engagement..

Pain Points of the Creator Economy

The ‘creator economy’ is a dynamic cultural and industrial shift focused on the arts and creative output that empowers creators. It represents a shift where creators are given increasing levels of autonomy, entrepreneurial opportunity, and along with it, greater freedom from external financial and creative restrictions. A welcomed and pivotal point in time where creators are seeing the industry’s evolution working in their favour. 

In 2021, anybody with the drive and passion has the ability to become a creator and creators have greater levels of engagement with their audiences than ever before. This is thanks to a convergence of the popularity of creator-focused networks, increased accessibility to production hardware and software, access to education and more.

Previously, audiences had little say in what they consumed and creators were both curated by and beholden to production companies and distributors. With audiences, and the power their voice commands, increasing exponentially, legacy platforms such as television production companies have lost market share to these new platforms. Platforms that claim to empower both creator and audience.

In 2020 Youtube posted annual revenue of $19.7 billion which is a +30.4% increase from the previous year. Now, the centralized platforms which were once seen as bastions of creative empowerment, have grown and started to dominate the creative industry to the extent that their flaws are becoming more apparent by the day.

Creators Are Making Millions from NFTs

The power of the audience in the post-globalized world has lent attention and power to the creators of which they are fans, and NFTs offer these creators new avenues for building valuable relationships with their fans.

The beauty of NFTs, however, is that like the internet before it, NFTs open up a new frontier for creative enterprise. Thanks to the permission-less nature of networks such as Ethereum, there is little stopping anybody from getting involved and minting their own NFT.

There are many ways in which creators can earn money independently using NFTs, from the creators of digital artwork who found a way to sell it for millions, to those who have never even necessarily considered themselves an artist. Famous digital artist Beeple managed to sell his NFT of ‘Everydays: The First 5000 Days’ for $69 million in March. Even Edward Snowden, best known for his activities as a whistleblower and political advocate, managed to sell his NFT creation.

Thanks to some permission-less smart-contract enabled blockchain protocols, now creators can mint NFTs and sell them directly to fans, through their custom storefronts or peer-to-peer marketplaces.  Once minted there are several ways in which an NFT may be used within the creator economy dynamic. The space is growing as fast as the opportunities and therein cuts out the middle man (and his fat slice).

As of writing, the average sale price for an NFT in the category of ‘art and collectibles’ is $112.56k. At the same time last month, the average sale price was $8.78k, a massive appreciation of 1182%.

Avoiding Centralized Pitfalls

Decentralized NFT marketplaces often offer a far greater level of transparency and modesty in fee structuring compared to their centralized peers. This is thanks to a larger level of competition between platforms as well as their democratic governance models. Similarly, decentralized blockchain-based NFT auction platforms help to avoid a common issue faced by many creators and artists.

Centralized auction houses have also long been considered a necessary evil in the world of art and collectibles, acting as custodians for the sale of items whose value can be both highly subjective and debatable. They also infamously act as custodians and gatekeepers of information, meaning that the bidding history and associated bid values are often kept a secret from the public, increasing the difficulty of obtaining a public appraisal value for items of high rarity. 

Furthermore, by keeping the values of bids and sales private, these same auction houses often manage to obfuscate the commission rates they are taking from the artists. By refreshing contrast, auctioning an NFT on a public blockchain, all information on bid values can be made available for all to see, increasing transparency and trust. 

Similarly, patronage platforms and content hosting/curation platforms pose a similar challenge to the autonomy of creators because their fee structures and governance are often opaque to the public.

Ordinary People Can Benefit From NFTs

The possibilities are such that somebody creative enough could do some really exciting things. Through P2E gaming models, video-game developers can incentivize player engagement through the promise of NFT or even cryptocurrency prizes. These NFTs can represent items that can be used in-game, and distributed as rewards for completing in-game objectives or reaching the top of a leaderboard.

Alternatively, creators can reward their fans with free airdrops of NFTs that can be obtained by meeting certain conditions as set by the creator, and a smart contract can be programmed to automatically execute the reward distribution once conditions have been met. For example, a game creator could create a limited edition commemorative NFT for attendees who have attended a special event, or a charity could distribute them to donors.

NFTs are different from traditional cryptocurrencies as “non-fungible” has reference to every instance of an NFT created being unique. Therefore one NFT is never identical to, nor can it be traded for another. It also is not divisible into smaller denominations, because it is not “fungible” (however this carries a caveat whereby it can be fractionalized as ERC20 tokens). First, the ERC-721 standard produces NFTs solely and forces developers to create a smart contract for each new token. On the other hand, ERC-1155 allows developers to develop a single smart contract that can be used to mint either fungible tokens or NFTs.

NFTs add a new layer of potential value to the work of creators in many fields such as art and collectibles, however, the same theory can also be applied to other areas. This is due to the importance of immutability and public verifiability when it comes to concerns such as the authenticity of the source of a piece of artwork, as well as the authenticity of its owner. A way of owning one’s creations without worrying about centralized overlords controlling the narrative of your content or revenue stream.

Minting NFTs on a permission-less network and selling them through decentralized platforms offer creators the opportunity to become owners of their content. To become enterprising artists, rather than artists working for a big enterprise.

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