Content creators should make more money and web3 will fix that

The platforms are taking all the profits and share a sliver with the people who do the actual work, content creators. Web3 will fix that. Here's how.

"Vin Diesel was one of the most hated people at Facebook."

About 10 years ago he had tens of millions of Facebook followers (he is now at 106M followers). He was engaging with them and listened to their suggestions. For example, Dwayne Johnson got introduced in the Fast and the Furious franchise as fans proposed it.

Even more, Mark Zuckenberg was a huge fan of Diesel. There's a story that xXx 2 was made because Zuckenberg asked for it.

Sriram Krishnan, (ex- Twitter, Facebook, and Microsoft, currently at a16z) was a guest on Bankless and, among other things, talked about the creator economy, how unfair it was on web2, and how things will change for the better on web3. 

web2: Creators make content, platforms make money

The old "social contract" between creators and platforms was that they would post content and engage with their fans. In exchange, the platforms would give them eyeballs. "There's no money involved", says Krishnan on Bankless.

As more and more creators grew bigger, the platforms would make even more money off them. At some point, creators figured out the imbalance in the transaction. Platforms would make huge amounts of money while creators made next to nothing. At some point, they realised that they had power over the platforms. Big names could hurt the platforms, if they decided to leave.

Of course, it's not as easy as that. Creators were 'locked-in' on the platforms. They could leave, but they would also lose their followers.

At some point, Facebook wanted to start incentivising creators more. In their internal discussions they were thinking "Hey, can we start paying people? The retaliation would be like: 'Well, then Vin Diesel would ask us for money and we don't want that'", says Krishnan.

Later on, some platforms offered ways for creators to make money from their content. Models like ad-revenue split, creator funds, revenue share, etc. On Facebook and Instagram there was the rise of the influencer. Not incentivised by the platforms, but they would strike deals with brands, in exchange of exposure of their products.

"So now, the contract of eyeballs, and kind of sneak in an ad for attention, just doesn't work anymore", says Krishnan.

web3, where content creators get their share

While platforms still don't want to lose their huge margins, web3 comes with solutions.

"[With web3] this is the ultimate expression of this, because you are giving two things", says Krishnan on Bankless:

• economic incentives

• ownership

Economic incentives in web3 goes beyond making some cash. For example, a social network could pay creators via its own token, which is part of the network. And as the network grows, the value of the tokens grows with it. Tokens could also come with voting rights, so as the creator grows bigger into that social network, they also become part of it. (Imagine owning part of the next Facebook because you post your content there)

Ownership is about owning the connection with fans. We've seen cases where popular creators, with huge followings, lost everything overnight. They got banned and had no way to reach their fans. Their whole business destroyed. Alternatively, in web3 your social graph could be connected to an NFT.

"So, I think, web3 in some ways, kind of the ultimate expression of the, uh, the creator control journey", says Krishnan.

Subscribe for free to get weekly emails like this one 📥 

DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.