The fungibles: The creator economy, the ownership economy and why they matter
Caleb Kirshner | Senior Strategy Manager, Impact Labs, FIS
December 06, 2021
Whether you’re a full-time artist or going (staying) home after your day job to record podcasts, put out music, mint NFTs for your digital art, or cultivate your global TikTok following, you are part of the “creator economy.”
Who are creators, and what’s the creator economy?
Blogger Hugo Amsellem defines a creator as “an individual who scales without permission.” Creators are authentic builders of assets who bypass traditional gatekeepers like record labels, radio, TV, schools and newspapers, and go straight to the public, trading security for autonomy. While freelancers sell their time, creators use the internet to scale without limits at little cost. In short, creators are internet entrepreneurs “bringing substance to the [notion] that anyone with an idea and an internet connection could make something of value.”
The creator economy is a class of online businesses built by independent content creators, curators and community builders. It includes the making and consumption of content, as well as the products and services that feed it. Companies are popping up to serve all phases of the creator lifecycle, from making content to growing an audience, monetizing and managing a business.
Why does the creator economy matter?
The creator economy is a $104B borderless market, growing and teeming with potential as it intersects with emerging Web 3.0 technologies. In analyzing data from 50 creator platforms, Stripe measured 48% YoY growth of creators coming online. Pandemic-induced digital transformation has accelerated this hockey stick growth and younger generations are the ones moving the puck. A 2017 study found that nearly 3x more 8-12-year-olds want to be YouTubers than astronauts.
How is the creator economy related to Web 3.0?
Contemporaneous with the boom of the creator economy is the beginning of a transition to Web 3.0, the ownership economy, enabled by blockchain. Media and online forums have focused their gaze on NFTs, or non-fungible tokens, which enable proof of ownership and smart contracts tied to assets like digital art. While the jury is out on the range of NFTs’ value propositions, speculation has rocketed trading volumes to $10.7B in Q3 2021, over 8x the volume in Q2. Digital art NFT sales are pioneering a way for creators of all stripes to directly monetize their work free of any platforms or gatekeepers taking significant cuts.
This sounds peachy—where can I sign up?
Just because the creator economy is off to the races doesn’t mean that any creator with a niche and talent is finding financial success. While tech news may zero in on triumphs like Beeple’s $69m NFT sale, or teen Charli D’Amelio becoming a multimillionaire on TikTok, most creators struggle to find financial security from their content. On Patreon, only 2% of creators made the federal minimum wage in 2017, and on Spotify, 1.4% of artists rake in 90% of royalties. Friction in monetization is preventing creatorhood from being a sustainable vocation en masse.
What could innovation in the creator economy mean for businesses?
As creators figure out how to monetize their work more effectively, larger businesses may benefit from these innovations. Though small and large brands alike are dipping their toes in the Web 3.0 water, they haven’t yet grasped how they want to use digital assets, and what for. While Web 3.0 may be a key to unlocking revenue for creators, enterprises to date have mostly treated digital assets as a PR splash. In March, Taco Bell released gifs of tacos on NFT marketplace Rarible, and in September Balenciaga launched a Fortnite hoodie that you can buy as an in-game skin for ~$10 or in real life for over $700. ROI on these drops as a new marketing channel is still unproven, and unlike creators, large brands don’t yet see digital assets as a notable revenue stream. Trailblazers, however, are starting to get their virtual ducks in a row beyond just for PR—Nike filed a patent for “Cryptokicks” virtual sneakers in 2019, and in November 2021, they filed seven more trademark applications to protect their brands in the virtual world.
What’s to come?
What a few years ago felt like Silicon Valley jargon about future digital worlds is now becoming a patented strategic position. A Gen-Z in their basement is now on screens in pockets around the world. A studio artist in L.A. who used to make $100 per print is now auctioning pieces through Christie’s. As the creator economy and Web 3.0 continue to expand, all these segments will need tools to directly capture the whole value of their work. Now’s the time to get building.