Winning Models for the Creator Economy

I’m building Satori: a creator economy studio, with wonderful people.
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⏳ I first wrote about creator and user owned decentralized brands in October, 2018.

I described “Cardinal”, a hypothetical company selling limited edition street wear and matching limited edition NFTs for authenticity. Cardinal tokens represented ownership stake and voting power in a DAO that made decisions on strategy, product, marketing and brand.

This thought exercise was a bit ahead of it’s time. Blockchains were still slow and expensive. Use cases like voting cost $10–50 per vote. The politics of “big tech” was also much different. In 2018, the amount of voices complaining about Apple’s 30% cut or a YouTube creator’s share of advertising revenue were tiny; today these voices are louder!

It’s time to revisit creator and user ownership; and practically drill into why they matter today and how to launch applications. I hope to convince you why and how you should do this. The biggest question is what will you build and when it will break mainstream?

  • Tech platforms have inserted themselves in between the creator and the user. Data is the oil for controlling cultural and economic power.
  • The largest disruptions from decentralizing capitalism will happen where users and creators are most easily aligned toward a common goal.
  • We sometimes hear about companies that spend no money at all on marketing or advertising. How do they survive? It’s simple. Users talk about product experiences and brands they love.
  • Marketing — can easily be decentralized by rewarding users for advertising on social media and in group DMs with circles of friends.
  • Content Creation — Instead of rewarding users directly for referrals, crypto media properties owned by users in the community can accrue value in the form of rewards from creators, or even other users… Content can rank in leaderboards, be remixed, share revenues in collaborations with other users and be traded within a community.
  • Strategy — From bad data, comes bad strategy. What if there was a way to involve users in the decision making processes of your business? — We double leveraged the cost of marketing and content, cut market research and strategy costs, while getting better and more aligned strategy decisions directly from our users.
  • As a creator or brand, are you paying hidden costs to platforms and service providers for the ability to reach an audience that’s already yours? Are you missing data and direct channels to your users? It’s time to align the flow of data, capital and ownership with your community!

No Data, Mo’ Problems

Creators and Brands are fighting a war on 2 fronts. The original battle of broadcast messaging, creating and growing a user base. And the new battle of owning bi-directional relationships with their users. Tech platforms have inserted themselves in between the creator and the user. Platforms hold all the data, communication channels and services to effectively reach users.

Technology for information dissemination used to be a dumb pipe, something you would only broadcast with like radio or television. Radio stations and television couldn’t talk to the audiences and in some respects didn’t really even know their audiences. These technologies could not alter listening habits or fine tune business models to extract more from creators or the users. The closest things to data were companies like Nielsen ratings, who would sell data on audiences to the TV broadcasters, who passed charges back to the creators.

We live in the age of surveillance capitalism. Since two way communication via the internet and software platforms ate the world, media distribution technology is much more powerful, and a lot of what is flowing back upstream to the distribution platforms is data. Our behaviours can be subtly learned from and manipulated to control the flow of commerce. We see this manifested in the rise of platforms like Google and Facebook, but it’s table stakes today; at work in literally every new company and application we use. Data is the oil for controlling cultural and economic power.

Li’s thread is the world we live in today; a world of digital serfdom. Both creators and users simply work the fields to produce content crops. The big tech platforms choose what to harvest with their algorithms, keep creators and users walled off from each other and tax both sides of the content experience marketplace.

Ingredients for Decentralizing Capitalism

What’s great about blockchains is that events are public by nature. I sell you an NFT, everyone can see that transaction and also verify you are the new owner. Likewise, trades on DEXs using AMMs are transparent enough to even code automatic execution logic on top of. See Money Legos.

Revenue sharing is coming to everyone around the world, whether regulators like it or not. Users can invest and share revenues generated by creators, brands, NFT funds, liquidity pools, … you name it! Here’s just one example.

You may have heard of a Decentralized Autonomous Organisations (DAOs). These are smart contracts deployed on the blockchain where members can manage a treasury, create proposals, vote and direct capital. Because of the added capital allocation, DAOs operate less like a Web 2.0 Wisdom of the Crowd model (StackExchange) and more like Ownership & Power of the Community.

There’s a wave of new models on the horizon mixing data, capital and ownership. These models will completely reshape entire industries, rewarding creators and users who coordinate on the collective success of their enterprises. The largest disruptions from decentralizing capitalism will happen where users and creators are most easily aligned toward a common goal.

Building the Models

Creators and brands need to promote and sell products or services. Right now they pay employees or an agency to perform this function. The employees or agencies may not be users, know what motivations drive the users or have organic relationships with users. They make up for this by spending money on market research and “testing” the market. It’s pretty inefficient. We sometimes hear about companies that spend no money at all on marketing or advertising. How do they survive? It’s simple. Users talk about product experiences and brands they love.

Figure 1: Agency Based Business Model

Marketing can easily be decentralized by rewarding users for advertising on social media and in group DMs with circles of friends. A far more organic approach to marketing. This removes inefficient employees or agencies that used to extract profits as an intermediary between creator and users. Also removes the need for platform ad spending. This is why platforms insert themselves between creators and users; the creators and users are the customers and products. Now users profit instead of intermediaries, and can spend more money on the creators or brands. It’s a no brainer.

Figure 2: New Model of Rewarding Users for Generating Organic Reach

Creators and brands often need to produce content to inform and shape the narratives and discourse around their brand and with their users. Like in the description of marketing above, they use employees or agencies. The problem: a limited group of individuals will not always have the best creative ideas or know what content will resonate with your audience. Producing bad content can be more detrimental than no content at all. The issues look the same as in Figure 1: Agency Based Business Model, but how do we address it?

The future of content marketing will include creating community owned properties e.g. crypto media. Instead of rewarding users directly for referrals, crypto media properties owned by users in the community can accrue value in the form of rewards from creators, or even other users… Content can rank in leaderboards, be remixed, share revenues in collaborations with other users and be traded within a community. Most brands will want to establish some controls around content and messaging, but this can be encoded into the crypto media itself and the mechanisms for how users can generate successful content. The final invaluable piece of this model is the data creators can own from their user’s creation and usage of content.

Figure 3: Crypto Media Business Model Example

In creative markets, you’re only as good as your last hit. How do you determine what will resonate with your users? What to make next? Creators and brands rely on in-house resources or agencies. Creators don’t receive enough audience controls, like the ability to message their users from Web2 platforms like Spotify or YouTube. External firms have to “spin up” entirely new audiences, often inaccurately, for a brand, simply to ask users questions. This is terribly inefficient, leading to high costs for creators and bad data. From bad data, comes bad strategy. What if there was a way to involve users in the decision making processes of your business?

Instead of rewarding users with currency in the above examples, we can use ownership tokens in the brand. These tokens can represent a limited time revenue share in the business. This creates long term alignment incentives for “getting involved” with the brand. As the revenue shares expire, tokens convert to votes. These votes can be used in a DAO. Votes and consensus gathered here can be used as market research. It can provide valuable signal for market moves. The brand is under no obligation to carry out the results of the DAOs strategy decisions. (don’t @ me CT for the DAO blasphemy).

We double leveraged the cost of marketing and content, cut market research and strategy costs, while getting better and more aligned strategy decisions directly from our users.

Figure 4: Sharing Revenues and Decision Making with Users

Summary

I hope by now you can see problems with incumbent platforms and business models in the creator economy. Creators and brands rely on third party agencies to unlock something that’s already theirs, the relationship with their community from centralized platforms! Third parties and in-house employees can also drain resources that could have been used to strengthen the relationship between creators and their users. Centralized platforms are never going to be able to gracefully shift their business models and offer ownership to their creators. This is why the rise of creator and brand owned platforms will be a major disruption. Ultimately, it comes down to costs, data and revenue streams being directed and aligned with the community.

Are you paying hidden costs to platforms and services to reach a community that’s already yours? Are you missing data and direct channels to your users? It’s time to align the flow of data, capital and ownership with your community!

I am working on Satori: a creator economy studio.

If you are a creator or brand that wants better alignment with your users, DM me on Twitter.

Thanks to everyone I collab with on a daily basis about these topics.

References:

https://consensys.net/blog/enterprise-blockchain/decentralized-brand-economies-the-key-to-blockchain-mass-adoption

Building Blockchain Solutions to Real World Problems - "The revolution will not be centralized."