Web3: The Paradigm Shift of the Creator Economy

Author: Typto, DAOSquare

For all creators, this is the best of times.

In 2003, I entered the creator community as a musician and worked in the music and film industries as a freelancer for over 10 years. This experience gave me two valuable assets: 1) an understanding of the industry; 2) how to survive and thrive as a creator.

I entered the Crypto space because of DAOs, as I believe they can help those who, like me, cannot realize their self-worth within traditional systems. But back in 2018, it was too early, so I began participating in the construction of some infrastructure, continually learning while waiting for the day when the time would be right.

Today, it stands before us.

New technologies, new ideas, and new social consensus are driving a new wave known as Web3. It is changing many industries and communities, including the creator community.

What is this change? How do we participate in it?

Before answering these questions, let’s briefly understand the creator economy.

What is the Creator Economy

Many people mistakenly think it is a new concept; in fact, it has always been around us, with YouTubers, podcasters, writers, content creators, musicians, painters, and so on involved, but this is not the whole picture. How do we define its scope? I have summarized a few characteristics:

• Free

• Creator-centric

• Creative work (usually digital products or virtual services)

• Profit through monetization tools

Freedom means you can create content according to your own will without having to report to anyone. Creator-centric means that this economic activity operates around creators rather than homogeneous products. Here are the categories of creative work I have compiled:

• Music

• Painting

• Photography, Illustration

• Comics/Cartoons

• Design

• Meme

• Newsletters

• Blog Articles

• Literary Works

• E-books

• Podcasts

• Audiobooks

• Videos/Vlogs

• Live Streaming

• Guides

• Financial Advice

• Courses

• Webinars

• Applications

• Games

• Tools

• Encyclopedia

And some monetization avenues:

• Selling digital content

• Advertising revenue

• Sponsored content

• Product placement

• Subscriptions

• Tips

• One-time sales or donations

• Accepting donations from fan clubs

• Participating in affiliate marketing

• Fan contributions

• Course fees

• Fan monetization

• Live or virtual events

• Social Tokens

Note: Thanks to Werner Geyser for his article “State of the Creator Economy” which provided us with many use cases for categories of creative work and monetization avenues.

We can summarize the creator economy in one sentence: the creator economy is a creative economic activity based on free individuals. From another perspective, it can also be described as: doing what you love and profiting from it. If you don’t love it, even if you are a freelancer, you are just working, not creating. Hence, there is also a saying: Passion Economy.

Now, I believe you have a preliminary impression of the creator economy. Let’s dive deeper and look at the creator economy in the Web2 era.

The Creator Economy in the Web2 Era

The development of Web2 has been astonishing. The improvement of computer performance and network bandwidth, the maturity of online technologies such as 4G, WiFi, online payments, and cloud services, the significant reduction in the cost of hardware (especially professional equipment), and the emergence of new user interaction methods represented by iOS have enabled everyone to create and share digital products or virtual services. This is the "era" prerequisite for the creator economy to occur.

On this premise, we can see a clear basic structure, a structure composed of infrastructure and platforms. It is applied to almost all Web2 era application scenarios, including the creator economy.

Structure of the Web2 Creator Economy

File storage, data, and payments are three important infrastructures of the creator economy.

• File storage allows your created content to enter the digital world; it is the foundation of everything.

• Data records all the data in your creator economic activities; it is your ledger.

• Payments provide you with a revenue settlement system.

Platforms utilize these infrastructures to build a stage for you. They integrate file storage, data services, and payments into their products and services, providing creators with tools for creation and distribution, helping creators find audiences through content discovery mechanisms and traffic strategies, and assisting creators in monetizing their work.

These platforms have fostered the prosperity of the creator economy in the Web2 era, allowing creative individuals to compete on the same stage as groups that have been operating for decades (even monopolistic groups). Today, much of the news you see comes from individuals, most of the courses you learn come from individuals, and most of the entertainment you enjoy comes from individuals.

Does it sound perfect? Many would say NO!

Problems

The reason for saying NO is that most of us may have experienced some unpleasant encounters, such as accounts or works being inexplicably frozen by the platform, terms being unilaterally updated by the platform, data being silently deleted or manipulated by the platform, or revenue being indisputably deducted by the platform, etc.

We cannot deny that these platforms provide us with a very good experience for operating the creator economy, even for free. But the cost is that we have given up something that is particularly important for creators: ownership.

Ownership is our supreme and exclusive right to something. The moment we upload our works to a platform, it is no longer just about copyright; it involves:

• Account ownership

• Content ownership

• Data ownership

• Copyright

• User relationship ownership

• Monetization ownership

As mentioned earlier, in the structure of the Web2 creator economy, file storage, data, and payments are directly integrated into the platform. In other words, the platform is the actual controller of these ownership rights. What consequences does this lead to? Let’s analyze briefly:

The conclusion is clear: the issue of ownership is not simply about who controls it; it concerns the core interests of creators. This is a very important fact:

The essence of the creator economy is an ownership economy.

However, the analysis above tells us that the basic logic of the creator economy in the Web2 era is that creators hand over ownership to platforms in exchange for profit opportunities, while platforms maximize their own benefits using this ownership.

We cannot declare this model to be wrong, as it depends on whether you, as a creator, care. Do you care that the platform controls everything about you? Do you care that the platform uses your ownership to generate greater profits without ever distributing those profits to you?

If you don’t care, then Web2 is perfect for you. I have always held the view that Web3, like DAO, does not stand on the opposite side of the problem to solve it; it is merely helping those who need help.

However, if you do care, then let’s take a look at a new world!

The Creator Economy in the Web3 Era

It’s time to talk about Web3.

Web3 represents a paradigm shift. A paradigm shift means a change in underlying logic, thought, and even worldview.

There is a popular description on Twitter:

• Web1: Read

• Web2: Read, Write

• Web3: Read, Write, Own

We have learned that in the Web2 era, creators' ownership is controlled by platforms. So does Web3 naturally return ownership to you?

Not necessarily.

Although there are already many excellent Web3 infrastructures, it does not mean that applications built on them automatically belong to Web3 (MetaMask has already shown us this fact). Many applications still use various barriers to restrict users from leaving, which is counterproductive.

What you see in Web3 is not as perfect as you might imagine.

I believe the essence of the problem lies in the lack of an open protocol layer between infrastructure and applications.

Protocols

I believe you are familiar with terms like HTTP, TCP, and IP; they are common internet protocols. The significance of protocols lies in establishing a unified technical standard to achieve data transmission and communication between endpoints.

In the context of Web3, a protocol is usually a smart contract, which also provides some standards and agreements to execute agreed transactions between endpoints without the need for third-party intervention, especially for transactions. Since it is merely a set of standards, it cannot be forcibly owned or controlled by anyone. Because it is a smart contract, it is executable and must be executed.

For the creator economy, an open protocol layer can allow everything related to ownership to be sovereign and fluid.

• Lack of sovereignty prevents us from truly owning all the value we create.

• Lack of fluidity prevents us from truly breaking free from platform barriers, allowing our creations to flow freely across different platforms and generate value.

Let’s take a simple example:

In the Web2 creator economy structure of infrastructure + platform, you have created a lot of content on Substack and have many subscribers, but now you discover a place with a better user experience and service, let’s hypothetically call it X. You cannot log into X with your Substack account to manage your content on Substack and let your Substack subscribers continue to enjoy subscription rights for your subsequent creations on X while directly receiving income from Substack subscribers on X.

Similarly, you cannot do the same between Spotify and Apple Music.

Can the protocol layer turn this situation around? Let’s look at the example of the IDX protocol:

IDX is an identity protocol based on the Web3 infrastructure Ceramic, and any application can build its account system through the IDX protocol, just as DAOhaus has already implemented. The account you register on DAOhaus (including wallet address, nickname, avatar, introduction, social links, contact information, etc.) is not stored on DAOhaus's servers.

Instead, it is recorded on the Ceramic network and decentralized storage through the IDX protocol and is fully controlled by you. When you access any application that supports the IDX protocol, you only need to connect your wallet, and your account will automatically sync to the new application. It’s like registering an account on Amazon and then being able to log into Google with that account.

Perhaps you have noticed that this is a real use case of infrastructure (Ceramic) + protocol (IDX) + application (DAOhaus). Through this structure, we achieve the sovereignty and fluidity of account ownership. If we can protocolize everything related to ownership, such as accounts, content, data, copyright, user relationships, and monetization, we may enter a whole new realm of imagination:

As a creator, you can connect your wallet address to create an account on any platform and then start creating. When you finish your creation, it will be "stored" in your wallet address, just like an ERC20 Token, and you will have absolute sovereignty.

When you want to expand your audience, you only need to connect your wallet on other platforms, and all the content you created on all platforms will be recognized and executable (including sharing, distributing rights, generating revenue, etc.).

You can choose monetization legos provided by different protocols, such as subscriptions, sales, product placements, etc., to initiate your economic activities. Monetization legos from different works, different platforms, and different protocols will form a fluid settlement network, linking various platforms like a pipeline and directing revenue to your wallet address.

It also fully belongs to you, just like the assets in your wallet; no platform can interfere with any of this, let alone deprive or deduct your earnings (though I suggest writing a profit distribution parameter into the protocol, such as a profit-sharing ratio among the protocol, creator, and platform, which will be automatically executed by the smart contract from the moment cash flow is generated once the creator confirms it).

Similarly, your user relationships will also be recorded at the protocol layer, thus truly owned by you. Regardless of which platform you migrate to, all user interaction data, such as your user subscriptions, fan relationships, and social records, will always accompany you.

This is just from the creator's perspective; this change will also bring new imaginative spaces and opportunities for all participants. Therefore, its significance is not only to liberate creators but perhaps to redefine the ownership economy, as well as the traffic and data economy. This is a market with millions of creators.

So, are we ready to welcome them?

Blueprint for the Web3 Creator Economy

I have organized some ecological projects of the Web3 creator economy based on the structure of infrastructure -> protocol -> application. First, let me clarify that the projects in this blueprint are limited to this structure, so it is narrow and does not cover many projects outside of this structure. Additionally, I want to focus more on the creation itself, so I have not included peripheral services, such as NFT trading markets.

For ease of comparison, I have drawn a diagram similar to the structure of the Web2 creator economy. The bottom represents the era prerequisites for the creator economy to occur in the Web3 era.

Infrastructure

Storage, data, and payments are still important infrastructures of the creator economy in the Web3 era. Arweave, Ethereum, Livepeer, and IPFS are already well-known, and I will briefly introduce Ceramic.

Ceramic is an open data network. As you know, data records all our interactions on the web and is an important asset for us. In Web2, these user-generated assets are not owned by users but by platforms. Ceramic aims to return data sovereignty to users. Users can fully own and control their data and authorize platforms or others to use it.

This allows Ceramic to play an important role in account ownership, content ownership, data ownership, and user relationship ownership, which is why I believe Ceramic is a crucial infrastructure for the creator economy and a cornerstone of Web3. I believe that in the near future, the Ceramic ecosystem will give birth to many great Web3 applications. However, Ceramic also needs to support more teams in protocol development and component packaging to improve its usability.

Protocols

IDX is an identity protocol, as mentioned above, through which accounts created can be fully owned by users, and account data can flow freely between multiple applications.

Lens Protocol is a highly composable social protocol. This means you can achieve information transmission and interaction between "Discord" and "Telegram" (of course, this is just an analogy). However, the Lens protocol can also play an important role in the creator economy, such as user relationships, allowing your users to fully belong to you and flow with you, as described above.

Unlock can provide monetization legos for the creator economy. The Unlock protocol offers convenient monetization avenues, such as subscriptions, purchases, etc.

IQ Protocol is a leasing protocol. It provides leasing services for DeFi, gaming assets, and other scenarios through time-limited FT or NFT. For the creator economy, it is an interesting monetization lego that can be used in subscription scenarios.

Lit Protocol is a cryptographic access protocol. It can encrypt access links for applications like ZOOM meetings, Google Docs, Gather, etc., creating access restrictions, while users can decrypt and access them through tokens. It is suitable for live teaching, content, and other scenarios.

meTokens is a social token protocol. Creators can monetize their future value through it. As an investor, you can invest in an individual's future just like you would invest in a company.

XMTP is an open encrypted communication protocol for encrypted community and application communication scenarios. XMTP can provide creators with encrypted native community and content sharing solutions.

Drips is a profit distribution protocol. It allows users to purchase access to content and services through subscriptions, one-time payments, etc. At the same time, Drips can automatically distribute profits, including profit splitting.

MuseX is a protocol dedicated to the creator economy. Its goal is to provide creators with a suite of protocols covering content creation, publishing, monetization, etc., to help creators better operate the creator economy. MuseX proposes two interesting directions:

• Allow ownership and enjoyment rights to be set for works. It can facilitate value flow between owners and users.

• DAO. MuseX provides a solution for collaboration, profit distribution, and governance for creator collectives. You can create an account (DAO) owned and controlled by multiple people, while MuseX also offers a flexible member role scheme.

In addition, it has many more innovative experiments. MuseX will be launched soon, and if you are interested, you are welcome to experience it then.

Applications

Currently, there are applications that have been launched or are about to be launched:

Self.ID is an account application. It can help you build your account based on IDX. The advantages of this solution were introduced in the IDX example above.

Orbis is a social application based on Ceramic. Social interaction is an important scenario in the creator economy. Through monetization avenues such as token access restrictions, Orbis can help creators build communities and conduct teaching, live streaming, knowledge sharing, etc. As a supporter of Orbis, I am also helping Orbis iterate its product, and many new features are about to be launched.

MuseX. The MuseX team has developed an application to help developers and users understand the MuseX protocol. It will cover all the functionalities provided by the MuseX protocol.

As you can see in the diagram, I only listed Self.ID, Orbis, and MuseX at the application layer because these protocols are still very new (most were launched in 2021), and we need to give application developers some time. However, a lot of application practices are already underway:

Write Together is a story creation application specifically designed for collaborative writing, built on Lens Protocol and Lit Protocol.

b.trax is an application focused on music, built on Lens Protocol.

Detok is a decentralized TikTok, built on Lens Protocol. However, as the developer mentioned, Detok is a demo he created in 24 hours, so it only showcases very basic concepts.

Mad.finance is an application that provides monetization legos and avenues for creators.

LensBook is a reading club built on Lens Protocol and Lit Protocol. It can achieve privacy access, such as only allowing those who have purchased the book to enter the club.

The Manago Jelly is a video creation and discovery platform built on Lens Protocol and Lit Protocol.

You can find more interesting projects in this issue's ETHGlobal award list and the ecological list shared by Lit Protocol.

Looking back at the history of internet development, we first had infrastructure, then various protocols began to emerge, and finally, this led to the prosperity of the application layer and the entire internet. Today, we are once again at the stage of building protocols. If we draw an analogy between today and the stage of building internet protocols, it is not difficult to see that the period we are in today holds a wealth of opportunities. Moreover, the development speed of Web3 will certainly far exceed that of Web2, and the blossoming of the application layer will come soon.

In Conclusion

I am a newcomer who only entered the Crypto space at the end of 2018. At the end of 2019, I was deeply shocked when I saw Pet3r_Pan's The Web 3 Manifesto; I truly understood what DAO and Web3 are. Thus, I began to think about how to solve real-world problems through Web3. To address the issues faced by entrepreneurs, I initiated DAOSquare, and as a creator, I also hope that Web3 can help more creators live better.

Among the creator community, only 1% of creators are doing well, while most creators do not have ideal incomes. However, I do not believe that intermediaries are the root cause of this problem. I previously gave an example: what we need to do is not to kill record companies but to build a record company that belongs to Web3.

The existence of certain roles is valuable and necessary; what needs to change are the unreasonable logics and structures, which is the same principle as DAO. Although it is difficult to change the 1% rule, and although we cannot immediately make 99% of creators as wealthy as the 1% group, at least we can help them gain freedom.

I would like to express my gratitude to 3Box (the parent company of Ceramic) and Oed and other creators of 3Box. They introduced me to a whole new concept back in 2019 and helped me find a direction for thinking about the creator economy. In 2021, I began discussing my thoughts with some developers, hoping that a team could realize them. Today, with the efforts of the MuseX team, these thoughts have become more refined and will soon be presented to everyone, which excites me.

However, I must admit that the viewpoints and thoughts mentioned in this article may have flaws or even be incorrect. So if you are interested in the creator economy, and if you have any suggestions or different viewpoints, I would be very happy to discuss them with you!

Additionally, I will continue to share thoughts on the creator economy. In the next article, perhaps we can talk about topics beyond the technical structure, such as copyright, record companies in the Web3 era, and so on. In short, the creator economy in the Web3 era is still in its very early stages, facing numerous challenges while also holding vast opportunities. Let’s work together to promote its development and enjoy its fruits!