Between Classes & Office Hours: Web3 & the Creator Economy
Jaspreet Bindra is a thought-leader on digital transformation and digital technologies. During one of his trips from Cambridge to Ashoka, he penned down his insights on the Creator Economy in the Web3
Jaspreet Bindra19 December, 2022 | 6m read
As you browsed the World Wide Web, you would have certainly encountered the infamous 404 error, signifying that a web page is ‘not found’. What you have not seen is a similar code 402, which actually stands for ‘payment required’. This was the piece that Tim Berners-Lee and his team left unfinished when they were fashioning the World Wide Web many decades back. The original intention was that every visitor had to pay something to view a web page, but the schema was never built, and even now, therefore, there is no standardised encoded way to send or receive money online.
The fact that user-pays was never the business model of the Web. Initially, most of it was free. Then, Yahoo and others scaled up publishing and advertising as the business model, which Google and Facebook took to another level. Besides advertiser-pays, another business model started taking shape – that of commerce, which Amazon started dominating. Off late, the tech world has begun revisiting the payments and commerce business model again. The reason is very simple – all of the advertising is $470bn a year, and e-commerce is ten times bigger at $5tn a year, albeit with thinner margins. E-commerce makes up approximately 18 per cent of the overall retail market already and is growing fast. Companies like Square, Paypal and UPI in India are building the online payments infrastructure to address the original 402 error. But the company dominating it and making it as simple as Berners-Lee and his team perhaps envisaged is the San Francisco-head-quartered Stripe. Stripe burst into prominence with its one-time valuation of $95bn, making it the most valuable private company ever. With its ambitious mission statement to ‘increase the GDP of the Internet’, it heralds a far more dramatic shift: the business model of the World Wide Web is shifting – from advertising to payments and subscriptions. The signs have been there for a while. The tech lash against rampant data monetization and the impact on privacy is the most prominent. Facebook has added shopping tabs on Instagram, it has started payments on WhatsApp in India and Brazil, and it has even debuted its own cryptocurrency. Tiktok is treading into e-commerce with a partnership with Shopify, and now, Elon Musk is making Twitter a subscription model too with the $8 Twitter Blue!
This new decentralised monetization model is giving rise to what is called Web3. A lot has been written about Web3, and it has become an elastic term being used for anything: pure crypto plays used it to make them sound more respectable, minting NFTs of bored mammals are seen to be Web3 ideas, so is buying virtual land or doing fashion shows in the ‘metaverse’. Yes, Web3 is all of this, but it is much more. Web 1.0 was about reading static content pages on MSN, Yahoo or AOL, and started in the 1990s. Web 2.0 burst forth in 2005 with Facebook, Twitter, YouTube and the like and is about people creating and posting their own content, going beyond just passively reading it. Web3 (for some reason using 3.0 is considered unfashionable) goes beyond where you not only actively participate, but also own and build pieces of it through ownership tokens and blockchain technologies, thus distributing ownership away from the highly centralised ownership of Web 2.0. So, if Web 1.0 was about Read, Web 2.0 is Read and Write, Web3 would be about Read, Write and Own.
But nothing signifies this titanic shift to Web3 and the new monetization model as the rapid rise of what is being called the ‘creator or passion economy’. This concept of enabling people with an online following to make money from sales was initially popularised in China. Then came Twitch which did this in gaming, Patreon which enabled crowdfunding for artists, and then Substack which helps writers monetize their blogs and columns. The original creator economy pioneer was perhaps YouTube, with kids in the US three times more likely to want to become YouTubers than astronauts!
The term was introduced in a seminal blog post ‘The Passion Economy and the Future of Work’ by Li Jin of Andreesen Horowitz, where she talked about how this trend will shift the current mass standardisation to ‘monetizing individuality’, where we “view individuality as a feature, not a bug.” The VC firm SignalFire says that this new ‘economy’ has more than 50mn creators, of which two million are making more than $100000 a year! Most of them are writers, artists, singers, and people with a passion in the arts, rather than the techies you would expect. The pandemic turbo-charged this economy – Etsy, an original creator economy company where individuals sell artisanal objects, had $346mn of mask sales! It was in 2006, that Chris Anderson predicted this trend in his book The Long Tail. His thesis was that products in low demand can collectively make up the market share of blockbuster rivals. He prophesied, “When the tools of production are available to everyone, everyone becomes a producer.” 15 years later, his wish that we move away from “suffering the tyranny of lowest-common-denominator fare” is coming to fruition.
Small live streams on Twitch outcompete with the Oscars and Grammys. OnlyFans users pay for niche and private conversations and viewings of individuals, rather than watch blockbusters. YouTube has 30mn channels, with those earning more than $10000 growing at 40%. The top 10 authors on Substack collectively make over $15M per year. The top content creator on Podia, a platform for video courses, makes more than $100,000 a month. Even the mighty Amazon, a standardised marketplace, is wary of the individual-driven Shopify. NFTs or Non-Fungible Tokens, an integral part of the Web3 economy have emerged to help digital artists monetize their offerings is one more offshoot of the creator economy. Then there is the Metaverse. While it is still early days and Meta and others are under pressure to build it into a monetizable model, it offers an unprecedented opportunity for creators to monetize their offerings. This Economy is rising in India too, with startups like GoSocial creating platforms and tools to help artists monetize their wares. The Long Tail is getting longer and more rewarding. “In the future, everyone will be world-famous for 15 minutes”, said Andy Warhol in a 1968 exhibition of his work at the Moderna Museet in Stockholm. What he did not foretell was that everyone’s fame would be experienced concurrently and monetized so well.
Jaspreet Bindra is a Visiting Faculty at the Department of Entrepreneurship, Ashoka University and the Founder and Managing Director of Tech Whisperer Limited, UK.