Podcast Summary
Decentralization and Creator Economy in Web 3: Web 3 technologies like crypto are enabling creators to own and monetize their work directly, reducing wealth inequality and inspiring entrepreneurship on the Internet
The creator and ownership economies are interconnected concepts that are shaping the future of the Internet and finance. The original sin of the Internet, which was the centralization of data and control, is being addressed through Web 3 technologies like crypto. This shift towards decentralization will enable creators to own and monetize their work directly, reducing wealth inequality and allowing more people to be their own bosses. Li Jin, a thought leader in this space, believes that crypto is a means to an end for unleashing creativity and inspiring entrepreneurship on the Internet. Understanding these concepts is essential for navigating the Web 3 and crypto landscape and unlocking new opportunities for investment and personal growth. The episode with Leigh Jin and Chris Dixon provides valuable insights into these mental models and is a must-listen for anyone interested in the future of the Internet economy.
Ledger's CL Card, Alchemix, and the Ownership Economy: Ledger's crypto debit card offers instant exchange to fiat and credit from crypto collateral. Alchemix provides self-repaying loans and high yields on deposited stablecoins. The ownership economy empowers creators to monetize content directly and benefit from the platforms they contribute to, a shift from Web 2.0.
The CL card powered by Ledger offers a crypto debit card experience with features like instant exchange to fiat and credit from crypto collateral, all manageable within the Ledger Live app. Alchemix, a DeFi app, provides self-repaying loans, earning high yields on deposited stablecoins, making it a savings account alternative. Li Jin, a co-founder general partner at Variant Fund, discusses the ownership economy, where next-generation networks grow faster due to user ownership. The creator economy, a subset of the ownership economy, has seen creators monetize their content directly, and now consider themselves independent businesses. The convergence of these concepts highlights the potential for creators to own and benefit from the platforms they contribute value to, a shift from the Web 2.0 era. To learn more, visit ledger.com, alchemix.fi, and Li Jin's Substack.
The Creator Economy and Ownership Economy: Interconnected and Evolving Together: The creator economy is shifting towards a community economy where creators and fans cocreate and are compensated proportionally to their contribution, with the ownership economy being the broader concept that includes crypto-enabled tokenization as a stronger form.
The creator economy and ownership economy are interconnected and evolving together, with the ownership economy being the broader phenomenon that includes crypto-enabled tokenization as a stronger form. The creator economy has evolved from creators producing content for others to monetizing their own personas and fan bases through direct monetization tools. The future of the creator economy is predicted to shift towards a community economy where creators and fans cocreate and are compensated proportionally to their contribution to the collective value. Web 3 and the ownership economy are related, but the ownership economy is a larger concept encompassing various forms of ownership enabled by technology.
Early Internet: Static Catalog with Limited Monetization: Despite the Internet's potential, early days were marked by low user adoption, limited monetization options, and lack of dynamic interaction, making it a challenging place for content creators to thrive.
The early days of the Internet, as described by Bill Gates in 1996, were marked by low user adoption, limited monetization options, and a lack of dynamic interaction. At that time, the Internet was mostly used as a static catalog for businesses to showcase their offerings, with very little revenue being generated directly from users. Bill Gates predicted a period of disappointment for content creators due to these challenges, as there was no easy way to monetize content or pass value directly from users. This was before the rise of web 2 platforms and the aggregators that eventually made significant revenue from content creation but kept most of it for themselves. The Internet was seen as a promising but challenging place for content creators to make a living.
The early days of the Internet and web 2 platforms: A double-edged sword: The Internet's 'original sin' of lacking native payments led to advertising becoming the dominant business model, with ongoing consequences.
The early days of the Internet and the rise of web 2 platforms were seen as a positive development for both consumers and content creators. On the consumer side, these platforms helped make sense of the overwhelming amount of information available online by aggregating and ranking content. On the content creator side, they provided a much-needed connection to audiences and a business model through advertising. However, Mark Andreessen refers to the lack of native payments in browsers as the "original sin of the Internet," which led to advertising becoming the dominant business model. This shift has had significant downstream consequences that we continue to grapple with today.
Imagining a Different Internet with Native Payments: Had native payments been built into the browser early on, there might have been a parallel transaction system outside of centralized gatekeepers, potentially aligning incentives and growing the Internet economy.
The lack of native payments in the early days of the Internet may have led to unintended consequences, such as a skewed incentive system for content creators and the dominance of advertising-driven business models. Had payments been built into the browser, there might have been a parallel transaction system outside of the control of a few centralized gatekeepers, resulting in aligned incentives between platforms and users, and potentially a larger Internet economy. However, it's also important to consider that native payments might not have been possible without crypto, and the Internet's evolution was influenced by various factors beyond just business models. The Internet needed to be aggregated due to the vast amount of content and creators seeking organization and ease of use. Ultimately, while it's intriguing to ponder alternative paths, it's essential to understand the complexities and interconnectedness of the factors that shaped the Internet as we know it today.
From Attention to Ownership Economy: The Internet is transitioning from an attention economy, where creators compete for clicks, to an ownership economy, where creators monetize their digital content through scarcity and ownership.
The current attention-based economy of the Internet has led to mass-produced, sometimes shallow content, with creators competing for clicks and attention, rather than producing high-quality content. The pervasive incentive system rewards the lowest common denominator type of content, and creators do not truly own their online presence or the content they produce. However, there is a transition happening towards an ownership economy, where creators and community members have more control. This transition is facilitated by the introduction of digital scarcity through technologies like NFTs, patronage becoming an investment rather than just an act of altruism, new economic models, and community ownership through DAOs. By enabling scarcity and ownership, creators can monetize their digital content effectively, and the Internet can shift from an attention economy to an ownership economy.
The shift from digital services to digital goods economy with NFTs: NFTs enable creators to monetize digital content through consensus-driven verification of ownership, moving away from traditional methods of digital content monetization and providing new opportunities for sustainable careers.
The rise of NFTs and digital goods on the Internet introduces a new economy of scarcity, granting creators the power to monetize their digital content in ways never before possible. This shift moves us away from the limitations of traditional methods like consulting or selling digital content with fake scarcity, towards a consensus-driven verification of true ownership. NFTs offer a unique digital address that cannot be duplicated or faked, making it easy to verify the authenticity of the digital asset. While there may be an abundance of faux scarcity in the NFT market, the true value lies in the consensus and verification of ownership, which had not existed before the advent of crypto. This shift from a digital services economy to a digital goods economy opens up new opportunities for creators to monetize their digital content and build sustainable careers.
The Digital Economy: New Opportunities for Jobs and Income: The convergence of digital property rights, PatronagePlus, and scalable layer 2 solutions is driving the growth of the digital economy, offering new opportunities for innovation, income generation, and job creation.
The shift towards digital goods and services, enabled by the emergence of digital property rights, is opening up new opportunities for jobs and income in the digital economy. This is particularly relevant to the concept of PatronagePlus, which combines traditional patronage with the potential for financial gain through the ownership of digital scarcities like NFTs. Historically, patronage has been driven by altruism and the desire for status, but PatronagePlus introduces a self-beneficial rationale, making it a scalable solution that could potentially engage more people in supporting creators. Furthermore, the growth of layer 2 solutions like Polygon and scaling infrastructure like Across is making it easier and more cost-effective to engage with decentralized finance (DeFi) applications. These developments are contributing to the expansion of the digital economy and the emergence of new opportunities for innovation and value creation. In summary, the convergence of digital property rights, PatronagePlus, and scalable layer 2 solutions is leading to the emergence of a new digital economy, characterized by the creation and exchange of digital goods and services, and offering exciting opportunities for innovation, income generation, and job creation.
Creator Economy Faces Securities Regulations Challenges: Securities regulations could limit reach of creator economy by requiring accredited investors or SEC registration for revenue sharing or investment-marketed products, but focusing on fan benefit can help creators reach their '100 true fans' goal.
The creative economy, including the sale of tokens or NFTs by content creators, faces challenges due to securities regulations that could limit participation to a small audience. Traditional creative works like merchandise or collectibles are generally not considered securities. However, if creators offer ongoing revenue sharing or market their products as investments, they may fall under securities regulations, requiring accredited investors or SEC registration. This could significantly limit the potential reach of the creator economy. The concept of "100 True Fans" suggests that creators need only a small, dedicated fan base to make a living, but this may be an underestimation. A creator could potentially live off of 100 fans paying $1,000 per year. However, the rise of NFTs allows creators to segment their fan base, making it easier to cater to the needs of their most dedicated fans and potentially reach the goal of 100 true fans. The key is to focus on fan benefit rather than creator benefit, providing exclusive content or a sense of community to attract and retain fans.
Monetizing Super Fans in Web 2 vs. Web 3: Web 2 business models treat all fans equally, missing out on revenue from super fans. Web 3 platforms like NFPs and NFTs enable price discrimination, allowing fans to express their support and creators to monetize effectively.
The current business models in the web 2 world, which are primarily based on advertising or subscription fees, do not allow for effective monetization of super fans or expression of their deep-rooted fandom. These models treat all fans equally, regardless of their willingness to pay, resulting in lost revenue and creativity for the creators. In contrast, platforms that enable price discrimination, such as NFPs (Non-Fungible Patrons) or NFTs (Non-Fungible Tokens), allow fans to express their varying levels of interest and support for a creator, leading to more powerful monetization and a direct connection between the creator and the fan. The example of Sound, a music NFT platform, illustrates this potential, as it allows artists to monetize effectively even without massive streaming numbers and provides them with the ability to identify and engage with their most dedicated fans. This shift from the attention economy to the ownership economy represents a significant change in the way creators and fans interact and is a promising development for the future of monetization in the digital world.
From attention to ownership economy: The creator economy is evolving towards an ownership model, where contributors are economically rewarded, and programmable economic models enable fair revenue sharing and attribution.
The future of the creator economy is shifting from an attention economy to an ownership economy, as discussed in the conversation around a new digital product and the Patreon Plus model. This transition involves programmable economic models, which allow for the attribution and economic reward of all contributors to a piece of content, not just the creator. This concept is still emerging but has the potential to revolutionize revenue sharing and attribution, as seen in platforms like Mirror and Foundation. Additionally, the rise of Decentralized Autonomous Organizations (DAOs) and community ownership is ushering in a new era of co-creation and shared value. In this model, community members become part-owners and their contributions are recognized and rewarded, leading to a more equitable and collaborative economy.
Community-driven content creation models in the creator economy: The future of the creator economy is in community-driven models where fans and creators collaborate to build value and share rewards, such as the Bankless DAO and Kyle Chayka's NFT-funded publication.
The future of the creator economy lies in community-driven content creation models, where fans and creators collaborate to build value and share the rewards. Examples of this include the Bankless DAO, which started as a community driven by fans of the Bankless podcast and newsletter, and now operates independently with the founders having minimal involvement. Another example is Kyle Chayka's NFT-funded publication, where crowdfunders have a stake in the publication and are incentivized to contribute to its success. The Web 3 world is enabling significantly lower barriers to creating and increasing financial rewards, and the creative process is becoming more conversational between creators and fans. This shift towards community ownership and collaboration is leading to a potential renaissance of human creativity, where everyone has the opportunity to financially benefit from their contributions to the Internet. The foundational elements for this vision are in place, and it's up to the builders in the ecosystem to make it a reality.
A Third Renaissance Powered by the Internet: The Internet enables a third renaissance, connecting the passion and ownership economies, and empowering people to create and financially benefit from their work, reducing income inequality
We're in the midst of a third renaissance, according to Lee, which he believes will be bigger than the previous two due to the Internet's reach and the ability for everyone to participate as both a content creator and patron. The passion economy and ownership economy are interconnected concepts, with the passion economy being the what (people doing what they love for a living) and the ownership economy being the how (giving people ownership of underlying Internet products and services to financially empower them). A key implication of this discussion is the need to reconfigure the relationship between capital and labor, aiming for a world where people's contributions of labor and capital are indistinguishable, reducing income inequality.
Crypto's Impact on Labor and Capital: Crypto empowers creators, potentially reducing wealth inequality by blurring lines between labor and capital, with founders deciding token distribution and favoring creators.
Crypto offers a new way to blur the lines between labor and capital, potentially preventing wealth inequality from worsening and even rebalancing the relationship between the two. Marx's theories of class struggle between capital and labor may seem relevant, but crypto presents a net new opportunity rather than a call for abolishing capital. The crypto space is debating its impact on wealth inequality, with some arguing it doesn't redistribute wealth but creates balanced platforms. Founders have the power to decide how token distributions are made and whether they favor early adopters or newcomers. By giving creators ownership, founders can truly embody the creator-first mantra.
Empower creators with tokens instead of traditional cap tables: Tokens offer a more effective way to distribute ownership, reducing wealth inequality, and empowering creators and entrepreneurs. Individuals can participate by creating content, supporting creators, building or investing in creator-focused companies, and learning crypto skills.
Giving creators ownership and distribution of tokens is a more effective way to empower them compared to traditional cap tables, which are heavily regulated and limit the number of people who can own equity. Tokens offer a more powerful tool to distribute ownership to many creators and entrepreneurs, reducing wealth inequality. For individuals looking to participate in the creator or ownership economy, creating content, supporting creators financially or socially, and building or investing in creator-focused companies are recommended steps. Non-technical individuals can also contribute by learning about crypto platforms, community building, engaging in governance, and working on tokenomics. These skills are in high demand and can lead to valuable opportunities in the Web 3 ecosystem.
The Creator Economy in Web 3: Unlocking Creativity and New Monetization Opportunities: Web 3's creator economy is growing exponentially, with traditional roles in demand and new monetization methods through NFTs and digital content formats. Predicted to thrive in 2022, it offers opportunities for autonomous income generation and creativity expression.
The creator economy in Web 3 is experiencing exponential growth and presents numerous opportunities for individuals to monetize their skills and content. Bill Gates' quote "content is king" still holds true in this new digital economy. Traditional non-technical roles such as design, project management, and community management are in high demand. Creators are exploring new ways to monetize through NFTs, and various formats of digital content like music, photos, and social experiences are gaining popularity. Web 3 social platforms are also emerging, aiming to connect creators with audiences effectively. Lee Jin predicts that 2022 will be another banner year for the creator economy, with an increasing number of creators adopting web 3 native ways to monetize their work. Overall, the creator economy in Web 3 is unlocking the creativity within everyone and offering new opportunities for autonomous and independent income generation. To learn more, check out the panel discussion "What is the Creator Economy?" featuring Lee Jin and Jesse Walden.
Understanding the Creator Economy: The creator economy is a way for individuals to earn a living by selling digital goods and services directly to their audience, and having 100 true fans can sustain a living. However, it comes with inherent risks.
The creator economy presents both opportunities and risks, and it's essential to understand what it is before diving in. The creator economy refers to individuals earning a living by creating and selling digital goods and services directly to their audience. A great resource to learn more about this is the Creator Economy 101 download mentioned in the podcast, which is linked in the show notes. Another essential concept in the creator economy is having 100 true fans, as discussed in a post by the guest on Substack. This idea suggests that an artist or creator can sustain a living by having a dedicated fan base of 100 people who pay them a small amount regularly. However, it's crucial to note that the creator economy, like crypto, carries inherent risks. Cryptocurrencies like Bitcoin and Ethereum, as well as the creator economy itself, come with the possibility of losing the money or time invested. But, as the podcast hosts suggest, this is the frontier, and it's not for everyone. If you're interested in the bankless journey, be prepared for the risks and rewards that come with it. Remember to click the links in the show notes to learn more about the resources mentioned in the podcast.
