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As with most breakthrough innovations, there is a mix of excitement, speculation and confusion about the role Web3 technologies will play in the evolution of our digital lives. For Web3 evangelists, technology promises to help people take back control of their data and monetize who they are, what they know and do in new and exciting ways.
As a result, Web3 has attracted billions in VC funding for projects and startups spanning its various components, including blockchain, cryptocurrency, non-fungible tokens (NFTs), decentralized autonomous organizations (DAOs), AI, and the Semantic Web. And for creators, the size and scale of investment in these new developments is exciting news.
What is Web3 anyway?
Before we dive into what it means for developers, it’s good to have a working definition of Web3. IDC defines it as “a collection of open technologies and protocols, including blockchain, that support the natively trusted consumption and storage of decentralized data, knowledge and value”.
If you are a creator, this definition should be music to your ears. Given the issues of control, privacy, security, ownership and trust that continue to plague the current iteration of the Internet, Web3 offers a glimmer of hope. Reading between the lines, IDC says Web3 will offer better dynamics between those who create and those who consume. It will enable the seamless, transparent, and cost-effective interactions and transactions needed for the creator economy to grow.
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The problem with centralized platforms
As it stands, the current ecosystems that feed most creators are completely centralized. And while some developers make a great living thanks to these platforms, in the end it’s the platforms themselves that make the real money. Take YouTube for example.
According to Statista, YouTube’s global advertising revenue reached $6.9 billion in the first quarter of 2022 alone, a 14% year-over-year increase. But despite this success, many YouTubers cannot give up their jobs. According to an August 2022 report, 97.5% of creators fail to make $12,140, the recognized US poverty line.
To be fair, YouTube isn’t the only platform with this momentum. Although popular platforms bring in billions, a vast majority of developers struggle to make a living. Linktree data shows that of the 200 million people participating in the creator economy, only 12% of full-time employees make more than $50,000 per year. The company also found that 46% of full-time creators make less than $1,000 per year.
Most creator platforms own the audience, data, and revenue. The main way for creators to make money is by getting sponsors or attracting large numbers of fans and followers to ads placed by a platform’s algorithm, which some believe favors certain creators over others. Web3 essentially cuts out those middlemen, allowing creators to connect directly with their audience and earn the bulk of the revenue for themselves.
Essentially, the mantra for today’s creator ecosystems is that creators make the content and companies make the money. These ecosystems can change their algorithms and rules at any moment, taking over the audience (and monetization) that a creator has painstakingly built over the years. And when a YouTuber decides they want to take their audience somewhere new, they can’t. They don’t have access to the data needed to directly connect with their audience outside of the platform environment.
Web3 will change the current Internet dynamics by allowing creators to monetize their work directly and without third-party interference. But you may be wondering, “How exactly does this work?”
Deploy Web3 for developers
The key to using Web3 as a creator starts with finding the right platform. And of paramount importance is maintaining full control over your content and the revenue it generates. It’s also important that the platform you choose provides the tools and services you need to run your business. That’s the approach we took at Kajabi, and according to a recent study, Kajabi customers make an average of $30,000 per year.
NFT marketplace Rarible is another good example when it comes to controlling the money you and your team make. If you have a team of collaborators, Rarible allows you to add their wallets to the smart contract and share royalties from future sales. The payroll accounting is completely transparent and nobody is left out.
Another model to consider comes from a company called Rally, which allows creators to launch their own creator coins. These fungible tokens are an interesting way for creators to monetize their work and themselves with their communities by creating an economy around everything they do. Essentially, fans and investors can buy, sell and use your Creator Coin as currency on the platforms built on top of this blockchain.
Decentralized social platforms like Mastodon and Diaspora go one step further. With these platforms, creators retain full ownership of their content and identity, and are able to make money from their fans rather than advertisers. Fans invest in their favorite creators, and each account has a monetary value that can go up or down. Additionally, ownership of these platforms moves with the owners from platform to platform.
We are in the early stages of Web3. And just as artists help revitalize neighborhoods, creators will push Web3 forward. Without creators and their fans as early adopters, Web3 growth will stagnate and the centralized web will only become more controlling. Therefore, there is no better time than now to start the Web3 journey.
Sean Kim is President and Chief Product Officer at Kajabi
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