Payment for knowledge, crypto finance, ownership economy and talent IPO.
Written by: LeftOfCenter
It’s time to revolutionize the Internet charging model with tokens. The road of revolution should start with creative people and creators.
With the rise of the creator economy, knowledge content products are rapidly being produced and disseminated on the Internet in an unprecedented posture. Many of these creators have gained many fans and even realized it. The era of ” creation for all ” has quietly arrived. But nowadays, most creators still cannot make a living by this. The fundamental reason is that there is a structural problem in the Internet revenue model: that is, the adoption of a free product model subsidized by advertisements is not a real market price. The income of most long-tail creators is diluted and diluted.
With the continuous development of the encryption economy, the Internet has begun to transform from Web 2.0 to Web 3.0 , whether it is content creation, music distribution, platform infrastructure, or various Web 3.0 tool products with different functions, around the ecology of creators and community economy It is gradually improving, which makes it possible to implement the ownership economy :
Creators can use their future revenue capabilities as value to support the issuance of tokens. Fans can purchase tokens to “invest” in creators and share their future economic success; this also opens up additional sources of funds for creators, and Interaction with fans opened up a new way.
Unlike ICOs, which are widely criticized for issuing coins out of thin air, community tokens are issued based on a certain value support. They are the profitability, popularity/popularity or prestige of the creators, and open and permissionless encryption economic primitives can promote Form a fan-oriented value discovery market. Compared with physical objects on the chain, this value native to the Internet community is easier to capture.
Before the real-life asset chaining scheme is perfected, community tokens may become one of the incremental markets with the most potential to connect with the real world .
The rise of the creator economy
The creator economy is on the rise.
The creator economy is not a fashionable label, but a structural change that is quietly taking place and has already happened in the Web 2.0 era.
An important evidence is that for a long time, a large number of platforms connecting creators and consumers have appeared on the Internet , from music, education, knowledge sharing, blogs, pictures to videos, etc., covering almost all categories.
On this type of online platform, people sell their skills, knowledge and creativity on a certain platform to earn a living in a way that is independent of traditional organizational forms. The products or services sold include but are not limited to writing, video, games, and movies. shooting, education, music and other categories, Kleiner Perkins former partner Eric Feng (Eric Feng) will be referred to in this population is a direct-to-consumer brand of digital natives vertical creator (Digitally native vertical creators, referred to as DNVC) .
a16z investor Lin Ji called this the creator economy and made a fundamental distinction between it and the gig economy that has become popular in recent years. She believes that the gig economy is a labor commodification model in a society of division of labor, which is caused by homogeneity and scale effects, while the creator economy focuses on making a living with heterogeneous skills . It is a sustainable accumulation of personal brand effects. And the audience, have independent creativity, realize the realization of individual creativity (Monetizing Inpiduality), and have a passionate economy with sustainable development attributes.
With the gradual maturity of human civilization, human needs have also evolved. As a “worker”, work is not only for making money, but for the purpose of combining career development with a sense of accomplishment and freedom, that is, work in addition to maintaining a livelihood, It still makes sense. The rise of the Internet and the emergence of various platforms that directly connect creators and consumers have catalyzed the transformation of new employment models . In the past, the market that was merely a professional matchmaking can no longer meet people’s needs, which brings opportunities for a new type of creator platform.
A 2017 study by the McKinsey Global Institute showed that 20% to 30% of the working-age population in the United States is engaged in “independent work”, which is what we often call ” freelance “. In addition, the proportion of job opportunities carried by digital platforms such as Uber and Etsy is also growing rapidly, and this trend has covered the entire industry, from YouTubers, podcasters and game anchors who are monetized by digital natives to non-traditional ones. In the sense of creators, such as teachers, sales staff, farmers, chefs and buyers, are all transforming to self-employment through digital media .
Most people can’t make a living
On the surface, this seems to be a good business.
There are many well-known Internet celebrities on YouTube, Instagram and Douyin, and the media often exaggerate reports for one reason or another, which can make people mistakenly believe that these platforms are everywhere for making money.
According to Forbes, the highest paid broadcaster on YouTube in 2019 was Ryan Kaji, who was only 8 years old. He made $26 million from unboxing videos, and the Dude Perfect team, which was popular in sports tricks video, made 2,000. Million US dollars, beauty blogger Jeffree Star earned 17 million US dollars, the above is only limited to advertising sharing or sponsorship. And some smarter people are beginning to realize their traffic dividends. For example, Huda Kattan, a beauty online celebrity in the Middle East, started his own business and developed Huda Beauty, a beauty brand of the same name, with a market value of 1.2 billion US dollars.
Putting aside the inspirational stories of success and the beautiful vision that the media portrays to the public, the data tells us the other side of the story.
Data shows that in 2017, 17 million creators in the United States earned about 7 billion US dollars on a total of 9 platforms. However, the real situation is that the real money is only concentrated in the top players, and most creators cannot make a living. In fact, only 3% of YouTube channels have income above the poverty line, which means that 97% of people are struggling below the poverty line, and it is not enough to rely on this to make a living.
In addition, most advertising-supported platforms, such as Instagram and TikTok, do not share revenue with users. In this case, the only way to monetize is to obtain a large number of fans and then sell their own products.
Like the Internet itself, in fact, creators on these platforms also have a power-law distribution with a long tail. The power-law distribution is the Matthew effect. In this case, it means that a few people have most of the benefits, and most people’s benefits are very small, because the winner takes all.
The Internet revenue model has structural problems, and the free model does not maximize platform revenue
The fundamental reason for this problem is that there is a structural problem in the Internet revenue model: the adoption of a free product model subsidized by advertising is not a real market price, which will dilute the income of most long-tail creators. And diluted.
In fact, most traditional companies set prices by repeatedly testing customers’ willingness to pay and competitive processes. However, the two-sided market based on digital information products is not the case. The reason is that the scale effect of the network is the key to success for products that are generally made based on the Internet business model. In other words, for an industry without technical barriers, the key to its success or failure is the size of the network.
In order to expand this network effect, these platforms generally use demand-side economies of scale. Specifically, the platform will subsidize most consumer users in a free mode to quickly seize the user market. On the other hand, there will be some monetized revenue sources for subsidies.
Most of the current mainstream Internet platforms adopt this model, including YouTube, TikTok, Pinterest, Reddit, Tumblr, Google Search, Facebook and other platforms. The content consumption on platforms is free, so that the user scale can be quickly expanded. On the one hand, they will rely on advertisers’ paid income to subsidize creators on the platform with a certain index.
This will result in revenue eventually flowing to the head creators, and most long-tail creators will not get a share of the pie.
An effective improvement plan is to adopt a differentiated pricing model, that is, to attract some consumers to purchase (or generate more consumption) with a tiered pricing model , thereby minimizing consumer surplus (consumer surplus).
Consumer surplus refers to the difference between the price consumers want to pay and the price actually paid. On the supply-demand curve , it lies in the area between the equilibrium price and the demand curve. In a market with a downward sloping demand curve, some consumers are willing to pay a price higher than the market price.
Take coffee as an example. If the market price of a latte is US$5, but you are willing to pay US$10, your consumer surplus will be US$5. There may also be other pricing demands from consumers in the market, ranging from US$20, US$15, US$12 and US$9. In this case, if people can buy goods according to their wishes , more consumer surplus will be generated, that is, total payment income minus total market pricing income. Other things being equal, the lower the market price, the more consumer surplus; the more elastic the consumer demand, the more consumer surplus.
Perfect differentiated pricing means that the price charged by the merchant for each type of consumer is exactly at the consumer’s willingness to pay, to minimize consumer surplus and maximize the profit for the merchant.
How willing are people to pay for digital content?
Under the free model of advertising subsidies, a unified free pricing model is adopted, which obviously cannot achieve effective differentiated pricing. For highly flexible cultural and creative products and services, there is still a lot of room for consumer surplus to be explored, which is an industry that is extremely suitable for differentiated pricing models.
In fact, the differentiated pricing model is one of the important features of fan economics , which is to provide services by meeting the needs of different loyal fans. The inherent attributes of the cultural and creative industry naturally fit with fan economics, because cultural and creative products have different values for different people, especially for die-hard fans, who may be willing to pay a higher premium to buy idol products.
As a founding executive editor of “Connection” magazine, Kevin Kelly (Kevin Kelly) said, “is the kind of hardcore fans who will buy all of your work, for example, they are willing to drive 200 miles to hear you sing; even have to buy After your book, they are still willing to pay for your published hardback, paperback and audiobook set; they are willing to pay for the DVD version of the YouTube channel “best” video; they will come to participate in your organization once a month get together.”
“If there are almost 1,000 such hardcore fans, even if you may not be rich, but at least you no longer need to worry about your livelihood.”
According to the concept of Kevin Kelly’s “A Thousand Hard-core Fans “, anyone who is engaged in creative or artistic work, such as an artist, musician, photographer, craftsman, actor, animator, designer, or author, can earn 1,000 A loyal fan can make ends meet.
Li Jin, a partner of a16z, believes that in fact, only 100 real fans are enough, and creators can segment their audiences and then provide tailor-made products and services at different prices. According to her, human beings are currently in a trend of unbinding from the employment system, and many people are shifting from corporate employment to independent individualized businesses. This is also the creator economy that she has been paying attention to.
In fact, free is not the best model, and there is more and more evidence that people are willing to pay for digital content . Most traditional news publications have successfully established paid platforms, such as The Washington Post, Financial Times, Business Insider, Wall Street Journal, and the New York Times, which is often mentioned as a classic case ( Currently, its subscription revenue is twice as much as advertising revenue), etc., which all prove the feasibility of the subscription model; Spotify monthly active subscribers account for half of the total number of users.
Internet products began to explore multiple monetization models
Since the advertising model is not reliable, it is better to make money directly from consumers.
In fact, some Web 2.0 platform and tool providers have realized this change and are creating more diversified monetization models besides advertising for the core users of the platform-creators.
For example, YouTube , the world’s largest UGC video platform, has only been divided into advertising at first, and now it has provided creators with multiple monetization channels including brand cooperation, live broadcast rewards, shops, and paid subscriptions. TikTok, the overseas version of Douyin , released a creator fund in July of this year. It plans to invest US$200 million to support this creator program. At the same time, it will release a tipping mechanism similar to Bits.
In addition, compared to the Medium model, creator platforms like Substack are often more attractive to creators, because it provides content creators with a solution for setting their own pricing power , allowing creators to set their own prices. Usually content creators can Set up a monthly subscription model (at least $5 per month), and the platform party Substack will take a 10% fee from it.
Patreon is another fan subscription model platform worth mentioning. Targeting creator sponsorship, Patreon allows creators to set up their own membership plans, with a wide range of creative forms, including but not limited to photography, porn game developers, independent musicians, YouTube chat show hosts, video directors, paintings, writers, etc. The sponsorship mechanism is mainly set by the creators themselves , which is very flexible. It can be paid monthly, paid by piece, and advanced features that provide fans with more permissions. Generally speaking, the higher the fee, the more permissions and rewards you can enjoy. Of course , Creators can also simply share free content for readers, or publish creations to get sponsored profits, and even earn a stable income to make a living.
For example, Saifedean Ammous , the author and economist of the book “The Bitcoin Standard”, opened his own membership plan on Patreon, which is divided into 3 levels. The first two levels are 25 US dollars per month and 50 US dollars, enjoy the same permissions, including allowing sponsors to directly access the manuscripts being written, participate in online live courses, join online forums and Telegram groups, etc.; the highest grade is 300 US dollars per month, except for covering the first two gears In addition to the scope of the authority, a 1-hour Austrian economics course in January and private lessons on the latest Bitcoin research are also available.
Of course, it’s also possible that fans do n’t ask for specific returns at all , just for funding to support creators to accomplish something they want to accomplish. Therefore, Patreon is somewhat less like a business relationship, more like a party willing to pay for sponsorship. , The other party expresses gratitude by giving back, without the compulsion of the buying and selling relationship.
A series of emerging platforms, such as Substack, that directly connect consumers and creators, give creators a pricing power based on which a market can be formed, and consumers in the market vote whether the product has value by paying. If they are willing to pay for it, a value market based on the work will be formed.
In other words, as more and more such platforms appear and are gradually adopted by creators, individuals who were previously in large organizations whose value is difficult to quantify can use these markets to form free pricing for their works.
Crypto finance and bond tokenization
A more radical improvement is to issue bonds based on the future income of creators as value support. Fans can purchase bonds and allow them to trade. This can be traced back to the “Bowie Bonds” issued by Internet musician pioneer David Bowie .
In 1997, the gorgeous rock musician David Bowie launched the ” Bowie Bonds “, using the royalties of all albums released before 1980 as a guarantee to issue bonds. These bonds were later acquired by the Prudential Insurance Company (Prudential Insurance Company). ) Bought for $55 million. The 10-year bond interest rate is 7.9% , which is about 1.5 percentage points higher than the market benchmark interest rate on US Treasury bonds.
At the time, this transaction was quite favorable for Bowie, because it allowed him to advance royalties and license fees for ten years without giving up his own song ownership.
This is a bold financial experiment . Prior to this, the practice of packaging illiquid assets into bonds was only common in housing and car mortgages, but David Bowie used this method for the first time in music copyright, pioneering packaging of intellectual property rights into financial products . This move has won the praise of many financial experts, because he truly understands the value of intellectual property.
The rise of crypto finance and a series of crypto-economic primitives can maximize the ” value discovery ” of intellectual property. Basketball player Spencer Dinwiddie (Spencer Dinwiddie), for example, he has launched a crowdfunding campaign called Gofundme, the target amount for the equivalent of $ 2,625.8 BTC (US $ 24.6 million).
This crowdfunding is supported by his NBA contract revenue , based on the issuance of tokenized bonds on Ethereum, for fans to purchase and invest. After several months of gaming with official NBA organizations, Spencer Dinwiddie received US$13.5 million of the US$34 million contract income in advance through this event. In return, investors can receive 4.95% of monthly interest and have the opportunity to join his All-star weekend event.
In essence, this is a way of tokenizing debt. Compared with borrowing money from institutions, fans can become investors, which can open up additional sources of funds for stars and engage in more diverse interactions with fans. For fans, this plan allows fans to “bet” on the success of players and make money from their future performance.
Fan-oriented value discovery platform
With the continuous development of the encryption economy, the Internet has also begun to transform from Web 2.0 to Web 3.0 . Whether it is content creation, music distribution, platform infrastructure, or various tool products with different functions, the ecology surrounding creators and the community economy is growing. getting better.
Zora: Helping limited issuers capture high premiums in the secondary market
Zora is a platform for creators and designers to release limited-edition products in the form of encrypted tokens, allowing creators to issue limited-edition artworks and products in the form of encrypted tokens, and one token issued on the platform promises to exchange A real product in the real world.
If you want to issue 100 pairs of limited edition sneakers, you will generate 100 specific tokens, which can be sold and traded via the Internet, so that physical products can be dynamically priced based on open market supply and demand.
With the buying and selling operations and transactions, the price of these tokens will fluctuate up and down. This means that before the token is exchanged for the actual product, the holder can still sell it to get an upward profit, of course, it may also lose money, and the resulting transaction fee will be owned by the creator. When a token is finally exchanged for a physical object , the token will be destroyed and removed from the market forever. At this time, the creator will receive the income of the product at the price of the current coin.
What Zora wants to do is to help creators/brands capture the high premiums generated in the secondary market by reshaping the buying and selling mode of limited-edition products . For example, the joint series Yeezys of Kanye x Adidas is priced at only US$220, but due to short supply , Leading to being fired up to 10 times the original price in a secondary market like StockX, but these high premiums all fall into the pockets of the scalpers. With a platform like Zora, creators can create their own markets to achieve true price discovery and capture value from subsequent secondary market transactions.
Zora x RAC
Of course, the most noteworthy classic case is the limited edition personal token TAPE issued on Zora by Grammy winner Andre Anjos, aliased as DJ RAC . Each TAPE token represents the newly released RAC Three tape versions of the studio album BOY. TAPE tokens are priced based on the joint curve, with an initial price of $20 per coin, and eventually sold hot, and the price quickly rose to hundreds of dollars.
At present, compared with the issue price, the TAPE token has risen 83 times, and the price is 1698 US dollars.
This case proves to us that it is feasible to issue personal tokens based on the crypto-economic primitives and establish a fan community to sustain a living or even make money. More importantly, RAC has also practiced the community ownership economy, providing loyal fans and communities The distribution of the personal token RAC allows us to see that the fan token economy is not only theoretically self-consistent, but also has the possibility of landing.
Community ownership economy
The Internet has flattened the world. People all over the world, no matter where they are, can talk online based on topics of common interest. The rise of the encryption economy and Web 3.0 allows people to have the same value no matter where they are. These tokens become a community of interests , and get the system’s incentives based on their contributions.
Imagine a scenario like this. With a keen sense of smell, you are optimistic about the future development potential of a certain creator. Then you can own part of the project by purchasing the community tokens issued by him, similar to buying a company’s stock and betting on the company. In the future, once this project succeeds in the future, it will be directly reflected in the token price. As a fan, you not only share the success of your idol, but you can even have a say in its income and career direction.
This is the ownership economy.
In the community ownership economy, the entire community and the creator are a community of interests, and everyone works together to develop and promote products. In a creator community, community members are as important as creators. In a decentralized protocol community, the user group of the protocol is as important as the developers. In a token-issuing project, the holders of community tokens As important as the issuer .
With the encryption economy primitives, the rise of creator infrastructure platforms, and the subsequent Web 3.0 tools, it is possible to implement the ownership economy to a realistic level.
Most community tokens are based on the ERC-20 format on Ethereum , which means that they can be traded without permission, and these tokens will create a natural market. For community members, just holding the tokens issued by the community means participating in the community, and any related achievements of the community will be reflected in the currency price. For loyal fans in the community, you can invest a lot of time and energy to earn tokens and get the rewards they deserve. Of course, you can also directly participate in the market without participating in the community and buy tokens by investing money. That is to say, even if you are not a loyal fan, you can bet on someone to earn profits in the future and bet on a creator’s The future is no different from buying stocks and investing in a company.
In the case of RAC, RAC uses the same retroactive token distribution mechanism as Uniswap to reward loyal fans, and airdrops a large number of RAC tokens to platform supporters including Bandcamp, Patreon, Twitch, etc., and these fans either pay A member (meaning there is a willingness to pay), either a peripheral buyer (meaning a loyal fan), or someone who has exchanged TAPE tokens for physical tapes (meaning not a speculative investor), this is Kevin Kelly describes the kind of die-hard fans who are willing to pay for the full set of hardbacks, paperbacks, and audiobooks you publish and buy the DVD version of the “best” video on the YouTube channel. Obviously this is a very worthwhile airdrop, because it will incorporate the most valuable users before it into its community value system.
In the ownership economy, a token is not only a financial investment tool, but more importantly, it is an equity token . For example, issuers can set up a hierarchical community membership model that requires a certain amount of tokens in their wallets to access a Discord channel, read some community exclusive content, obtain limited gifts and experience exclusive rights such as early release. Since ownership can be verified on the chain, verifying whether you have access is very simple. Now there are Web 3.0 community chat applications like Syndicate , which can verify asset ownership in a trustless way. For example, you can use Syndicate to create a Chainlink big whale community, then you can set the parameters of the chat group to at least hold Only 1000 LINK tokens can be added to this group.
Syndicate user interface
Ownership economy allows individuals to become part of the community, not only in terms of economic rights and exclusive content, but also as an individual unit in the community, it also allows its own opinions to be better listened to. This is mainly achieved through governance voting . All these elements will inspire the smallest member unit of the community-individuals to become active participants and evangelists in a community.
Community token issuance platform Foundation, Roll, Fyooz
Foundation is another token issuance platform for artists and designers, founded by Dharma former product designer Matthew Vernon . Similar to Zora, Foundation allows artists to issue ERC-20 tokens representing physical objects, which can then be sold on the secondary market or exchanged for physical objects. Unlike Zora selling tokens on the Uniswap platform, Foundation chose to develop its own agreement to make the pricing model more suitable for art sales. For example, every transaction fee generated by the secondary market exchange for works published on the Foundation platform will be Owned by the artist. Like Uniswap, Foundation also uses a joint curve to define the relationship between supply and price, but allows designers to customize the low and maximum prices of token sales. This can solve the problem of the last few items on the Uniswap platform because the price is too high to be used. The problem of selling out.
Roll is the first platform product to set foot in this field. As a creator-oriented community token issuance platform, Roll’s goal is to help content creators and fans establish a monetization relationship , and is committed to providing information to residents living in the Internet community. Introducing the community token technology stack, allowing creators and their fans to easily earn, spend and trade community tokens.
Roll provides a set of tools for the community platform to make it easy to issue and distribute their own community currency. At the same time, the issuer can also customize the value of the currency, that is, the issuer’s method of obtaining currency and spending Make your own decisions, so that the main community can capture value.
Roll was founded by Bradley Miles and Sid Kalla , both of whom worked at CoinDesk. At present, two rounds of financing have been obtained, with a total funding of 2.7 million US dollars. The first round of investment institutions include BitMEX CEO Arthur Hayes, Internet celebrity Gary Vaynerchuk founded VaynerX, venture capital funds Techstars Ventures, Hustle Fund, Techstars NYC, and the second IFabric Ventures, IOSG Ventures and William Mougayar in the round.
Unlike most crypto projects, Roll does not issue its own tokens, but in terms of product growth and the introduction of creators, it has been moving forward in an orderly manner. Roll has introduced 300 creators and introduced celebrities such as Akon . The singer issued personal tokens on Roll. In September this year, the total market value of community tokens issued on the platform was close to 250 million U.S. dollars . Roll will continue to cooperate with a series of musicians, creators and organizations next year, which will allow these organizations and individuals to create community tokens based on Roll infrastructure and APIs.
Fyooz is the latest community token issuance platform that allows ordinary people to participate in projects such as investing in artists, brands, and talents, and to share the success of their idol career, not only in the workplace, but also in economic success. It is worth mentioning that Fyooz is incubated by DuckDao , a decentralized autonomous organization with a strong community foundation, which means that Fyooz has the community genes to attract fans.
So far, Fyooz has attracted attention by cooperating with two rappers, Lil Pump and Lil Yachty . Among them, rapper Lil Yachty released his personal token YACHTY , which was sold out in 22 minutes at a price of $15. According to the Fyooz application, this transaction generated a total of $276,006 in revenue. YACHTY token holders have a variety of exclusive rights related to Lil Yachty, including obtaining a blind box prepared by Lil Yachty’s mother Venita McCollum (Venita McCollum once published the book “Training a Rapper”), and obtaining Lil Yachty’s career Personal belongings and join him in online parties. Another rapper, Lil Pump, plans to issue a personal token PumpCoin on Fyooz in early 2021. PumpCoin will allow fans to interact directly with the rapper himself, and interact with Lil Pump in other unspecified ways. Due to SEC regulations, PumpCoins are only available outside the United States.
When we talk about the ownership economy, we are not limited to creators, but can actually be applied to creators in a broader sense , that is, those who contribute whether time, energy, or money become part of a certain community, and they are pledged by holding community tokens. Focus on its future, such as the decentralized autonomous organizations Duckdao and DXdao and Karma DAO.
Are community tokens a bubble?
Cryptocurrency and blockchain are often criticized as bubbles, scams, and pyramid schemes because they have no connection with the real world. Some people even believe that cryptocurrencies and blockchains without incremental markets can only be maintained by zero-sum games. Time development will eventually shatter to zero. However, we believe that community tokens may become one of the incremental markets with the most potential to connect with the real world before the real asset chain plan is perfected.
Why do you say that?
Unlike ICO tokens, community tokens are supported by a certain value , but this value is intangible before Web 3.0, and it is at most diluted on the Internet platform in the form of advertising revenue. Generally speaking, fan token issuers have a certain degree of popularity. The essence of the tokens issued is endorsed by the prestige of the promoters, and its issuance method is also a fair distribution. At the beginning, the tokens issued by the era tokens have no value. The founder will make the initial allocation through custom rules and keep a part of it. As long as fans are willing to pay, value will be generated. The more popular the issuer, the higher the price of the token.
Compared with the physical chain, Lianwen believes that this kind of value native to the Internet community is easier to capture. With a series of easy-to-use token infrastructure, various Web 3.0 tools, and, most importantly, the benefits and use cases of popular science community tokens to creators of non-encrypted natives, and help them spread across various Internet platforms The community value on the Internet is extracted and returned to the value creation subject-the community sponsor and its community members. And this is exactly what platforms such as Rally, Roll, and Fyooz are currently trying hard.
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