On March 11, 2021, an NFT (non-fungible token) created by the digital artist Beeple sold at Christie’s for $69 million dollars. Overnight, NFTs became the No. 1 topic within the creator economy. After a wave of eye-popping sales to crypto-rich investors, the hype exposed the world to the opportunities that crypto offers artists. A new creator crypto economy has emerged.
During my time at Patreon, I saw the potential of a direct-to-fan monetization model. By empowering creators to earn a steady, sustainable revenue stream through direct engagement with their communities, the system—which puts control and ownership into the hands of creators—will build a more beautiful and rewarding creator economy. For artists to maximize the benefits of crypto, they will need to think beyond NFTs and begin building a more cohesive and inclusive system where all fans (including the crypto whales) can participate. Artists can focus on what they love: releasing art and bringing value to their communities.
NFTs are just one part of a larger crypto revolution
While the NFT craze seemingly exploded out of nowhere, another blockchain development has been simmering in the background: the concept of social tokens. Social tokens are custom cryptocurrencies made by creators—artists, musicians, celebrities, and others—to foster deeper connections with their communities and to power financial transactions within their fan ecosystems. They represent a new paradigm for monetization by taking the concept of a membership model to a new level: They provide the infrastructure for a creator to wholly own their economy and integrate that currency into wherever they engage with fans and transact for physical and digital goods and services.
The concept of social tokens and NFTs is not new. Artists have always been on the forefront of embracing new technology to connect with their fans. In 2009, Radiohead pioneered the direct-to-fan experience with the release of their album In Rainbows (with mixed results) and in 2017, Björk rewarded people who bought her album Utopia with crypto. But only recently has it been possible for musicians like Portugal the Man to co-create independent economies with their communities through crypto.
Over the past few years, a massive investment has been made to build out software, networks, and platforms that can mint NFTs and launch social tokens at zero or an extremely low cost. This ease of use has opened up access to the technology and led to a ton of experimentation by creators. The musician JVCKJ launched an EP and a streetwear fashion brand via his own cryptocurrency earlier this year, and Post Malone has set up a celebrity beer pong league with fans using NFTS. Actress Cara Delevingne raised money for her foundation by auctioning off an NFT video in which she explores concepts of ownership and self-expression, while Jack Dorsey donated the $2.9 million he received from selling his first ever tweet as an NFT to the charity GiveDirectly. While social tokens and NFTs are currently being viewed as separate developments, a continuum is emerging of crypto-focused services and products that are providing tools for creators to build a sustainable crypto economy. A process that began when Patreon empowered creators with ownership over their micro-economies is now thriving on the decentralized blockchain.
The allure of crypto for creators and artists
While we’ve only recently seen it crystalize, it’s been inevitable for some time that crypto would become an integral part of the creator economy. The economics of crypto favor artists over the big tech-owned social media platforms that have been profiting from their labor over the past decade. Creators need fewer fans than ever to make a living, and crypto allows them to directly own their financial relationship with fans instead of relying on tech giants to serve as a middlemen. Moreover, crypto gives creators control over their own economic success and helps them maintain ownership over their IP in perpetuity.
Just a few years ago, podcasting, hosting a YouTube channel, and blogging were viewed as hobbies, not professions. Now, any of those paths can be viable entrepreneurial pursuits. There are universities that teach creators how to run their business. There are venture funds looking to invest early in creators’ careers to help them scale their channels. There are thousands of new companies popping up every day looking to help creators in every aspect of their engagement with fans and in every aspect of running their business. The challenge was that creators didn’t have a way to tie all of this together into a cohesive economy that travels with them wherever they engage with their fans.
With crypto, they do. They can launch their own economies and mint their own currencies that deliver unique value to fans. These supporters become holders of tokens that they can use to certify their superfandom or gain access to exclusive content and experiences. Artists like the DJ/producer Wax Motif are offering goods and services in exchange for their currency: Last month, he launched $WAXM to build a closer connection to his fans, and is offering a myriad of benefits ranging from 75 $WAXM for a birthday shoutout to an in-person meeting for 500 $WAXM. As a result, he and his community have driven nearly $1 million into the $WAXM economy. Similarly, streamer Alliestrasza regularly plays card games with fans on Twitch. Fans buy Twitch subscriptions with her coin, tip Allie directly with it, and also, if they choose, tip other members of the community when they do something positive. The $ALLIE economy now has more than $1.2 million.
The spark ignited by the world’s obsession with NFTs could be a game changer for the fair compensation of artists who contribute so much to our culture. From a product and user experience standpoint, NFTs are just in the beginning stages of what they will become over the next few years. NFTs of the future will be far more eco-friendly by reducing the vast amounts of energy used to build blockchains (via advancements like Proof of Stake). They will be interactive for fans—and as such, arguably hold more value than the old fashioned collectibles of yesteryear. Most importantly, they will be just one piece of these personal economies instead of the entire story.
Bremner Morris is Rally’s CMO/CRO. Previously, he was Head of Global Go-To-Market and Revenue at Patreon.