If you want to know why there’s so much talk about crypto and blockchain’s potential to transform the creator economy, one good answer might be that there’s so much in need of transformation.
No one has been more vocal than musicians upset at the very micro micropayments they get for song streams — $0.003 to $0.005 are the most cited figures, which puts earnings at $3,000 to $5,000 for 1 million plays.
Another is that so many other companies, including social media giants like Facebook and Twitter, are getting in on trying to fix a very broken system that it’s an obvious target for an industry built on the concept of eliminating financial middlemen.
It’s a simple pitch: Creators can take payments directly from fans, with no bank, credit card issuer or payments processor in the middle taking a cut. That sounds great until you actually try to send bitcoin from one digital wallet to another: It’s a process that even technologically-minded people find cumbersome.
Then there’s the reality that most creators live on a platform of some kind: Twitter or YouTube, Spotify or Apple Music, or one of the many, many content creator-focused platforms for musicians, artists, social influencers, podcasters, topic educators and more. Those platforms tend to want a cut — or pay what they wish.
And there isn’t really a need for crypto payments on those platforms. Sure, in April, Twitter teamed up with payments tech firm Stripe to use crypto — starting with the USDC stablecoin — for creator subscription payments. But Stripe began supporting Twitter’s Super Follows traditional payments back in September of last year.
That said, as more and more merchants start accepting crypto payments through processors like BitPay and Strike, and more people start actually paying with crypto — more than one quarter of the nearly 60 million U.S. crypto consumers prefer merchants who accept digital assets, PYMNTS U.S. Crypto Consumers study found — it should become easier and more lucrative for individual creators to accept crypto with a pay button rather than a digital wallet transfer.
Of course, if they follow the more common pay-in-crypto-but-receive-cash process that is becoming the norm — in no small part to avoid dealing with volatility — it isn’t really transforming the creator economy as much as it is adding a new payments rail.
So, where does crypto fit in?
The best current answer is social tokens.
There have been others, like Steemit, a blockchain-based social media and blogging platform on which creators could earn STEEM tokens for creating content. But none have really taken off.
What’s a Social Token?
Social tokens are bespoke cryptocurrencies built around a particular brand, community or content creator. At their core, they are about access and benefits.
At the high end, a number of top European soccer teams like Barcelona, Manchester City and Juventus embraced fan tokens that offered access relatively early on. Juventus token holders can vote in polls on topics like the song played when the Turin, Italy, team scores a goal, while FC Barcelona token holders can by VIP access to stadium tours and player meet and greets.
More recently, they’ve been embraced in the U.S. by the Ultimate Fighting Championship (UFC), 28 of the 30 teams in the National Basketball Association and half of the National Football League’s 32 teams.
But individual artists and creators of all kinds have been creating social tokens on Rally, a platform that describes itself as “a place for creators and their communities to build their own independent digital economies.”
All of that should tell you what you need to know about the key strength and weakness of fan tokens: They’re highly dependent on superfans and require a constant stream of specialized content and access to keep them desirable — which is to say, valuable.
“You kind of have to provide perpetual benefits,” Mason Nystrom, an analyst at crypto research firm Messari, told CoinDesk. “If people are buying your token, you have to continue to provide value, or have some exit strategy, which is fairly challenging.”
Which points to a basic problem with crypto as a tool of the creator economy: It doesn’t really make it much easier to connect with fans without a big fan base, and it doesn’t really make it easier to get paid without a platform to connect with fans.
And if you’re earning $0.003 per song or 0.000003 BTC, it doesn’t really matter until you’re Drake, who pulled in 3 billion streams in the first five months of the year.
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