Creator economy is central to the metaverse’s success
By Colin Campbell. Top image: Dalle-2
Meta's recent release of new images from its Horizon Worlds metaverse was widely greeted with derision, demonstrating just how far the concept of web 3.0 has to go before it's fully accepted.
Many of the criticisms aimed at Horizon Worlds are based on the billions of dollars that Meta is pouring into the project. At play too, is a general fear that the metaverse's future will turn out to be a rerun of the Big Tech present, in which platforms are owned and controlled by a small number of powerful companies, mainly for their own profit.
It's true that metaverse platforms - the virtual worlds in which we'll gather to play, socialize, create, and share - will likely be built using the kind of massive investment that only large corporations (and even governments) can afford. But it's also highly probable that these platforms will only succeed if they are engineered with a focus on rewarding creative individuals.
In other words, a metaverse without the input of creators and artists is a non-starter. In order to attract those individuals, metaverse platforms will need to be built on creator economies, in which revenues are explicitly directed towards individuals.
A booming economy
SignalFire, a leading digital venture capital investment firm, recently estimated that there are around 50 million people in the creator economy, mainly comprising of "content creators, curators, and community builders including social media influencers, bloggers, and videographers, plus the software and finance tools designed to help them with growth and monetization".
The market size has grown to more than $104 billion with investment companies staking $1.3 billion in 2021, according to research company CB Insights.
In the digital creative economy, workers create their own base of fans and customers through a nexus of social media, entertainment platforms, and direct-to-consumer retail portals.
Currently, the creator economy uses a plethora of business models ranging from branded advertising, to subscriptions, to tips, to digital product sales. Complexity and diversity of revenue streams and platforms is a source of growth in the creator economy.
The arrival of new digital platforms specifically geared towards the creator economy is likely to provide immense opportunities. This new nexus incorporates the metaverse, digital currencies, and bespoke, personal, unique content (aka NFTs).
Many artists are currently making their living creating commissioned work for individuals. This is likely to be a hallmark of the metaverse, in which displayed individualism and item collection will be a paramount goal for many users.
While the metaverse is still a nebulous concept, human desires are well known. Likely content hotspots include digital fashion and avatar art, music and live events, art galleries and movie launches, video game items, as well as advertising and sponsored content. Collaborations between top creator-artists and brands will be inevitable.
Skewed rewards
Currently, the creator economy flourishes on platforms like Twitch, SubStack, Unity, and Roblox. All of those services reward their contributors with a share of the revenues that their work generates. Without creators, those platforms would cease to exist.
However, the rewards systems are generally stacked to benefit the platform-holder, with terms that favor the most successful creators to the detriment of those with niche audiences.
The platform holders also, generally speaking, own the content that their contributors create. It is difficult, if not impossible, for a creator to take their work from one platform to another. Creators are subject to a host of regulations over which they have no say, nor any bargaining power.
Platform-holders can, and do, change their terms without notifying their contributors, leading to widespread dissatisfaction among creators. Usually, these changes prompt a good deal of complaint from contributors, but little effective pushback.
Last year, YouTuber Joshua Wanders told the New York Times:
"With the internet and YouTube, there’s always the concern of being demonetized and having your channel canceled, so people are always looking for alternative ways to earn money. You never know where the platforms are going to take you at the end of the day."
However, there are cases in which creators have shown their power. Last year, OnlyFans was forced to reverse a decision to ban adult content following a serious rebellion from both contributors and consumers.
Rethinking the web
Competing metaverse destinations that stick to controlling policies will struggle to attract the talent they need to grow. In a true creator economy, the creators enjoy a greater share of the pie, as well as ownership of their work, and more negotiating power. They may even enjoy part-ownership of the platforms themselves.
Mason Nystrom, Senior Research Analyst at Messari focused on Web3 recently wrote:
"Web3 is about rearchitecting the existing services and products of the Internet so that they benefit people rather than entities.”
Gaming will be a central pillar of any metaverse's attraction. The most successful games will be those that constantly renew themselves through user-generated content, such as Roblox and Minecraft.
These games require high levels of creativity and time-commitment from artists and content-makers. They will require a massive turnover of assets and updates. This means that creators must be able to make a full living from their work - something that is rarely possible currently. A recent survey by Linktree found that only 12% of digital creators are making more than $50,000 per year, with 46% of creators making less than $1,000.
Creative support
Even establishment organizations, like French bank BNP Paribas, recognize the need for change. In a recent post, the company stated that the post-industrial world has severely diminished the kind of social mobility that a steady job once conferred. A creator economy is an opportunity to correct that situation:
“The Virtual Economy is an opportunity to short-circuit that system failure. It is an environment where entrepreneurs, prospectors and skilled agents can generate significant wealth very quickly without the need for startup capital. Esports players, streamers, skin designers, level boosters are just some examples of the creative new ways that people are generating wealth in this new economy.”
As creators accrue power and recognition, they are likely to support each other, much in the way of market traders or any guild, who understand that their competition with each other is less important than their collective interest in diminishing the power and control of land owners and tax collectors, in this case the platform-holders. Collective bargaining - currently a no-no for platform-holders - will become the norm.
To meet these goals, the creator economy platforms of the future will need to be built from the bottom up, so that they benefit creators. Tech giants will need to reduce platform fees for creators if they want them to succeed and drive engagement for their brands. This is one reason why Meta's Horizon Worlds elicits so little excitement. While its marketing focuses heavily on Meta CEO Mark Zuckerberg, giving a strong impression of a centralized, highly controlled vision of the future. But real success will be found elsewhere. It may take serious recalibrations for big companies to understand this fundamental shift.
Economy in the metaverse will be fuelled by digital partnerships between the tech giants who build the infrastructure and content creators who create the content. We need creators to create the experience of entering into the metaverse.
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