💰 Investing in creators
The power of social tokens and the benefits for creators receiving investment (vs just a creator grant)
Hello everyone!!
A few days ago, I wrote about creator grants given by platforms, and why they aren't a long term solution. A day after posting that article, @ljin18 tweeted that these are bread and circus, and that's literally how I feel about them.
Building a creator middle-class means having more creators be able to generate enough income to live out of creating content by themselves, but getting there is hard. A part from the huge effort required to create valuable content, there is a lot of risk involved when it comes to money.
So... if creator grants aren't a reliable source of income, and it's hard for small creators to make enough money to survive the initial phase, what could be a viable solution to such problem?
CREATOR COINS
Investing in creators has never been easier, thanks to the so called "Creator coins" –a.k.a. social tokens. These coins are decentralized and secured by blockchain, and built on the same model as common cryptocurrencies like Bitcoin or Ether. These allow anyone with a crypto wallet to invest in people (creators in this case) –or invest their time and get rewarded with tokens– and like @coopahtroopa said ”Social tokens provide a means of not only sharing financial upside with their favorite creative but also enabling tiered, tokenized access based on active contributions.”.
But what are the benefits for the creators receiving investment through their tokens, and why are they different from the grants that platforms give them?
Creators are able to set their own terms.
Creators aren't tied to a platform to receive the benefits, they are free and independent.
Less luck, but more upside. Although receiving investment will require creators to stand out or at least do things correctly with no guarantee that they will ever get any money, there is no limit to how much they can receive, making creators keep working hard to grow their business.
The money invested may come with help, feedback or just support – from people that care about them, or their business.
TL;DR: They give more power and flexibility to the creator and they are the ones receiving the main benefit, not the platforms.
Side effects & things to consider:
Investments incentivize creators –specially small or just starting out– to create better content. They have a sense of responsibility with those putting their money on them as businesses. Every token holder will have a sense of ownership that will ultimately improve the quality of the content and how the business is managed.
However, receiving money as an investment from fans can increase the risk of burnout. They are investing in a person (a lot of pressure for a creator), and fans might always want more from the creator with ownership over the actions and decisions.
Small creators need to get funded, but it's still hard for them as they don't have a community and fans yet. How do we solve de discoverability dilemma?
Ok, say we find a way for early stage creators to get funded, investing in someone's career at an early stage is risky so... how could we help people that want to support creators avoid such risk?
Well, a thing I've been thinking about a lot is how could we implement the lending business to the Creator Economy. Since there's a lot of risk involved in investing, people lending money to support a specific creator –or a random one– may be a good way to finance those who want to start creating content more frequently or take the big leap.
While creators that are able to make a steady income from their content have the potential to become a media agency, there's a lot of risk involved at the early stages in order to get there. And if it's risky for them, imagine investing money in their career. So, if we were able to find a viable way to allow fans support their favorite creators without the risk of losing their money –or random people trying to support random creators– and also them receiving a return on their "investment", more creators would be able to jump start their career and build a stable business out of their content.
These proposals all look great, however, there's a lot of things that we still don't have an answer to... They seem promising ways to help creators grow and become businesses, but many things could happen that I personally don't know how would be solved.
For example:
What would happen if a creator gets ill or dies? Because traditional businesses have a way to keep working without that one person but what happens with all the money put into creators if there's no way for them to keep creating content or running their business?
As I said, there's a lot more to learn about the pros and cons about investing in creators, but I personally believe that these will benefit everyone involved in a creator's business – creators, their fans and investors.
If you want to learn more about the benefits of investing in creators – as a fan/investor –, you should definitely check this tweet by @CDTEliot:
Well, that's it for today... These are just my thoughts on how creators could benefit from these options and I believe there are definitely many more – please share them below if you have some! I would also love to hear what are your thoughts on the matter – specially if you disagree!
If you liked this piece consider subscribing and sharing it 🤙🏼
See ya 👋🏼
Shoutout to @CDTEliot for helping me with some thoughts on this topic!! If you are into crypto and the creator economy, he is a must follow!