This is Part 2 of a two-part series on the Creator Economy. See Part 1: A Gold Rush Mentality is Overtaking the Creator Economy
A key part of the transformation to the creative economy is the rise of Web3, which includes blockchain and NFT and digital token technology. “But these are early days, and not a lot of creators know about it,” explains Mason Nystrom, a research analyst at Messari.
The platforms and products that really want to help creators on their long-term journey will be the ones that succeed, not just the ones looking to profit in the short-term, says Ben Terry, partner and chief creative officer at Access Ventures, a nonprofit that works to build a more inclusive economy. And for creators a steep learning curve lies ahead. “Right now when people say ‘creator economy’ it’s like sticking jello on the wall,” he notes “In the past year it’s changed so much it’s hard to know what it means.”
Here’s the way NFTs work: artists can sell anything digital –i.e, drawings, music, writing — and then monetize it in perpetuity, getting paid a royalty at each sale point as the value of the work increases. Buyers get certificates of authenticity. That’s because NFTs are typically part of the Ethereum blockchain that allows artists to create their own galleries and set their own prices online while earning royalties on secondary sales. Just as important, the asset cannot be deleted since the metadata of the NFT is stored on the blockchain, so if a platform ends up shuttering it doesn’t matter.
Most platforms take royalties on first-time sales and on all secondary sales. On NFT platforms, the spit can be anywhere from 2% to 15% on primary sales, and 1% to 5% on secondary sales. Most often the fee is paid by the buyer so creators need to figure out the platform’s royalty structure and charge accordingly, says Nystrom.
More and more platforms like Artblocks or SuperRare are emerging to allow artists to sell NFTs. One startup that will launch its Web3 platform in March is Ekko. It will allow creators to load their content – including music, art, writings, videos and photographs — and the site will transform any work into an NFT. It will also allow buyers to pay for NFTs without a digital wallet, making it a more mainstream marketplace for consumers. Ben Guez, a serial entrepreneur, is bootstrapping the venture after helping many Patreon and OF creators with their marketing efforts.
“I have seen a lot of creators achieve great success, and others lose money,” he says.
They face challenges, he acknowledges. It’s hard for them to understand blockchain, and how to make money from NFTs, he points out. The other issue is safety, since these digital assets can be hacked in digital wallets or from users of these platforms through phishing scams, bugs and other means. It’s a growing problem. Last month, hackers stole $1 million in NFTs from OpenSea users, the largest peer-to-peer marketplace for NFTs, rare digital items and crypto collectibles.
Practical Advice for Creators
So what should creators do when accessing the new platforms and tools they can use to start a business?
“When doing due diligence look at the platform itself and study its audience,” says Nysstrom. “Pick one with a lot of volume and a large audience if you don’t have your own following. Also look at tooling and figure out what you want to issue.” As he explains there are options. You can issue a single NFT or a collection of tokens. Keep in mind artists have to store a record of their NFT or token on another platform.
Now is the time artists can get in on the nascent NFT market. The overall market reached $41 billion in value in 2021, according to blockchain data company Chainalysis. Many analysts expect it will double by 2025.
But no matter whether or not a creator decides to digitize their work, akey to success is a solid social media strategy. The likelihood of someone wanting to own an NFT of something you create goes up exponentially if you are well known in the metasphere.
“You have to diversify across multiple channels and cross-promote. This will help you get five times the mileage,” says Sasha Sloan, 24, Miss Utah and founder and CEO of Archive Sunday, a company that sells apparel, accessories and collage kits designed for Star Wars and Harry Potter fans.
She should know. She was a political science student at Brigham Young University when the pandemic hit and she launched a side hustle posting videos for Star Wars and Harry Potter fans on TikTok. In three months she had 1 million followers. Then she started posting and cross promoting on YouTube, Pinterest, Instagram and Facebook. Last year, she garnered $800,000 in revenue from merchandise sales, and payouts from the TikTok Creator Fund and YouTube. “I started with $300 in the bank and a cell phone. It was like getting struck by lightning.”
This story and others on New Builders Dispatch are made possible by a sponsorship from the Ewing Marion Kauffman Foundation. The Ewing Marion Kauffman Foundation is a private, nonpartisan foundation that provides access to opportunities that help people achieve financial stability, upward mobility, and economic prosperity – regardless of race, gender, or geography. The Kansas City, Mo.-based foundation uses its grantmaking, research, programs, and initiatives to support the start and growth of new businesses, a more prepared workforce, and stronger communities. For more information, visit www.kauffman.org and connect with www.twitter.com/kauffmanfdn and www.facebook.com/kauffmanfdn.