The Blockchain is an encrypted, decentralized database that stores data, or in other words, it is a digital ledger of any transactions, contracts, or other events that require independent recording.

One of the most distinguishing characteristics of Blockchain is that this digital ledger is available across hundreds and thousands of computers and is not restricted to a single location. In the financial services industry, blockchain technology has already started to cause disruption, and it is this technology that allows bitcoin transactions to take place. Blockchain technology, which is used in the financial sector, allows participants to communicate directly with one another and execute transactions over the internet without the involvement of a third party. It is not necessary for the parties to share any personal information in order for the transaction to take place on the Blockchain, and it generates a transaction record by encrypting the identifying information. The most intriguing aspect of Blockchain technology is that it significantly minimizes the likelihood of a data leak.

In comparison to traditional methods, Blockchain utilizes several shared copies of the same database, making it more difficult to perpetrate a data breach or cyber-attack. With all of its anti-fraud capabilities, block chain technology has the potential to change several business sectors by making operations smarter, safer, more transparent, and more efficient than traditional business procedures.

As such, this essay will discuss how blockchain technology may truly benefit the creative economy sector.

What is the creative economy all about?

The expansion of the social web is aided by technologies that make it easier for writers to produce more material. In recent years, the rapid expansion of both producers and content on major digital social media platforms has served to feed the platform’s continued growth in content consumers. This has resulted in these major social media platforms wielding influence on both the supply (maker) and demand (consumer) sides of the economic equation. The material of these organisations is matched with potential audiences using computer-based algorithms, which allows them to monetise the content via advertisements. This strategy has shown to be incredibly profitable for the platform, but it has proven to be less lucrative for the producers. Many of the producers not only received little compensation for their work, but they are also at the mercy of the algorithms in terms of their ability to reach their target audiences.

Increasingly, as artists’ fame develops, with some super-stars claiming millions or even billions of followers, they demand more sophisticated monetization tactics.

Businesses want more direct control over their content as well as the distribution channels via which it is supplied in order to maximize income.

This opportunity has been taken seized of by a growing number of startups and younger social media firms, who have created a broad variety of goods and services aimed at assisting artists in monetizing their work. An increasingly popular monetization approach is the usage of subscription fees, which are particularly successful since they offer a consistent and ongoing source of money.

There are platforms that, for example, aid video streaming providers in producing subscription money by sharing 50 percent and 80 percent of the revenue generated with them, respectively, in exchange for their assistance. It is feasible for writers and artists to monetize their work via the use of certain platforms. There is a marketplace for digital artists that compensates them with 88-95 percent of subscription profits, which is a significant amount of money. Substack is a well-known service that reimburses newsletter writers for 90 percent of their subscription fees.

Other platforms enable producers to sell their digital items directly to consumers or to just accept tips from their customers. Teachable is a company that specializes in offering online courses. Another platform simplifies the process of selling digital items of various varieties. “Buy me a coffee” enables fans to simply tip authors.

The incumbent social media behemoths are feeling the heat. They risk losing both the creators and their fans if they do not take effort to retain them. The makers would then invite their fans on these platforms to migrate to the new ones, where they could earn a higher profit margin.

In the previous three years, Youtube, the world’s largest video hosting platform, has already split 55% of total ad income with its artists. YouTube and Facebook have both adopted the popular subscription and tipping business model for producers. Twitter has announced the launch of the Super Follows function, which enables authors to charge their followers for access to exclusive material.

In addition to the expanding communities of creators and their followers, there are platforms and companies that give tools and services to them, which all contribute to the development of what has been labelled the creative economy. The creative economy has been expanding in scope for some years. Currently, as of June 2020, the annual earnings of the top Youtube channels are close to $30 million, while the top writers on new newsletter service may make far in excess of $1 million in income. Despite the fact that the total quantity of merchandise sold on Gumroad has increased year after year, it is predicted to reach 143.8 million in 2020, roughly twice the amount sold in 2019. This growth is mostly because to the Covid pandemic tailwind for digital products, which has contributed to the increase.

The creative economy’s difficulties

Numerous obstacles remain in the growth of the creative economy. Two notable examples are as follows:

  • Platform-specific challenge: There are a number of centralized platforms, such as YouTube, Facebook and Twitter, have total control over what content can and cannot be shown on their platforms, in addition to having complete control on the demand side. In order to reach a wider audience, an artist must appeal to the “algorithms” that are built into the various platforms. Whether these platforms should have the capacity to accept or reject user material has been a source of heated discussion for a long period of time.
  • Challenge unique to creators: in terms of money, it is always winners who take (almost) all. The few megastars control the lion’s share of money generated by the creative economy. According to Economics, based on statistics from Patreon and Spotify, just 2% of the 200K producers who earn a combined $1B per year on Patreon earn more than the federal minimum wage of $1,257 per month.

Blockchain as a Potential Solution

The ability to make money as a creative is now a reality. The ability to own their audience relationship has never been greater, and fans are rewarded for taking part in the process. Blockchain technology has the potential to revolutionise the creative economy. Relationships between creators and consumers are already shifting.

Blockchain-based systems allow content producers to retain ownership of their work and eliminate the need to rely on a third party to share and distribute their work.

Final Thoughts

In order to maintain more control and independence over the commercialization of their work, content creators’ fanbases are growing in size. However, this is becoming increasingly challenging. There were a slew of businesses and other platforms that emerged to fill the hole and thrived. Additionally, the major incumbent digital platforms are taking measures to retain musicians on their platforms and to assist them in earning more money on their own platforms. Every one of these factors contributes to the continued growth and development of a healthy creative economy.

Other than altering creative content through the use of NFT monetization, there are three key ways blockchain could revolutionize the creator economy: empowering the creator-led community through creator tokenomics, developing decentralized versions of social media platforms, and developing decentraliszed versions of traditional financial instruments. Each of these choices is not mutually exclusive, and it is probable that they will coexist in the foreseeable future. They are, on the other hand, all fairly early in the morning. In the current market environment, all of the crypto tokens involved, whether they be NFTs or creator tokens, are very speculative investments.

We also discussed the difficulties that platforms are experiencing, as well as the creator dilemma that the creative economy is now facing. On the complexity level of the platform, although developing blockchain-based social networks provide a solution to the issue of centralized content management, the usefulness of such networks is limited until they achieve a critical mass in terms of user numbers. Although a blockchain-based system will not instantly alleviate the lack of creator middle-class challenges, it will bring new technologies that may be used in other solutions to the creator dilemma in the future.