In April, we published The Creator’s Dilemma, which compared four models for creative production: paid subscriptions, government funding, NFTs, and commons-based peer production. Today, an artist and crypto developer Alan Luo dives deep into how crypto applications (beyond just NFTs!) might forge a better future for creators.
👨🎨 no more starving artists
By Alan Luo
As long as I can remember, I’ve wanted to make things. I started out wanting to be a comic artist. Then a musician. Then a YouTuber. Then for a long time, a game developer. I’m working on that one now. But whenever I told my parents about my dreams, they’d just say: You can’t make money doing that!
But — I quipped, being the indignant young child I was — clearly some people get paid to do creative work. And sometimes extremely handsomely, at that. So it seemed like a solvable problem.
At the same time, I noticed that there seemed to be a mismatch between the volume of blood and sweat that creators put into their work and the bread that got put on their table in return. Indeed, there is and always has been an extraordinarily undercapitalized creative class, full of brilliant dreamers and artists who work tirelessly to express their inner worlds, who can garner millions of followers and views, yet are rarely scraping by to sustain themselves. Get a million views on YouTube, and you might only see about $2000 for your efforts. And the creators who get there are the cream of the cream of the crop. To sustain a minimum wage of $12 an hour, you’d need 12 million views a year. That’s more than the population of Hong Kong.
But things aren’t all bad. The arts as a career are certainly far more accessible in today’s age of social media than they were back in the days of royal patronage. YouTube is not perfect, but it is certainly a far more democratic platform than the imperial court.
Compensation for creators may still get better, and perhaps radically so. Introducing: crypto.
beyond elite patronage
You’ve probably already heard about crypto in the periphery, but most coverage of the tech focuses on speculation, Elon Musk, and memes. But the mechanisms behind crypto, and the means by which it may induce social change, are often glossed over.
In fact, crypto has the chance to drastically improve the lives of creators in a quantum leap of comparable size to the boons of social media and internet entrepreneurship. Just this year, Instagram artist Beeple made 69 million dollars from auctioning an NFT, a piece of crypto-based digital art. Instinctively, one might suppose this sale to be a fluke. Some have speculated that the NFT bubble may burst at any time. But NFT markets are regularly trading billions of dollars of assets, and the underlying tech is here to stay. Beyond speculation, it’s beneficial at a protocol level.
To understand why crypto stands to benefit creators, we first have to understand how traditional creative business models work. Originally, all forms of art were confined to high society. Paintings were commissioned by royalty, and music was played only in private salons and concert halls. Creators never had to think about where their money came from, because they were usually commissioned by a small number of noble supporters, or patrons. In some sense, their work was never meant to be sold — it was meant to be bought.
On paper, this seems like a far cry from today’s world of pop stars and chart-toppers with mind-bogglingly high numbers. But in practice, most creators still follow the same business model. Usually, it’s a small portion of the total fan base that provides a majority of the total revenue. Creators need only 1000 true fans to fund their entire business. Mobile games usually get most of their revenue from about 5% of their users. Podcasts are often funded by large publishing organizations like the BBC.
The era of patronage is not over. It’s just that creators now have the ability to find their own patrons. The hard thing about creating is that it’s very hard to find these patrons. Most creators will end up going through a platform, publisher, or agent, to handle the business side of things, and will lose 30% of their revenue in the process. And once you do finally find these patrons, it’s easy to lose them! Your Instagram followers won’t know about your brand new YouTube series. Creators become beholden to whichever distributor they initially choose, with little hope in sight if their chosen distributor goes out of business.
The reason that crypto is so creator-friendly is that it easily resolves both of these issues. Sales via crypto can occur without the need for a middleman, granting the creator larger royalties, and it is far easier to retain a fanbase across multiple services.
how crypto eliminates the middleman
To understand why this is the case, let’s talk about the technical details of crypto. When people refer to ‘crypto’, they’re typically referring to an ecosystem of decentralized apps (dApps) that run on the Ethereum network. This network is fully decentralized, just like the internet — there is no governing body that can elect to take down the network, or impose rules on it. However, unlike the internet, all data on the network is public — only users’ identities are kept private. If you buy Beeple’s NFT, everyone will know that someone bought the NFT, but no one will know exactly who it was. Additionally, the blockchain maintains an immutable public record of every transaction ever made. The result is essentially a public data store and an ever-growing suite of apps whose governance is public, credibly neutral, and persistent across time.
It turns out that this set of features is just what artists need. In the case of NFTs, it isn’t that it’s never been possible to charge people for digital art. It’s just that the buyers could never have any guarantee that the art they were buying would last for 50 or even 5 years. Even if they did, the art would be easily copyable due to the nature of digital formats, and hence the value of any digital piece would immediately depreciate into nothingness. However, on Ethereum, this is no longer true. If I own Beeple’s art, then everyone knows I am the sole owner, no one can take that away from me, and this will never change unless I willingly sell the NFT.
The fact that all data on the decentralized web is public, credibly neutral, and persistent also means that it is much easier to have a coherent brand and identity. Right now, there’s no easy way to link my Reddit reputation to my Runescape gold and Twitter followers. I could spin up a third-party service to collect this data, but if Runescape makes its data private or the Twitter servers go down, my identity and audience gets fractured. But on the blockchain, one wallet address can own a dozen tokens and operate on a dozen apps with little to no overhead whatsoever. All apps live in the same shared ecosystem. What this means for artists is that they can retain patrons much more easily.
These benefits don’t only apply to digital artists. A musician could sell a lifetime VIP ticket without having to worry about scalping or award front row seats to their followers with the highest follower counts. Just as smartphones once seemed like a dream of the future, building this credibly neutral, interoperable, and persistent platform makes creator ownership a permanent part of the world we live in.
Creators are often exploited because they hold influence over massive fanbases, but struggle to convert this soft power into hard power, or real assets. That’s why the middlemen — the agents and platforms — of the creative industry exist. What the blockchain offers is a way for creators to own the interactions with their fans: to make every transaction directly with the customer.
a radically creative future
NFTs are only the tip of the iceberg as far as new compensation structures and creator-friendly business experiments go. As Creative Director at Dark Forest, I view my job as making as many of these experiments occur as quickly as possible, to give people a vision of what a radically blockchain-oriented world could look like, beyond NFTs. The most exhilarating thing about the project is that some of these experiments have already started to occur. I spearheaded the creation of the Valhalla NFTs, collectible planets which we minted as rewards to our top players. One of them sold for as much as 1.337 ETH, equivalent to $3100 USD at the time of writing. On a traditional digital platform, this award would be nothing more than a badge.
I’m excited about the potential of blockchain’s permanent, ecosystem-level impact. Despite my interest in the arts, I’ve come to realize that it’s hard to create the world you want through self-expression alone. You need to build it. And the world that I want to see is one that is more full of dreams, creativity, and madness. Authentic self-expression is beautiful, but ephemeral. Sometimes, it’s time to build.
Alan Luo (they/he) is the Creative Director of Dark Forest and a student at Columbia University. He likes to think about games — what they are, what it means to play them, and why we should care. His other interests include music theory, crypto, and beans. Find more of Alan on Twitter.
What surprised you most about the crypto ecosystem?
The strongest theses have to do with radical social reorganization and deriving value from public goodwill, not DeFi or speculation. I do think the ecosystem has some problems, but the optimism at least is infectious.
What creatives do you personally draw the most inspiration from?
I tend to like voices that are courageously independent. Games: Maddy Thorson, Derek Yu, Miyamoto. Music: Jacob Collier, Billie Eilish, Linkin Park, John Powell. Others: Jack Conte, Hayao Miyazaki, Antoine de Saint-Exupery.
What’s one book you loved this year?
Finite and Infinite Games by James Carse. You’ll love it or you’ll hate it. It’s probably the closest thing to a contemporary religious text.
💰 In this excellent, wide-ranging essay, Reboot community member David Phelps gets right to a core tension in the creator economy: Is artificial scarcity a necessary prerequisite to getting creators paid? Why do crypto-economics depend so much on resource and status hoarding?
🖼 Can you mint an NFT of a Creative Commons licensed work? Apparently, yes.
🗻 Mission-driven technologists can now register for the Impact Summit, a free virtual conference with speakers, a pitch competition, and career opportunities.
✅ “Ugh fields” are the tasks that never get done because you can’t even bear to think about them. Read this advice for getting them out of the way.
💝 closing note
I asked the Reboot community about the best digital art they’ve seen lately:
Andrei shared this botnet that artificially inflates the value of climate news by clicking on ads.
David shared this animated NFT “celebrating freedom and love on-chain ∞.”
Joice shared this trippy, nostalgic take on Dalí.
Jacky created his own AI-generated art based on the prompt “a publication and community reclaiming techno-optimism for a better collective future.”
Jasmine & Reboot team
Disclaimer (Aug 2021): Reboot has since received a $5k grant from Dark Forest’s associated foundation. This newsletter piece was completed long before we asked for or received funding of any kind — in fact, the grantmaking body did not yet exist.