May 18, 2022 7:34 pm

Economy of creativity: a “new Venice” in a club of friends with benefits

Axiom of steel: for every problem that affects humanity, there is an article on Medium (or similar platform) that claims there is a solution to that calamity with Web3. The new wave of decentralization that many predict in the digital field (of which bitcoin and the rest of the cryptocurrencies are just the tip of the iceberg) is a proposal to moderate climate change, reduce corruption and poverty, improve political representation and much more.

Among the areas in which there is more enthusiasm is the economy of creativity (or attention or passion). Specialist Li Jin (formerly of the Andreessen fund, now with her own VC) recently wrote a summary of the opening field of opportunity, co-authored with Katie Parrot, titled The Web3 Renaissance: A Golden Age for Content. It begins with a prediction by Bill Gates from 1996, who in a classic essay on the early internet argued that for the network to reach its full potential, content creators should be paid according to their work. “Long-term prospects are good, but there will be a lot of disappointment in the short term,” the Microsoft founder predicted.

Some 25 years later, much of this “disappointment” has to do with a business model in which platforms and very few players get the lion’s share: 90% of Spotify royalty payments go to 1.4% of musicians, and the same goes for other creative areas. “The creative class is among the most under-monetized sectors of Web2 – capturing very little of the value it generates,” says Chris Dixon, another expert on the subject.

“The average American spends a third of the day listening to music for streaming and, nevertheless, less than 1% of the musicians can live from this channel”, add. At the time, Marc Andreessen called the original sin of the Internet the difficulties and frictions for the movement of money on the network, which ended up consolidating a suboptimal model based on advertising, which benefited the large platforms.

What are Web3’s ways of disrupting the business model of creativity? For Li Jin there are four main avenues:

new shortage. Non-Fungible Tokens (NFTs) give pricing power back to creatives, via memberships or sales of unique blockchain-certified digital assets. For Rex Woodbury, tokenization is a much more accurate measure of creative work than followers on Instagram, TikTok, or other networks. This “market capitalization” of each creative gives depth to the real value of each work.

Investment attractiveness. Paying a creative for content becomes an investment (tokens can go up in price) and is no longer pure altruism.

Programmable benefits. Blockchain allows to moderate the effect of “superstar economy” of Web2, where very few keep everything. 90% of the creative work is collaborative, and the new dynamics allow scheduling the distribution of royalties to separate Ethereum accounts (and other cryptocurrencies) much more easily.

Property. Web3 enables groups of creatives directly to be the owners of the platform where they develop their products. “Decentralized Autonomous Organizations” (DAOs) or other forms of collective organization make it possible to bypass the dominant platforms that dictate the rules of the game. Dixon says that the first DAOs came out of the field of decentralized finance (DeFi) and that now comes the turn of the creative economy, with projects like “Friends With Benefits” (FWB), a group of collaborators that started their relationship on Discord and then grew up in the field of decentralized creative economy.

An alternative measure of how fast changes are occurring is to notice how expanding trends find compelling detractors almost immediately. The traditional “Gartner cycle” that describes for each technology or trend a stage of growth, bubble, explosion, fall, valley of frustration and then a period of consolidated growth that occurred with electronic commerce, for example, in well-differentiated phases , now it occurs immediately, or even simultaneously.

When the media have not yet finished publishing explanatory notes on the Web3 boom that many anticipate, Figures like Elon Musk or former Twitter CEO Jack Dorsey have already come out publicly to relativize these predictions. The arguments? On the one hand, lack of real impact (for now). On the other, not to “eat the curve” of the democratization of property in a field where those who are making fortunes today are the venture capital funds (VC) and not the creative ones. In fact, the concentration numbers in the crypto world are currently similar to Web2. Musk said publicly that today Web3 is more of a marketing concept than a reality. And Dorsey assured that the move will end up in the hands of the VC, with special allusions to the firm Andreessen-Horowitz, one of those that leads the pro-Web3 batucada at the narrative level.

Everything is much more uncertain in the creative economy of Latin America. The reports about “economy of passion” in the region in the last year revolved around a central concept: a lot of talent and little monetization. In Argentina, the star entrepreneurship of the pandemic in this sector was Cafecito, created by the 26-year-old programmer Damián Catanzaro. Inspired by projects from the United States and Europe such as Patreon, Ko-fi or Buy Me a Coffee, Cafecito allows you to empathize with content creators through a symbolic donation of the cost of one or more coffees. In dialogue with THE NATION Two months ago, Catanzaro maintained that he still sees decentralization dynamics in the field of creative business as “very green,” and even more so for Latin America.

Meanwhile, the most enthusiastic find new metaphors to consolidate the story of a new economy of creativity in the making. Just as Li Jin speaks of the Renaissance, Dixon draws a parallel with thirteenth-century Venice. What that city had at that time, Dixon argues, “was a high class of merchants, with property and representation in the government, which allowed creative resources to be coordinated in the best possible way. New ideas, concepts and inventions could be combined, organized, scaled and reinvented in Venice, with explosive results”.

DAOs would be, from this point of view, a “new Venice” that allows resources to be organized more efficiently and foster innovation from the bottom up. Part of the axiom of a Web3 solution for every problem or inefficiency of humanity.

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