Three reasons why NFTs offer creators better economics

In his 2008 classic "1000 True Fans," Kevin Kelly predicted that the Internet would change the economics of creative activity: To be a successful creator, you don't need millions, you don't need to count Millions of dollars or millions of customers, millions of customers or millions of fans. To make a living as a craftsman, photographer, musician, designer, writer, animator, app developer, entrepreneur or inventor, all you need is thousands of real fans who are Defined as fans who will buy any of your products, these die-hard fans will drive 200 miles to watch you sing; they will buy hardback, paperback and audio versions of your books; they will buy your next book without even looking at it A figurine; they'll pay for the "best" DVD version of your free YouTube channel; they'll be at your chef's table every month.

Kelly's vision is that the internet is the ultimate matchmaker, enabling 21st century sponsorship, where creators, no matter how niche they may seem, can now discover their true fans, who in turn showcase them through direct financial support enthusiasm, but the Internet took a detour, and centralized social platforms became the primary way for creators and fans to connect, and these platforms harnessed this power to become the new intermediary -- inserting advertisements and algorithmic recommendations between creators and users, while simultaneously Keeping most of the income to yourself, the good news is that the internet is returning to Kelly's vision.

For example, many of the bottom-tier top writers earn far more than they do in paid jobs, and the economic benefits of low acquisition rates coupled with rabid fans are astonishing, and in the substack, 1,000 newsletter subscribers per With monthly payments of $10, and annual payments of $100,000+, crypto, especially NFTs (non-fungible tokens), can accelerate the trend of creators making money directly with their fans. Social platforms will continue to play a role in building audiences (though these may also be replaced by better decentralized alternatives), but creators can increasingly rely on other methods.

NFTS are blockchain-based records that uniquely represent pieces of media, which can be anything digital, including art, video, music, gifs, games, text, memes, and code. NFTS contains highly credible documentation about its history and origins, and can attach code to do almost anything a programmer can dream of (a popular feature is code that ensures the original creator gets royalties from secondary sales), NFTS's Security technology also enables Bitcoin to be owned by hundreds of millions of people and represent hundreds of billions of dollars in value. NFTS have been getting a lot of attention lately due to high sales, with NFT sales exceeding $300 million in the past 30 days. Crypto has a history of ups and downs, and it is likely that NFTs will have their own ups and downs. There are three important reasons why NFTs can provide better economics for creators.

The first is to eliminate rent-seeking intermediaries. The logic of blockchain is that once you buy an NFT, it's completely under your control, just like you buy books or sneakers in the real world, NFT platforms and marketplaces exist and will continue to exist, but they are charging Aspects will be limited because blockchain-based ownership transfers power back to creators and users, you can shop around and force the marketplace to earn fees. (Note that lowering brokerage fees may have a multiplier effect on the creator's disposable income. For example, if your income is $100,000 and your costs are $80,000, deducting a 50% commission rate will increase your income To $200,000, 6x your disposable income, from $200,000 to $120,000.)

The second way NFTs change creator economics is to support fine-grained price tiering. In an ad-based model, where revenue is more or less uniformly generated regardless of the fan's enthusiasm level, NFTs allow creators to "screen" the most passionate users by offering special items at higher prices, but NFTs are more expensive than NFTs. Non-crypto products go further, as they are easily segmented into a series of descending pricing tiers, with top NBA shooters ranging from $100,000 to a few dollars. Bitcoin fans buy as much as you want, up to 8 decimal points, depending on how passionate you are. The granularity of crypto allows creators to capture a larger area under the demand curve.

The third and most important way is to make the user the owner, thereby reducing the cost of customer acquisition to near zero. Open any technical S-1 file and you will see huge user, customer acquisition costs, usually online advertising or salespeople. In contrast, the total market capitalization of crypto has grown to over $1 trillion with little to no marketing spending, Bitcoin and Ethereum have no organizational backing, let alone marketing budgets, but are backed by tens of millions. People use, own and love. The highest-grossing NFT project to date, NBATopShot, has generated $200 million in total sales in the past month while spending very little on marketing, and the reason it has been able to grow so efficiently is because users feel like masters - - They have their own skins in the game. This is true peer-to-peer marketing, driven by community, excitement, and ownership.

NFTS are still in their early stages and will continue to evolve, and their utility will increase as digital experiences are built around them (including marketplaces, social networks, displays, games, and virtual worlds), with the potential for other consumer-facing cryptos to emerge Products, paired with NFTs. Modern video games like Fortnite contain complex economies, mixing fungible tokens like V-Bucks with NFTs and virtual goods like skins. At some point, every internet community may have its own micro-economy, including NFTs and fungible tokens that users can use, own, and collect, and the true fan argument is built on the internet’s original ideals: users and creators Participants connect globally, unencumbered by intermediaries, sharing ideas and economic advantages. Existing social media platforms sidestep this vision by locking creators into a bundle of distribution and monetization, challenging them in two ways: take away users, or take money. Crypto and NFTs give us a new way to make money.

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