When Covid-19 hit, many creators turned to YouTube, Instagram and TikTok for help sustaining their businesses and adjusting to new social norms. While the creator economy took a massive hit at the beginning of Covid-19, with an increase in social media usage, a new wave of creators and startups appeared.
The average user’s screen time went up dramatically during the lockdowns to over 13 hours per day, according to Eyesafe Nielsen estimates. DataReportal analysis indicates that as of January 2021 there were 4.66 billion internet users worldwide, an increase of more than 7% from the previous year. Social media users are growing even faster, up by more than 8% since April 2019 to reach 3.81 billion in 2020. The latest data shows that there are 4.48 billion social media users around the world in July 2021, equal to almost 57% of the total global population.
The increase in internet time meant an explosion in the number of new influencers during the Covid-19 pandemic. Increased interest and guidance on health, nutrition, beauty, fashion and gaming led to a sudden leap in influencer profiles. According to the estimate, there was a four to five times rise in influencer marketing, with particularly impressive action during the holidays. According to another study, 78% of marketing leaders employed influencer marketing in 2020, with around 13% of them taking to influencer activity for the first time last year. According to Influencer Marketing Hub data, the sphere has grown by US$800 million with the addition of just 31 influencer-startups since October 2020.
Since the beginning of 2021, there has been a boom in the world of non-fungible tokens (NFT). The amount of transactions has propelled the NFT market into the billions of dollars, and the most expensive work pulled in US$69 million.
Now the total value of NFT-based crypto art is worth over US$1 billion, according to CryptoArt, which tracks the largest platforms dedicated to art sales.
Social tokens go mainstream
In 2020, Covid-19 forced artists, brands and other creative industries to rethink their monetization and fan engagement strategies. Many have turned to virtual meetings and live broadcasts. Others have experimented with platforms like Patreon or tried to double the monetization of their YouTube and Twitch accounts. But some went further and created their own cryptocurrencies — in the form of social tokens. They are the ones who have made the leap from the crypto community to the consumer audience.
Creators can use social tokens to unlock monetization opportunities and create a tremendous amount of value for followers. Social tokens are created by individuals or communities. They can be used for practically any purpose. As the creator market develops, the opportunities for social tokens will only increase.
Regulators have seen the rise of decentralized finance (DeFi) as a threat to the traditional financial system. The main challenge for DeFi when they emerged was the ability to become an alternative to the banking sector with strong regulation and control.
In the roughly 18 months since the emergence of DeFi at scale, approximately US$80 billion of capital has been contributed to DeFi protocols. At the beginning of 2020, the total capitalization of decentralized finance projects stood at $1.5 billion, and in October 2021 it reached US$148 billion.
The attraction of DeFi lies in the democracy of the system, lack of regulation and “manual” decision-making. Other reasons for the growing popularity of decentralized financial projects are anonymity, the speed of transactions that take seconds as opposed to hours or days of waiting in a centralized system, and the lack of dependence on various corporate and government adverse events.
Given the growing popularity of DeFi projects, lending and deposits will move into this area over time. Retail customers are already leaving banks as DeFi offers savings rates that are significantly higher. However, such projects can become not only an alternative but also an addition to banking services.
During the outbreak of the coronavirus pandemic, decentralized finance could be key to rebuilding a financial system that has been hit hard by Covid-19.
Main challenges for creators
The challenges of 2020 have given impetus to new ideas, formats and narratives. The difficult times have become a catalyst for creativity.
But what are the main challenges for creators? Below are the top problems and values for the creator when the problem is solved with blockchain and decentralized solutions:
- Artwork ownership provenance and authentication
Managing the “blockchain air gap” between the blockchain listing and the physical artwork.
- Greater value for creators
With blockchain, authors can publish work and monetize it without having to pay intermediaries.
- Reducing counterfeiting
Blockchain can give branded items a digital identity and act as a passport. The ledger will display all previous owners and transactions to verify item authenticity and reduce the proliferation of counterfeit items.
- Pricing of creative works and value derived
Ability to validate all transactions for creative work and a decentralized place to store and publish work
- Real ownership of a digital asset
Blockchain-based digital asset ownership allows users to gain a share in the ownership and exert control over their digital assets (e.g. in a game).
When put together, Web 3.0 technologies like blockchain, decentralization, artificial intelligence and edge computing could have an even greater impact on the creator economy over the next 10 years.
What does the future hold for the creator economy?
The hype around NFTs is most likely temporary, and the system itself won’t change until the decentralized platforms are fully operational and used.
Many experts and futurists are waiting for the merger of two worlds: online and on-chain. In essence, this is the creation of a metaverse with game tokens. There’s a definite market demand for creating digital worlds where you can use, sell or trade your own digital assets. The future will belong to tokenized artifacts that will be used in decentralized systems. Which in turn will lead to the creation of another ecosystem of creators.
- Social tokens
Taking into account all the criteria outlined above, social tokens have a great chance of success in the future. For creators, this means that through uniting the community can create social tokens. Perhaps in the future, we will see social tokens that are connected to the decentralized finance (DeFi) community as collateral for large or small lending.
Decentralized finance looks like the financial alternative of the future. In the DeFi sector, banks are no longer needed and such barriers do not exist. Anyone can contribute to the decentralized liquidity pool. Moreover, even the developers of their platforms cannot restrict certain groups of people from DeFi, which creates certain risks, but at the same time ensures equality for all users.
- Creator protocols
The emergence of specialized creator protocols allows creators to tokenize and monetize their content and digital assets. Global cataclysms and pandemics such as Covid-19 will continue to affect the creator economy. Given the refusals of classic systems, economic crises and the lack of offline, people will go online more and more deeply with many opportunities to express themselves as creators.