I’ve been writing about consumer startups and tech for several years, and reader feedback and discussion have been one of the most rewarding aspects of sharing my thoughts publicly. I wanted to provide a way for newsletter readers to deepen their engagement. One of my interest areas is around how crypto can empower creators and communities, and there’s no better to learn than by actually living that thesis.

By minting this free NFT and subscribing to Li’s Newsletter Insiders, you’ll get early access to my upcoming two-part blog post, 24 hours before it drops to the public. Down the line, there’s also potential for other perks like live discussions and AMAs (based on feedback from the NFT holder community).

Thanks for following along!

-Li

NFT art by Annie Zhao

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By Li Jin and Katie Parrott

One of the most powerful narratives surrounding web3 is that it is a movement toward a better, fairer internet. Specifically, web3 proponents envision an internet in which users can wrest back power from a small number of extractive, centralized institutions, and in which everyone with an internet connection can participate on a level playing field.

But web2 started with a similar promise of empowering individual creators and removing intermediaries — a promise left unfulfilled. Now, standing at the precipice of a new era of the internet, we should ask ourselves: Is web3 actually democratizing opportunity? And if not, how can we better design platforms and governance systems to promote fairness?

The social and political philosopher John Rawls’ thought experiment known as the “veil of ignorance,” proposed in his influential 1971 work A Theory of Justice, provides a useful framework for these questions. When creating the foundations for an ideal society, Rawls contends, we should imagine that we do not know where we ourselves would fall within it — that is, we should adopt a veil of ignorance. A just society is one “that if you knew everything about it, you’d be willing to enter it in a random place.” Rawls adds:

Among the essential features of this situation is that no one knows his place in society, his class position or social status, nor does anyone know his fortune in the distribution of natural assets and abilities, his intelligence, strength, and the like. I shall even assume that the parties do not know their conceptions of the good or their special psychological propensities.

Rawls’ thought experiment is particularly relevant now because we are standing at precisely the kind of inflection point that the veil of ignorance imagines. Web3 presents the opportunity to build an entirely new internet — indeed, entire new economies — from scratch. The question then becomes: What kind of internet should we be creating?

Some might say that web3 is young, and these issues will simply work themselves out over time. But questions about impacts and externalities were left too late in the design of web2, with consequences ranging from election manipulation to widespread vaccine misinformation. Some indicators show that early design choices in web3 are replicating or compounding the inequalities of web2 and the real world.

If we want web3 to make good on the promise that it can materially improve the situations of everyone within the ecosystem, and not just a handful of people at the top, we need to design it according to principles that will make that happen.

How Do We Decide What’s Fair?

Philosophers and thinkers have been debating for centuries how best to allocate resources among participants in a society. The body of thought devoted to answering these questions is known as “distributive justice,” and there are varying schools of thought within the discipline:

• Strict egalitarians argue that the only just system is one in which resources are distributed absolutely equally — in other words, everyone should have the same amount of material goods. The principle is rooted in the belief that everyone is morally equal, and thus deserves to have equal access to materials and services.

• Luck egalitarians argue that what’s important is equality of starting position, and that any inequalities that emerge after that point are justified by differences in merit.

• Libertarians argue that individual freedom should be the sole consideration, and that any effort to redistribute resources infringes on that freedom.

• Utilitarians argue that the most just system is the one that maximizes the sum of total happiness and well-being of all participants. Under utilitarianism, redistribution of wealth would be desirable because each marginal dollar would do more to raise the well-being of a poor person than a wealthy person.

Common among these theories of justice is a tension between two equally important yet often opposing values: freedom and equality. A society in which all actors are completely free is likely to result in a significant amount of inequality, since individuals differ in their motivation to pursue wealth and will behave in ways that advance their own interests. Conversely, a society that is completely equal inhibits freedom, since individuals cannot behave in any way that causes them to be unequal to others — even if that unequal outcome is “earned” through hard work or skill.

Using veil-of-ignorance reasoning, Rawls introduced his own theory of distributive justice, known as “justice as fairness.” It has two parts: the greatest equal liberty principle and the difference principle. The greatest equal liberty principle affords all citizens equal rights and liberties to the fullest extent that’s compatible with others also having those liberties. Justice requires equal rights for every person.

The difference principle says that any social or economic inequalities that do exist in society should meet two conditions. First, they must be “attached to offices and positions open to all under conditions of fair equality and opportunity.” Social positions, such as jobs, should be open to everyone and allocated by merit. In other words, a person’s prospects for success should reflect their level of talent and willingness to use it, not their social class or background. And second, any inequality that does exist should maximize the benefit of the least well off. This is a profound principle. Under this principle, it’s acceptable that doctors earn more than janitors, because that compensation differential incentivizes doctors to pursue their careers and ensures that janitors (and everyone else) will receive quality care if they fall ill.

Rawls’ theory is nuanced, but in short, it’s unique in how it resolves the central tension between the competing demands of freedom and equality. By requiring that inequalities benefit the least advantaged, Rawls builds in a natural corrective to the rampant inequality that would otherwise emerge in a system that privileges freedom above all else.

This balance between freedom and equality makes Rawls’ theory compelling as a philosophical framework for the internet. It leaves space for builders to be rewarded for their contributions, which is necessary to foster incentives for smart, ambitious people to build in the ecosystem. At the same time, it places a burden on those builders — and the ecosystem as a whole — to build in a way that creates opportunity for less-advantaged participants.

Evaluating the Current Internet Against Justice as Fairness

How well does the current internet abide by Rawls’ principles? In many ways, the web2 internet has expanded and enhanced opportunity for a broad set of people and exists in closer accordance to Rawls’ difference principle than the pre-internet world. Before the internet, access to participation in various industries was limited by a handful of gatekeepers, ranging from movie studios to music labels. The internet and social media platforms made it possible for anyone to participate in content creation and distribution, and therefore enabled more creators to succeed.

But you don’t have to look far for evidence that the web2 internet falls short of the mark in other ways. Consider just a few examples of how web2 platforms have inhibited equality and violate the difference principle: Gig economy platforms bring in billions of dollars in revenue, while the frontline workers who deliver their services earn poverty wages and are shut out of decisions that impact their lives. Social media companies and media platforms earn billions of dollars in ad revenue from algorithmic feeds that elevate misinformation and damage vulnerable communities. Platforms’ creator funds typically reward creators with the most views and engagement, leading to the concentration of income among those who already have ample sources of revenue while failing to broaden access for less-well-off aspiring creators. And we’ve written before about how the internet’s original sin of not enabling payments led to the extractive, advertising-based business models that define the web2 economy today.

But it’s not just web2 platforms that fail to reach Rawls’ standard of justice. Web3 in its current form is also exacerbating inequalities. Web3 projects commonly issue crypto tokens as digital representations of value. Early versions of token distributions have led to unsustainable dynamics wherein speculators are rewarded instead of those who are adding consistent value to networks through actual usage. Some play-to-earn games have implemented dual-token systems in which users earn income but not governance power, creating the risk of replicating the dynamics of the current economy in which workers earn salary but not equity, compounding wealth inequality. Business writer Evan Armstrong points to strong parallels between some current NFT projects and multi-level marketing schemes, in which later arrivals to the ecosystem are structurally unable to achieve the same level of success as early adopters due to system design.

How to Ensure Justice as Fairness in Web3

We’ve seen how both the web2 internet and early iterations of web3 fall short of ensuring a free, fair playing field that benefits the least advantaged. So what would an internet that meets Rawls’ standards look like? Some general anti-principles start to come into focus:

• Don’t build a system that only benefits the wealthy, because what if you’re poor?

• Don’t build a system that disproportionately favors early adopters, because what if you’re not embedded in networks that give you early access to knowledge?

• Don’t build a system that demands extreme technological savvy to succeed, because what if you don’t have the aptitude or resources to learn those skills?

Using these anti-principles as guides, builders and participants of the web3 ecosystem can do three things to ensure it aligns with Rawls’ ideals of liberty, equality, and the difference principle: First, promote self-determination and agency. Second, reward participation, not just capital. And third, incorporate initiatives that benefit the disadvantaged.

Promote self-determination and agency.

One of the flagship principles of web3 is the idea of self-determination: Unlike in web2 platforms, with a cadre of founders, executives, and shareholders holding all the power, web3 communities will be controlled by their members. This would be consistent with economist Albert O. Hirschman’s “Exit-Voice-Loyalty” model, which describes the choices individuals have when confronted with dissatisfactory situations in organizations and states. Ideally, on web3 platforms, users can voice concerns to try to change their situation; exit to new platforms; or wait, out of loyalty, for the situation to resolve.

But the reality today is more complex. Early governance structures have largely instituted token-weighted voting, with the result being plutocracies that are not all that different from the boardrooms they’re meant to be a corrective to. And the problem with plutocracy, whether it happens in a boardroom or a DAO Discord channel, is that the people holding the power are likely to look out for their own interests.

As a first step in aligning web3’s future with Rawls’ principles of justice, participants and builders of the web3 ecosystem need to push for democratic systems of governance that give a voice to all its members, not just a select few. Everyone should be equally enfranchised in the systems in which they participate.

There are additional systems of governance that can combat plutocracy, such as:

• Reputation-based governance: According greater governance power to those with higher reputational value.

• Delegation: Enabling community members to nominate others to vote on their behalf.

• Pods/subDAOs: Smaller groups within an organization whose scope of governance can be constrained to their missions.

An example of a project purposefully diversifying its member base is Mirror’s airdrop of the $WRITE token, which is needed to register a custom subdomain on the platform — and, in the future, to participate in governance. To broaden the base of users who would be able to influence governance, tokens were distributed according to an algorithm designed to maximize diverse social clusters. According to Mirror, this airdrop “further democratizes the selection process and broadens the criteria for entry…the expansion of the Mirror community will be determined by those who have been most integral in shaping it thus far.”

Beyond the importance of voice — the ability for people to change a system from within through governance — participants also need a viable path to exit. Web2 platforms coerce user loyalty through network effects and closed data, and exiting a platform leaves creators without access to their audiences or content. Web3 affords the opportunity to build systems that foster user agency and self-determination through true digital ownership, open data, and networks that are built atop open-source software.

Reward participation, not just capital.

A core philosophical tenet of web3 is that there are more ways to provide value to an ecosystem than through capital — and furthermore, that value should be able to be earned, not just purchased. This is a radical departure from the existing structure, where those with capital earn more through investments than people can earn through work — resulting in a widening wealth gap over time.

Distribution of ownership to participants is also a major shift away from how incumbent platforms are built, wherein meaningful ownership accrues to employees and investors but excludes users whose content and contributions make those platforms valuable.

An important step in aligning web3 with the principles of justice as fairness is to ensure that everyone is on an equal footing and can attain positions of power or compensation through their own merit and contributions. The reality so far has been that those in the right knowledge networks can compound their wealth through strategies like sybil farming (creating multiple accounts) to receive additional token airdrops. And while early distributions of tokens often perversely incentivized short-term mercenary behavior — like participating in yield farms then exiting them days later in search of higher yields — there is an opportunity to iterate and improve the process to support networks’ long-term retention and sustainability. One way is by making it possible to earn ownership through ongoing participation in networks, not just capital investment. Projects that are working to expand access to ownership through active contribution include RabbitHole, Layer3, Gitcoin, BanklessDAO, and FWB.

Incorporate initiatives that benefit the disadvantaged.

The difference principle is grounded in the idea that inequality, per se, is not a bad thing. With fair equality of opportunity as a prerequisite, inequality remains an inevitable outcome of people’s natural abilities and level of desire and effort to earn money. But when inequalities do arise, do those arrangements benefit those less privileged in society?

This is a challenging principle to apply in the context of technology. But consider this thought exercise: Do the current social networking feed algorithms promote content that maximizes the benefit to the least well off? For platform creator funds that give payments to content creators, predicated on views and engagement: Do such inequalities in payouts maximize the benefit to the least well off among their users? The answer is likely no. While top creators have a plethora of ways to monetize and can sustain their output regardless of creator fund payouts, the least well off may not even participate in content creation due to financial constraints.

The difference principle will be particularly important to the democratization of web3, since participants will enter the ecosystem at different times with a wide variety of backgrounds, incomes, and technological fluency and access. There are already many examples of projects leveraging crypto to maximize the well-being of the least well off. For example, SuperHi, a for-profit creative education platform that is planning to decentralize ownership to its members and instructors, tested a basic income program with the goal of broadening access to creative careers. Projects like Proof of Humanity and ImpactMarket seek to use blockchain technology as a foundation to provide basic income to those in need. Communities like LaborDAO are leveraging building blocks to build worker power, while others like she256, We3, and Komorebi Collective are focused on increasing diversity in the blockchain space.

Besides projects that have social good as an explicit mission, all web3 networks should be incentivized to adhere to the difference principle and maximize benefit to the least well off, since that approach maximizes attractiveness to new participants, propelling further network effects. A just network is one in which participants would be willing to enter at any time, at any position, with any level of tokens.

A Fair, Just Internet Is Possible

Web3 offers the opportunity for a meaningful course correction — a chance to reimagine the internet and build new platforms from first principles. But in order to do that, we need to agree on what those principles should be, and why. Rawls’ principles of justice provide a useful starting point. Without full knowledge of where our positions will be, our aim should be to design new systems rooted in fairness and consideration for all.

Li Jin is a cofounder and General Partner of Variant, a venture capital firm focused on investing in web3 and the ownership economy.

Katie Parrott is a writer and editor at Every, a media company publishing essays and analysis focusing on business.

If you’re interested in working in web3, check out the Variant Talent Network to find opportunities at our portfolio companies, or openings at Variant Fund.

Nearly two years ago, I published “The Passion Economy and the Future of Work,” which laid out a vision for online work that was informed by and a reaction to the challenges of the gig economy. While the gig economy represented a major development in the evolution of online-enabled work—removing geographical constraints for work opportunities and offering greater flexibility—it also entailed risks that were disproportionately borne by workers: reduction of leverage, income instability, lack of rights and protections accorded to employees, and lack of autonomy. Through powerful network effects and ownership of data on customers and reputation, gig platforms serve as gatekeepers to their workers being able to access income. Some scholars argue that the gig economy—which encompasses 55 million Americans or 34% of the workforce—has eroded a century’s worth of hard-won worker protections.

The passion economy was envisioned as an evolution and alternative to the gig economy mode of online work, entailing the playbook of building an online audience, cultivating direct user relationships, and monetizing skills/knowledge, content, and other individualized services. (Note that while the passion economy is broader than the creator economy insofar as income is generated from offering a wider range of individualized services and products—not only from content creation—they are overlapping: passion economy workers leverage the tools of the creator economy in order to build an audience that can be monetized in a range of ways. Therefore, I will use the terms interchangeably in this post.)

The appeal and promise of the passion economy are readily apparent: creators can reach a global audience with just an internet connection and earn a living with only 1,000 or 100 true fans. Some creators today are earning millions of dollars per year through engaging in brand deals, selling digital content, creating courses, and more. These online micro-entrepreneurs now number over 50 million in the US. At the same time, excitement from the tech industry around the creator/passion economy is at a fever pitch: nearly every large social media platform is rolling out new funds, programs, and features to attract and retain creators. And a multitude of new startups seeks to serve creators and make it easier for them to earn a living.

But just as the gig economy mode of work brought about negative consequences, strong parallels are emerging between the gig economy and creator economy, rooted in the commoditization of work and erosion of worker leverage. For online creators today, a handful of large social media platforms serve as gatekeepers for finding and connecting with audiences. While these platforms provide valuable services to creators, including the tools for content creation, hosting, and discovery, there is an immense power imbalance between platforms and creators, who are reliant on platforms for distribution.

As we’ve traveled up the adoption S-curve, social media platforms have shifted from supporting creator individuality to commoditizing creators in order to maintain their grasp on user attention, a necessary ingredient for advertising-based business models. This dynamic undermines creator success and independence, making the creator economy just as corrosive for online workers as the gig economy.

Numerous startups are attempting to help creators set up their standalone, owned properties online; earn more from fewer, truer fans; and lessen their dependence on social media platforms. But unless we radically change the foundation of the creator economy—how creators find and connect to a community in the first place—these solutions are incremental at best, and don’t create a fundamental unlock for the issues plaguing the current creator economy.

Only by understanding how the creator economy is evolving and its risks can we be more thoughtful in moving it forward. My goal with this blog post is to help the tech community amplify their positive impact; help creators understand and take action to improve their situations; and prompt founders to balance the needs of all stakeholders in building platforms that influence the livelihoods of millions of users.

The new shape of capital

In a world where work is increasingly mediated by platforms, the relationship between workers and capital owners evolves. Historically, capital ownership revolved around physical capital, such as manufacturing equipment, raw materials, and buildings. During the Industrial Revolution, workers migrated en masse to cities to seek work at various centers of production, with the proportion of the population living in cities jumping from 17% to 72% between 1801 and 1891 in England and Wales. Since the late 20th century, capital has shifted and abstracted from production to finance, with financial services accounting for an increasing share of national income relative to other non-financial sectors.

Today, with the shift to platform-mediated work, capital is evolving once more, to ownership of data that enables productivity.

Gig economy platforms’ lock-in isn’t predicated on controlling physical capital or manufacturing equipment. Instead, their capital is data that they gather and control—locations of every network participant, the record of all events and interactions, reputation and feedback scores, and market-clearing prices—all of which strengthens their network effects.

Similarly, the creator economy is marked by the rise of a small number of firms that have accumulated capital and effectively control the means of production and distribution. While online platforms have unlocked the traditional gatekeepers of the creative world, they also serve as the access chokepoints of a new type of capital. The dominant centralized creator platforms own the data, social graphs, and end user relationships—all of which creators need in order to access audiences and income. Furthermore, in the majority of cases, this type of capital cannot be easily ported over to external, creator-owned properties. In this way, creator labor is controlled and commoditized by platforms.

Parallel problems in the gig and creator economies

Against this backdrop of creator platforms controlling the means of production, various risks are arising:

Over-supply and competition between creators

As in the gig economy, the creator economy is marked by the incentivization of over-supply: there is a multitude of creators willing to create content, and algorithmic feeds serve up a steady stream of alternatives. As a creator, one’s content is commoditized and substitutable with rival offerings. When there is one monolithic feed built with an algorithm that uses a preferential attachment model, a small set of creators rise to the top, and all creators compete with each other to capture the attention of audiences. The result is a zero-sum competition between creators that results in over-supply and devaluation of content. Though creators are trying to implement the playbook of leveraging social media platforms to build an audience before porting them elsewhere, the movement of one's audience is a non-trivial process that platforms are resistant to facilitating.

A unique element that impedes organization and activism among creators is the intrinsic motivation behind online creative work: creating content often has the connotation of being a hobby or labor of love, which causes many new aspiring creators to join platforms and start creating content for free, without any expectation of compensation, benefits, or protections. This makes creative labor uniquely at risk of being undervalued and exploited.

Exploitation of creator labor

While unpaid internships are still legal in many cases in the US, they are increasingly considered exploitative. The Fair Labor Standards Act of 1938 stipulates that any employee of a for-profit company must be paid for their work. In contrast, creators are effectively large-scale unpaid workforces, uploading massive amounts of content that platforms have converted into billions of dollars of revenue and trillions of dollars of equity value. Sometimes, creators receive a share of the revenue that platforms earn from their content, but lack enfranchisement in how pay is determined or how monetization rules and thresholds are set. This is reminiscent of the compensation practices in the gig economy: ridesharing and delivery platforms shift their costs and risks onto drivers, who go unpaid when there are no rides or orders, resulting in effective earnings that are below minimum wage.

Insecurity and volatility

Creator labor entails the same job and income insecurity as gig work. In the gig work world, clients can end contracts at any time, and providers can be swapped out easily. The same can be said for creators: if users are not satisfied with the content or offering, another creator is just a swipe away. Underscoring this job insecurity is a black-box algorithm that drives most social media discovery feeds: product design can change at a moment’s notice to favor different types of content, diverting potential prospective followers elsewhere. This insecurity and volatility is a direct contributor to creator burnout.

In a New York Times article about creator burnout, a TikTok creator in Toronto says, “It almost feels like I’m getting a taste of celebrity, but it’s never consistent and as soon as you get it, it’s gone and you’re constantly trying to get it back.”

Last summer, creators’ job insecurity came into focus during the shutdown of Mixer and, later, the threatened ban of TikTok. Creators exhorted followers to follow their other social media accounts, and third-party products arose to let creators download a copy of their own content or follower lists. De-platforming—whether by a platform or by the state—means that creators can easily lose access to their audiences and past creations. In the gig economy, the parallel occurs when platforms deactivate worker accounts (for a variety of reasons), and workers lose their ability to earn income, with no recourse for reaching previous customers.

Intermediation and taxation

Because creator platforms often own the relationship between creators and fans, they are also able to intermediate the economic relationship, with compensation determined by the platform. Just as gig workers are unable to negotiate their pay with platforms, creators are similarly price takers, with platforms deciding revenue share rates, monetization criteria, creator fund payouts, and other elements that drive creator income. Unilateral and often opaque monetization policies have resulted in widespread creator mistrust. A WIRED article about the TikTok Creator Fund noted, “Three creators who spoke with WIRED say they noticed their views drop after they joined the fund, and they wondered whether TikTok was intentionally limiting their reach to cap how much they could earn. Two of them have since opted out of the program entirely.”

There can also be intermediation by other creators: because of the role that follower graphs and reputation play in surfacing content, influence and monetization flow to those who already have large audiences. The associated risks include lack of attribution to smaller creators for trends or withholding of earnings by intermediaries purporting to represent creators.

How do we build a healthier creator economy?

In the face of increasingly commoditized creator labor, a few principles should be upheld to realize the vision of a better creator economy:

1. Ownership and portability

Ownership comes in different forms: creators are increasingly prioritizing owning a neutral channel of communication with their audiences (via email lists, RSS feed subscribers) and owning the direct monetization relationship with end users (Stripe account). Creators are also setting up their own websites, potentially self-hosted with their owned domains, as a way to build more direct fan relationships. Creator and user ownership of data, relationships, content, identities, and interactions would weaken platforms’ lock-in and entail a shift in power from platforms to their participants, enabling them to operate outside of a handful of platforms.

But we can go even further in enabling creators and users to control their own destiny: software itself can become community-owned and operated. In crypto networks, that can entail a distribution of tokens that confers governance rights; while in Web2 platforms, user ownership can take the form of engaging the community as investors and advisors (potentially enabled through tools like Fairmint, Republic, Cabal, or Stonks). For companies, engaging creators as shareholders can give creators more incentive to contribute to a company that they co-own, offers opportunities for creators to shape decisions that help the business succeed, and creates incentive alignment between the platform and its participants.

On content itself: while most Web2 platforms don’t claim ownership of users’ content, they grant the platform the right to use, distribute, and modify their work. Instagram’s Terms of Use states, “you hereby grant to us a non-exclusive, royalty-free, transferable, sub-licensable, worldwide license to host, use, distribute, modify, run, copy, publicly perform or display, translate, and create derivative works of your content.” In other words, users are essentially giving control to the platform as to how, where, when and under what circumstances the image can be reused—a loss of ownership and control that leads to their content being devalued and commoditized.

Fred Wilson has written about ownership on his blog:

“[I]t is important to me that I control the platform that I publish on. I use the open-source WordPress software for my content management system and run that on a hosted server. I use my own domain, AVC.com, to locate my writings on the Internet. That has served me well. No matter how horrible I become, nobody is going to take me down.

But we can go even further down this path of controlling our destiny. We can decentralize the entire thing; the content management system, the storage of the content, the domain name system.”

2. Credibly neutral creator mechanisms

Vitalik Buterin wrote about the importance of building mechanisms that are credibly neutral, in which he described, “a mechanism is credibly neutral if just by looking at the mechanism’s design, it is easy to see that the mechanism does not discriminate for or against any specific people.” The four elements of credible neutrality are: (1) Don’t write specific people or specific outcomes into the mechanism, (2) Open source and publicly verifiable execution, (3) Keep it simple, and (4) Don’t change it too often.

Another way to think about credible neutrality is the idea of the “veil of ignorance.” In this thought experiment, citizens making choices about their society are asked to make them from behind a "veil of ignorance," without knowing their gender, race, abilities, tastes, wealth, or position in society. Correspondingly, applying the veil of ignorance to creator platforms allows us to test policies, monetization mechanisms, funds, and product mechanics for fairness and impartiality. For instance, would we design the TikTok Creator Fund as-is, if we were situated behind the veil of ignorance with no knowledge of which particular creator we would be on the platform?

It’s easy to see how today’s Web2 platforms lack credible neutrality and would fail veil-of-ignorance reasoning: algorithms that decide which content gets shown aren’t publicly verifiable, and removal of certain creators or content happens arbitrarily. Facebook’s Oversight Board is an imperfect attempt at credible neutrality, comprised of 20 “independent” members (that Facebook selected) who review decisions about content moderation. Recently, with the ban of Donald Trump, the Board argued that indefinite suspension was an arbitrary punishment that was not supported by the company’s stated policies: “It is not permissible for Facebook to keep a user off the platform for an undefined period, with no criteria for when or whether the account will be restored.” It went on to say, “In applying a vague, standardless penalty and then referring this case to the Board to resolve, Facebook seeks to avoid its responsibilities.” More broadly, in response to the limited powers and questionable neutrality of the Facebook Oversight Board, an ad-hoc group of activists, researchers, and academics convened a “Real Facebook Oversight Board” to push for more accountability.

In contrast, the Mirror $WRITE RACE is a weekly open voting process in which the existing users of Mirror, a community-owned and operated publishing platform, decide on which new members to induct. The team wrote, “Are we, the Mirror team, the sole gatekeepers of the platform? Is that at all in line with our values? Do we even have time for that? The answer is no, no and no.” Though prospective members may not like the results, the process is open, neutral, and publicly verifiable.

3. Creator-friendly business models

Business models define incentives, and incentives drive the content that users create. Offering more direct monetization models (where users pay creators) can encourage creators to align their content with what end users value, versus creating content that maximizes watch time or virality. Other monetization models can foster a creator middle class, for instance, allowing creators to capitalize on superfans to capture more of the area underneath their demand curve, or to earn more passive income (e.g. “create now, earn later,”), thus reducing the active effort needed to maintain financial success and mitigating creator burnout.

In addition, platforms should set take rates that are minimally extractive. Bill Gurley outlines the strategy behind platform take rates in his post: “In order for your platform to be the “definitive” place to transact, you want industry leading pricing – which is impossible if your rake is the de facto cause of excessive pricing.” He also outlines an example of Priceline Group enabling participants to bid up their take rate for better placement. This is in contrast to most creator platforms today, which set take rates unilaterally, and sometimes regressively (more successful creators pay less, e.g. on Twitch).

As outlined above, turning stakeholders into shareholders, as in creator- and user-owned platforms, can better align the interests of platforms with creators. Ownership can confer both economic and governance rights, meaning that creators and users decide on product strategy, leadership, and what to do with profits.

4. Creator interdependence and solidarity

Today’s creator economy, as it exists on centralized social platforms, pits creators in competition with each other in a constant battle for fleeting attention. Going forward, my hope is that we can build platforms and mechanisms that incentivize mutual support between creators, where one creator’s success does not come at the expense of another’s.

Creator DAOs (decentralized autonomous organizations) are a way to turn a group of people with a shared mission (e.g. creating media about a certain topic) into a decentralized army with a treasury and governance tools that harness members’ collective intelligence. Today, we’re seeing lots of experimentation in creator DAOs: members vote on creative projects, co-create content, have all revenue flow to a treasury, and share in ownership (examples include Songcamp’s Elektra or DIRT). Beyond creator DAOs, recent instances of large groups of people pooling together capital in order to buy NFT artwork, e.g. via PartyBid, hints at how people can organize to reach a collective goal. These organizations hold glimpses of what this more cooperative future may look like, and I expect best practices to emerge for how creators can leverage DAOs. Perhaps one element of these DAOs could be Universal Creative Income, funded by the community treasury, in order to broaden access for emerging, diverse creators. In contrast to today’s creator funds offered by social media platforms, the eligibility for funding could be based on independently verifiable data since all user metrics are on-chain.

Note that it’s likely infeasible for existing platforms to adopt the principles above, as doing so would erode their current business models and weaken their network effects. Innovator’s dilemma suggests that new entrants are most likely going to be the ones building with these creator-friendly principles in mind, with new disruptive business models that align with creators’ interests.

Open questions to explore

What channels could exist to institutionalize creator voice?

Strengthening creators’ voice would not only benefit creators, but also help platforms themselves design and implement features with the buy-in of creators. I’m excited to see novel methods of incorporating worker voice into platform governance and decision-making (and balancing creator voice with those of investors who aren’t actively contributing labor). As a glimpse into what this future could look like, DeFi protocols allow token holders to vote on key decisions like the take rate (Uniswap), algorithms (Yearn), and integrations (Compound).

Among Web2 platforms, Twitter’s open call for proposals on how its verification program should work is a step in the right direction: “Calling for public feedback has become an important part of our policy development process because we want to ensure that, as an open service, our rules reflect the voices of the people who use Twitter.”

Another example is Airbnb’s Host Advisory Board, designed to serve as a voice for hosts with Airbnb’s leadership: “They’ll be a formal link between Airbnb hosts and Airbnb leadership, participating in monthly meetings with Airbnb and an official Advisory Board Forum each year to present hosts’ ideas.” However, the opacity with which the initial advisory board was chosen, and whether members are actually representative of the broader host community, has been met with scrutiny in the Airbnb host forum.

How can platforms be designed to mitigate creator anxiety and insecurity?

Product design can have massive implications on creator burnout and anxiety. One common desire among creators is for more transparency on the part of platforms about how the discovery algorithm works and updates to how it is changing. The algorithm serves as a quasi-“manager” for online creative work, continuously influencing and assessing creators, yet is currently opaque. Hunter Walk also wrote a post with ideas for how creator wellness could be built fundamentally into the product, including seasoning of content, rate-limiting posts, and platforms offering paid time off to creators.

As an example of what this could look like, Streamloots, a streamer monetization platform, offers a mental health support program for influencers on its platform.

A fundamental driver of creator anxiety is economic insecurity. To that point, solving for the underlying financial precarity of creators, whether by providing creators with Universal Creative Income or enabling more creator cooperativism e.g. through DAOs, may address the actual root issues underlying creator mental health issues.

What forms of online collective action could emerge?

Creators ought to explore means of collectively expressing their voice, to bring their demands to bear upon platforms and clients. In 2015, 20 of the top 50 Vine creators met with the app’s management team to propose product and monetization changes. Current examples of creators organizing to effect change include TikTok creators going on strike, and FYPM, a “Glassdoor for influencers” that aggregates creator reviews on working experiences with various brands.

How does discovery and distribution work in a post-social media platform world?

Platforms today are double-edged swords for creators: creators rely on them to grow their audience, but also want to be able to reduce their dependence on them over time. Creators can’t forego creating content on social media platforms until they are widely popular and can grow from word-of-mouth. One solution is creator collectives and bundles, where those with larger audiences can boost emerging ones. As an example, Every is a newsletter bundle that offers both distribution and ownership: “We give our writers financial upside in the work they do and the freedom to build their own creative vision, but we also support them with distribution to an audience, editorial support, and an advance on their subscription revenue if they need it.”

In a recent post about creator compensation, I wrote, “In the digital world, user rights are civic rights, and creator rights are worker rights.” The problems emerging in the online creator economy are the latest instantiations of the same broader political economy problems that afflict our society, with widespread worker vulnerability, a hollowed-out middle class, and externalized business risks that are shifted instead to private individuals.

As the economy undergoes a profound shift to platform-mediated work, the conditions around labor are rapidly changing. Creators may be a new class of workers, but the parallels to previous labor movements—including those in the gig economy—are clear. In centuries past, worker rights and worker-friendly company environments didn’t just emerge spontaneously, but were hard-won. Likewise, creator empowerment will be the product of concerted efforts by founders, investors, creators, and the broader tech community to craft structures and platforms that prioritize creator control and ownership.

Thank you to Patrick Rivera, Jesse Walden, Sasha Hudzilin, Lindsey Lee Lugrin, Matt Lockyer, Lila Shroff, Alberto Martínez Guerrero, and Louis Giraux for reviewing drafts.

Further reading

DO NOT SUBSCRIBE HERE subscribe at wheresyoured.at | Ed Zitron | Substack

DO NOT SUBSCRIBE HERE subscribe at wheresyoured.at. Click to read DO NOT SUBSCRIBE HERE subscribe at wheresyoured.at, by Ed Zitron, a Substack publication.

https://ez.substack.com

What the "Creator Economy" Promises-and What It Actually Does

Kyle Chayka writes about how platforms like YouTube, Instagram, and TikTok have embraced the word "creator" to refer to the people who make content on social media.

https://www.newyorker.com

https://www.nytimes.com/2021/06/08/style/creator-burnout-social-media.html

Instagram, YouTube & TikTok Are Burning Out Their Creators. Here's How to Fix That.

Instagram, YouTube & TikTok Are Burning Out Their Creators. Here's How to Fix That. Creator Wellness Will Be A Key Goal of New Products Being a modern creator is, for many, exhausting. The falling ...

https://hunterwalk.medium.com

Uber and Instacart don't represent Silicon Valley. Why we're voting "No" on Prop 22

Today, I'm publishing a letter that I penned with Nate D'Anna, co-founder and co-CEO of Dumpling, about Prop 22 and the status of gig workers. Prop 22 is the California ballot proposition that would exempt app-based transportation and delivery companies from having to provide employee benefits to gig workers.

https://www.lisnewsletter.com

https://li.mirror.xyz/j3WsyvI5LKFKcFc9YK6cwzpU131Gs-N8ynGh3Jkli_g

https://every.to/means-of-creation/apple-is-holding-back-the-creator-economy

The Creator Economy Needs a Middle Class

Right now, the creative economy on platforms like YouTube and Instagram looks a lot like the U.S. economy - there are a few big winners and a lot of people hustling to make a living and barely getting by. But it doesn't have to be like this.

https://hbr.org

In January 2020, essayist Matthew Ball pronounced the metaverse to be the “next great labor platform.” Beyond a portal to entertainment, he envisioned the metaverse as the enabler of an inclusive, high value economy, in which any individual, regardless of location or identity, could participate via virtual labor.

Months later, in the wake of pandemic-induced economic fallout, this prediction quickly materialized. While some jobs moved online, many did not. Particularly impacted were blue-collar workers in emerging economies—local shopkeepers and service workers who watched already unstable income streams dry up. With bills to pay, people turned to new income sources wherever they could find them—including play-to-earn video games.

Play-to-earn is a new category of video games where players can earn rewards such as in-game assets and tokens, which can then be sold for cryptocurrencies and cashed out for local currencies.

In the Filipino town of Cabanatuan City, play-to-earn game Axie Infinity helped hundreds of people put food on the table and complete debt payments. Beyond the promise of reliable income, some found that playing the game to be more enjoyable and lucrative than local minimum-wage jobs.

Unlike previous iterations of online work which centered around real-world value being exchanged through platforms, Axie Infinity was part of a burgeoning ecosystem of virtual worlds in which people earn income, connect, and socialize—entirely online.

Axie Infinity

Based on blockchain technology, Axie Infinity is a decentralized digital pet universe where players battle, breed and trade fantasy creatures called Axies. Players earn yield in the form of fungible tokens called Smooth Love Potions (SLP) by winning battles between Axies.

Founded just three years ago, Axie Infinity has $25M daily marketplace volume, $9B run rate, and over 400k DAUs, as of July 2021. Players across the world are earning between $500-1000 per month playing the game.

For all of the game’s promise, there are barriers to entry: to play Axie Infinity, a player must first purchase a team of three Axies, which are themselves non-fungible tokens (NFTs). In the early days of the game, Axies were affordable for all those wanting to play, but as excitement for the game grew, so did the price of Axies.

Today, purchasing Axies can be prohibitively expensive: a starter team can easily cost upwards of $500. That dynamic threatens to plague virtual worlds with the same structures of inequality that exist offline, with those in greatest need of play-to-earn’s potential being excluded from participating.

That’s where Yield Guild Games (YGG) comes in.

Yield Guild Games

YGG is a gaming guild that purchases and rents teams of Axies to new players who would be otherwise unable to afford the assets necessary to play the game. YGG also provides these players with training and support along the way. While the program is free, Axie revenues earned by the player are shared with their community manager and YGG.

Currently, there is more demand for such scholarships than there are programs to meet it. In response, YGG recently introduced the Sponsor-A-Scholar program, which allows patrons to donate funds to help expand YGG’s fleet of Axies and serve more scholars. Flying Falcon, a pseudonymous benefactor, was the first to contribute to the Sponsor-A-Scholar program, sponsoring a total of 50 players in May 2021.

Universal Creative Income and NFT Fundraising

A study by the World Bank found that people prefer a reciprocal approach to philanthropic donations: in other words, they get something for the money they donate. Since NFTs themselves are viewed as stores of value, NFT auctions can be effective as fundraising mechanisms, encouraging higher interest in bidding.

At the same time that YGG was emerging, Li Jin, founder of Atelier Ventures, began exploring ways of funding the long tail of internet creators, ultimating culminating in an essay proposing that platforms and DAOs enact Universal Creative Income (UCI). Beyond simply calling for UCI, Jin was eager to help fund such a proposal as the one she had envisioned in her essay.

Recognizing the power of NFTs to raise funds for good and garner community support, and on the heels of a successful NFT debut, Jin auctioned a second NFT (co-created with illustrator Annie Zhao) representing her UCI essay. All proceeds, she announced, would be donated to the Sponsor-A-Scholar program by Yield Guild Games.

The auction

On June 19th, Richerd Chan won the NFT auction for 5.6969 ETH, or $12,878.

But the story doesn’t end there.

Following the close of the auction, Richerd proposed that he fractionalize the NFT and sell a part of it to the second-highest bidder, Jason Li (whose bid was 4.866 ETH or $11,000), donating the additional proceeds to the program. Jason generously agreed.

They decided to name the scholarship “Leaping Corgi Scholarship” to honor Li’s love of corgis—animals that are as intelligent as they are adorable.

Richard and Jason’s combined donation of 10.5629 ETH ($23,878) will fund a total of 87 scholars from developing countries to be able to play-to-earn with Axie Infinity. These scholars will be chosen by YGG’s community managers based on referrals from their existing scholar community, and will be based in countries such as the Philippines, Indonesia, Venezuela and Brazil.

Support the Leaping Corgi Scholarship

All proceeds from the Leaping Corgi Scholarship NFT edition sales will go towards funding additional scholarships. If we sell all editions, we can sponsor an additional Axie team.

Buyers will receive periodic updates on scholars' lives.

Art by Heresy.

Leaping Corgi Scholarship

The Winner: Richerd Chan

Richerd is the founder of manifold.xyz, the premier NFT product and smart contract technology firm for creatives in the NFT space. Though he has been in crypto for almost a decade, Richerd first dove into the NFT space at the start of 2021. As he began collecting NFT artwork and connecting with the artist community, Richerd saw how much room there was for innovation. With a background in blockchain development, game design, and art, Richard and his team started to work with artists on developing bespoke NFTs and smART contracts.They are currently taking their learnings and experiences to create tools and an ecosystem to power the creator economy and enable creators.

“I love the NFT space because it's the perfect interaction of everything I love - art, technology, crypto, and programming,” said Richerd. “Art is super important to me. I’m an artist at times too, so I get it,” he said.

The Runner Up: Jason Li

Jason is a passionate art collector and co-founder of Outland Art, a marketing and consulting platform for artists and galleries. Jason and his team recently pivoted toward the metaverse and NFT world. As a new medium, he believes that traditional artists can re-imagine how to express themselves using NFTs.

“In the traditional art world, artists have been making prints/editions for more than a century, it is the artist signatures and authorizations that make a regular printed piece of paper valuable. This is almost the same concept as an NFT except NFT provides much easier authentication process. I truly believe this technology will significantly change some part of the traditional art world and broaden people’s imagination about what is possible.” said Jason.

Scholarship Recipients

Of the 87 scholarship recipients, 52 are located in the Philippines, 10 are in India, 10 are in LATAM, and 15 are in Brazil. The following are comments from some of the scholars, expressing their gratitude and explaining how they intend to spend their earnings.

"I applied for the scholarship because I am unemployed, and it has been very difficult for me as a single mother recently arrived in Peru. I couldn't believe the joy I felt at being chosen. I am extremely grateful. For my earnings, apart from setting aside a little for rent and food, I will invest in the game with the Axies." -YGG Scholar 2460—Leaping Corgi, Peru.

“I am planning to give half of my earnings to my mother so that we can continue to build our house and give some for paying our bills. I am super excited to play this game because I can earn money while enjoying the game.” - YGG Scholar 2453—Leaping Corgi, Philippines.

“I'm thrilled to finally be part of this life-changing game. I'm planning to spend my earnings on my brother's education since he's now studying in college. The other portion would be for my personal savings.” - YGG Scholar 2450—Leaping Corgi, Philippines.

“I was very happy and excited to start. I graduated in architecture this year, but with this crisis and pandemic, many people stopped hiring. With this scholarship, I can manage my time, play, study, and I know I can count on extra income at the end of the month.” - YGG Scholar 2470—Leaping Corgi, Brazil.

Further reading:

• For more background on the YGG Sponsor-A-Scholar program, see here: https://medium.com/yield-guild-games/flying-falcon-sponsors-players-to-start-earning-in-nft-games-2d5f179d74e7

• For more information on Yield Guild Games, see the Media Kit here: https://drive.google.com/drive/u/0/folders/1yCaivYoqW7HaGdug-2GyDS17RRpj4f97

• For background on the play-to-earn movement, see this mini-documentary about a community in the rural Philippines that played an NFT game to earn money while locked down during the COVID-19 pandemic: https://www.youtube.com/watch?v=Yo-BrASMHU4

• An article in the New York Times about the first NFT that Li ever sold: https://www.nytimes.com/2021/03/24/opinion/what-are-nfts.html

• The NFT that Li sold to fund the YGG Sponsor-a-Scholar program: https://foundation.app/@li/nft-50862.

• The Case for Universal Creative Income (where the artwork for Li’s second NFT sale was originally published): https://li.mirror.xyz/j3WsyvI5LKFKcFc9YK6cwzpU131Gs-N8ynGh3Jkli_g

• The HBR article (December 2020) that Li wrote about the need for a creator middle class: https://hbr.org/2020/12/the-creator-economy-needs-a-middle-class

With thanks to Lila Shroff.

In the 1930s, the New Deal was a series of programs and projects instituted to aid the unemployed, support economic recovery, and reform the financial system in the midst of the Great Depression. Among the programs was Federal Project Number One, which devoted $27 million—roughly $522 million today—to provide employment for tens of thousands of artists across music, design, visual art, theater, writing, and more. As the largest instance of government patronage of the arts, the program also sought to make art accessible to the wider community and to create a new American style of art.

These programs employed some of the 20th century’s most celebrated artists, including Jackson Pollock, Willem de Kooning, Lee Krasner, and Mark Rothko, and yielded over 100,000 works, including murals, sculptures, and paintings. The Federal Art Project aimed to be inclusive of artists of varying experience levels and allowed wide latitude in subject matters and styles, with program director Holger Cahill declaring, “Anything painted by an American artist is American art.”

Beyond providing relief to unemployed artists, the programs were designed to “ameliorate growing discontent and inspire civic feeling” (source). Importantly, they shifted the perception of art from a luxury good financed through private patronage to an essential part of what constituted a democracy. Art became accessible to all and woven into the fabric of public spaces, versus limited to rarefied circles. The role of the artist became validated as an essential part of the economy and community, as opposed to a frivolous hobbyist.

Nearly a century later, it’s time to renew that spirit. The present day mirrors the 1930s New Deal-era in many ways, with widespread job loss, a broad sense of burnout, and a need to bridge divides across communities. Importantly, COVID-19 has exacerbated income inequality to levels not seen since the Gilded Age—the top 1% of Americans now hold 30.4% of all household wealth—with low-income workers, women, and minority groups disproportionately suffering job loss and health risks. After this economic collapse, as after the Great Depression, we ought to explore ways to support recovery, especially for the most vulnerable groups.

Universal Creative Income (UCI)

Today, the financial precarity associated with creative professions means that those who pursue art are typically well off: someone whose family has an income of $100,000 is twice as likely to become an artist, actor, musician, or author than someone from a family with $50,000 income. And those from households with an annual income of $1 million are 10 times more likely to become artists than those from families with a $100,000 income. Money’s Kristen Bahler wrote, “Devoting yourself to the life of a ‘starving artist’ is a lot less risky if your family has enough money to make sure you don’t actually starve.” This uneven opportunity landscape remains true in the world of online content creation: a 2013 paper in the Journal of Computer-Mediated Communication found that “online content creators tend to be from relatively privileged groups and the content of online services based on their contributions may be biased towards what is most interesting or relevant to them.”

Despite the democratization of creative tools and platforms and the lower barriers to becoming a creator on the internet, financial success is concentrated among just a small segment of top creators, and the middle class of the creator economy remains elusive.

Platform-provided UCI

In some ways, creative works on the internet resemble public goods: they are nonexcludable (a user cannot exclude others from consuming the good) and nonrivalrous (one’s usage of the good does not prevent others from consuming it). When creators post a video on TikTok or write a tweetstorm, the entire world can consume and benefit from them. The content can provide entertainment, connection, and edification, spark new insights, and have positive externalities. Consumers value the content, but it’s infeasible to charge for it—unless the creator puts up a paywall and turns the public good into a club good.

Government spending is one way to provide public goods, but not the only way. In line with the notion of the net state—in which our economic and cultural lives are increasingly shaped by tech companies that rival nation-states in their power and capital—technology platforms are another potential source of funding for these creative workers.

Tech companies commonly compare themselves to digital public spaces: Mark Zuckerberg wrote in 2019 that Facebook and Instagram were “the digital equivalent of a town square,” and Jack Dorsey has referred to Twitter as a “digital public square.” In the physical world, public spaces are typically funded through a combination of local, state, and federal funding; for tech platforms, funding emerging creators can be a form of investing and supporting those who contribute to the vitality of digital town squares.

In the digital world, user rights are civic rights, and creator rights are worker rights. Today, creator-workers have little voice over their compensation, protections, and labor practices. Platform-sponsored basic income for creators would be one step towards facilitating a more worker-friendly environment. In turn, a richer and more diverse content environment would enhance the consumer experience.

I introduced the idea of a platform-sponsored Universal Creative Income (UCI) in my December essay about the need to support a creator middle class, outlining platform UCI as a possible solution to support emerging creators.

Providing creators with a basic income may be a wise strategy to incentivize more creators to devote more time to content creation. TikTok’s Creator Fund announcement echoes this sentiment: “The U.S. fund will start with $200 million to help support ambitious creators who are seeking opportunities to foster a livelihood through their innovative content.”

Guaranteed income would enable individuals to spend more time on creative pursuits, rather than worrying about being able to meet basic needs. Successful implementation of UCI would bring improvements in creator stress and mental health, and create a more equitable path for a more diverse array of creators to be able to pursue content creation as a career.

For platforms, the idea is simple: use company revenue to fund a Universal Creative Income program for emerging creators on the platform. For instance, companies like Facebook or YouTube could carve out a fund to support creators on the platform and send them a monthly check to cover basic living expenses, regardless of skill, training, or background. UCI differs from most prevailing platform creator funds in terms of consistency of payments, transparency of eligibility criteria, and focus on smaller emerging creators. To the last point: we believe focusing on creators who are in the greatest financial need would create the largest impact on participation in the creator economy.

Platform benefits of UCI

While UCI may appear to be predicated on altruism on the part of companies, there are tangible business benefits that could make such a program a worthwhile investment. UCI can better align creator and platform incentives, and drive downstream user engagement and retention.

1. Compete for creators. Implementing a UCI program allows platforms to attract creators in an era in which every social platform is fiercely competing for creator attention. There has been a steady drumbeat of new creator funding initiatives, signifiers of the battle to win over creators. The TikTok Creator Fund was announced in summer 2020, committing to award $1 billion to creators in the US in the next 3 years, and Snap Spotlight—which pays out $1 million daily—followed suit just months later. While these programs are a step in the right direction for compensating creators, the distribution of funds is correlated with success, making them financially meaningful only to the superstars on each platform. A UCI program can be beneficial in attracting and retaining a much larger population of creators.

2. Empower more diverse creators to participate in the creator economy. Just as unpaid internships exclude students from lower-income backgrounds who cannot afford to work for free, the current paradigm in the creator economy of amassing an audience through free content before eventually monetizing locks out creators who are less able to take financial risks.

Our hypothesis is that funding the long-tail of creators can create more long-term business impact than funding top creators who can already monetize in myriad ways and are highly sought after by many platforms. A UCI program targeted at emerging creators can engender more creator loyalty and build a proprietary acquisition channel for the next generation of talent. A recent example of a platform initiative targeting emerging creators is Pinterest’s newly-announced Creator Fund, which is explicitly focused on underrepresented communities who acutely need financial and creative resources: “we saw a need to uplift Creators and communities that have been disproportionately underrepresented on the platform.”

Alexis Wichowski in The Information Trade writes, “The digital realm needs to stay ‘healthy’ in order to keep users there. It’s in net states’ best interests to invest in the health of that ecosystem.” UCI can foster a healthier ecosystem by financially assisting emerging creators—ultimately leading to more user engagement and a richer content ecosystem on the platform.

3. Retain creators throughout their entire lifecycles. For creators, an early decision they make is choosing a platform to begin creating content on. A UCI program could tip the scales in favor of a platform, encouraging creators to begin their content creation on that ecosystem. From there, it’s easier to retain creators as they grow and progress in their lifecycles. For creators who develop familiarity with product features and build a following on the platform, there’s added lock-in that translates into increased retention.

4. Counteract resentment among smaller creators. From our conversations with emerging creators, there’s often a sense that platforms prioritize top creators, granting them preferential treatment, lower take rates, and greater visibility and promotion. A platform-sponsored UCI would counteract that perception, demonstrating to emerging creators that they are a valued part of the ecosystem.

In short, UCI functions like any business investment: the benefits of a UCI program, in the form of acquiring more creators and fostering a more vibrant ecosystem of content, should exceed the cost of implementing such a program.

Creator benefits for UCI

1. Encourage experimentation and creativity. Research on the interplay between creativity and social vs. financial rewards has found that social recognition—which drives much of the online creator economy—induces conformity, whereas financial rewards boost originality. UCI could encourage creators to experiment and take on bigger risks with their content, tackling new and diverse topics without fear of alienating their audience or underperforming.

2. Improve creator wellness. Hunter Walk recently wrote that "being a modern creator is, for many, exhausting," since social media platforms reward content velocity. UCI can encourage more balance and ward off creator burnout. A 1970s universal basic income (UBI) experiment gave a group of Manitoba, Canada residents a guaranteed income for a five-year period; as a result, women took more time off for maternity leave and more students completed high school. By removing concerns over meeting basic needs, UCI can similarly afford creators the ability to make decisions that optimize for long-term benefits.

3. Bridge the gap from side hustle to main hustle. A familiar milestone for any employee-turned-creator is the anxiety surrounding the initial plunge into creating full-time—and the associated initial pay cut. UCI can help more creators make the transition from side hustle to main hustle by smoothing income as creators navigate finding creator-market fit.

The net impact of UCI would be more content creators—including those who otherwise would not have taken the risk to become creators—and a higher-quality, more diverse content ecosystem. Substack echoed these benefits in their blog post explaining the Substack Pro program, their advance payments program for writers:

We like this structure because, while some who get these deals are already well off, it gives financially constrained writers the ability to start building a sustainable enterprise. We take most of the risk for them. In return, their work contributes to the quality of the Substack ecosystem and they become long-term customers.

What are the risks of platform UCI?

Having tech platforms sponsor UCI programs is not without risk. It moves us from the real-world paradigm in which governments and central banks have absolute power over money, to an online world in which platforms have greater control over the livelihoods of emerging artists.

For creators in the UCI program, being a beneficiary increases dependency on a single company that maintains power to make unilateral decisions about payment amounts, program eligibility, etc. Unlike a government-sponsored UBI, there’s no democratic process to get the consent of the stakeholders in the design of platform UCI.

Another major potential downside is stifling innovation. While established, profitable companies are able to fund UCI, it’s infeasible for early-stage startups to do the same. Startups would be less financially attractive to emerging creators, who may increasingly opt to create on platforms that offer UCI. Just as the New Deal was part of a cultural agenda to Americanize art and create a sense of shared national identity, platform-sponsored UCI could similarly “platformize” art, making certain formats more widely accepted and valued and entrenching platforms’ lock-in.

A platform-funded UCI program could also be controversial among top creators, because it is effectively redistribution within the platform’s economy: a share of the platform’s revenue—which is disproportionately earned from the top creators—would be allocated to emerging creators. In the real world, the political resistance to UBI stems, in part, from the increase in taxes necessary to fund it. Residents already take into consideration taxation in deciding where to live. The parallel in the creator economy is that top creators can move elsewhere—taking their audiences with them—in order to avoid platform take rates that go toward subsidizing UCI.

It’s worth noting, however, that platform-sponsored UCI could promote a net increase in the accessibility of being an online creator as a career. And to-date, a lack of monetization features has not hindered new startups (e.g. Clubhouse for the first year) from attracting creators.

How to implement platform UCI

1. Platform calculates a share of its revenue that it can allocate to a UCI program, as well as decides on the segment of creators it would like to target and criteria for determining eligibility. The criteria would be determined based on business goals, for instance, targeting creators for whom regular cash payments would have the greatest marginal utility and generate the most incremental new creation activity. This eligibility criteria would also serve to distinguish aspiring, emerging creators from regular consumer users.

2. Once a creator hits the eligibility criteria, they can elect to begin receiving UCI payments. The company sends creators a monthly check for a standard amount for UCI.

3. At the end of 12 months (or a predetermined length of time), the creator is phased out of UCI. The time-bound nature of the program is intentional, so that every emerging creator gets a shot, but limits the scope of the program so that platforms don’t have to subsidize every long-tail creator forever.

4. Platform assesses the UCI program’s results against business objectives (e.g. original content creation, engagement, retention) and iterates from there.

Crypto UCI

As an alternative to platform-funded UCI, crypto could also be used to implement more transparent and democratic forms of artist funding. In a podcast conversation, Collab.Land founder James Young describes a decentralized autonomous organization (DAO) that could sell fractionalized NFTs and use the proceeds to fund grants for emerging artists, who would, in turn, give the organization a portion of their social tokens as a form of collateral.

Another implementation could be that a community treasury could use a portion of its holdings to fund a UCI program. It would function similarly to the platform UCI outlined above, but rather than a centralized company making unilateral decisions about UCI, users and creators of the DAO would participate in governance decisions, including the mechanics of the basic income program for creators.

The downsides of using crypto to fund artists are greater complexity and new behavior changes: creators would need to have crypto wallets and learn how to transfer cryptocurrencies into fiat (to buy materials, pay for food, rent, etc.). If UCI is targeted at the lowest income creators, it’s a segment that is less likely to be familiar with the mechanics underlying a crypto UCI program and requires more onboarding and education.

Returning to the New Deal, crypto UCI has the potential to renew the democratic spirit of the Federal Art Project. Just as the Federal Art Project employed artists whose work was installed in public spaces like schools, hospitals, and libraries, new crypto business models like NFTs and crowdfunds can enable creators to monetize while still preserving public access to their work. An ARTnews column contrasts, "If the commercialization of art was accompanied by its dislocation in galleries, museums, and private homes [...] then the FAP sought a more inclusive understanding and appreciation of culture by endeavoring to integrate art with everyday experience.” Crypto UCI can combat the dislocation of content, moving it from walled gardens to more open ecosystems where creators have more control over their businesses and consumers can have more access to information.

Though platform-funded UCI and crypto UCI may appear ideologically opposed, they are not mutually exclusive. Web2 and Web3 solutions can and will live in tandem: crypto UCI can be a great funding mechanism for creators with community recognition, but for a brand new creator, the distribution potential of Web2 aggregators is currently unparalleled.

From UCI to UBI

Beyond just funding creators, there could be benefits for expanding basic income to a wider swath of the population. Universal Basic Income (UBI) can be a hidden form of creator funding, freeing more people to be more creative and innovative. Research shows that children from high-income (top 1%) families are ten times as likely to become inventors as those from below-median income families; moreover, downstream product innovation also disproportionately benefits higher-income households.

In the 2020 election, presidential candidate Andrew Yang called for giving every American adult a basic income of $1,000 every month, with one of the stated benefits being to enable people to “be more creative.” Today, support for UBI is especially popular among young people: adults under age 30 favor the government providing a UBI by roughly two-to-one. Despite this recent popularization of UBI, the idea of a guaranteed income has a long-standing history: Napoleon, Thomas Paine, and Martin Luther King, Jr. all expressed support for some form of cash handout or base compensation.

Despite the benefits of UBI, the US may not have the political will to enact such a program anytime soon. UBI Research is a think tank that explores possible implementations of government-independent UBI; many of its compiled projects are crypto-based. For instance, UBI is a crypto project that continuously streams $UBI tokens to successfully verified members, who have been registered as unique humans on Proof of Humanity, a social identity system for humans on the Ethereum blockchain.

The future of digital creative life

Beyond providing employment for artists, the New Deal had a larger mission: to promote what Franklin D. Roosevelt called "a more abundant life." New Deal cultural programs enabled countless Americans to see original artwork for the first time, attend their first live theater show, and attend educational programming at community centers around the country.

Today, social media platforms likewise enable consumers to access a multitude of creative work at no expense to themselves, but the advertising model and digital nature of content have undermined the economic viability of content creation online. The end result is that the creator economy resembles an economy of superstars, and the vast majority of creators are struggling to make ends meet—and all creators are building on a shaky foundation as their ability to reach audiences and earn income is dictated by a small handful of companies.

Though crypto holds promise for platforms to be more open and transparent and for users to directly own and participate in the upside of the underlying platform, there’s already a power-law distribution emerging for creators. On NFT marketplaces, the top 1% of artists account for 48% of sales. It’s a power law dynamic that mirrors the traditional art world, in which the top 1% of artists account for 64% of auction sales.

With pandemic-induced job insecurity and heightening income inequality, it is more pressing than ever to enact programs that create broader on-ramps for creator success. As we spend more of our lives in digital town squares, it’s important to foster a healthier ecosystem in these online cities, with stronger civic activity, democratic decision-making, funding for public works, and an economy with a robust creator middle class. Universal Creative Income can be a step in this direction.

We hope that the ideas and solutions outlined in this essay are considered starting points in a longer conversation. We’re eager to hear ideas from the broader community and to see more experimentation in this space.

Thanks to Scott Moore for inspiring conversations. Thank you to Patrick Rivera, Jesse Walden, Cooper Turley, and Gabby Dizon for reading and improving this. Thank you to the many people whose thoughts inspired this piece, among them Matthew Henick, James Young, Jon Ippolito, Xavier Jaravel, Scott Kominers and countless others.

Further reading:

• Cent on Product Hunt. Cameron and Max were the first folks I heard “Universal Creative Income” from—thank you for coining it!

• “Universal Creative Income”

• Vox, “Artists helped lift America out of the Great Depression. Could that happen again?”

• ARTNews, “During a Crisis, Is Art Just a Luxury? What the New Deal Has to Teach Us About the Importance of Supporting the Arts”

• 64 Parishes, “Federal Art Project”

• Stanford Basic Income Lab