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Monetizing the Creator Economy Through Social Tokens

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Borderless Ventures | Ethan Pierse | Oct 27, 2021

Monetizing creator economy and social tokens - Monetizing the Creator Economy Through Social TokensYou might not yet have heard of social tokens or creator coins, but it's very possible that you heard the news of Lionel Messi changing football clubs from Barcelona to Paris Saint-Germain. Well, millions of dollars of his $40M signing bonus were paid in $PSG tokens issued by social token platform Socios. Those tokens allow fans to interact with the team by earning rewards, participating in select club decisions, and accessing unique merchandise and experiences.

But what are social tokens ?

Social tokens allow brands, whether individuals or organizations, to include their fans and community in a dedicated tokenized economy that facilitates:

- Direct monetization

- Community engagement and loyalty

- Governance

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Social media platforms can take 5-30% of content creators' tips and payment tools like Venmo charge 3% commission. However, creator coin platforms like Rally are able to charge 0% for direct digital payments to creators. Amazing platforms like Patreon, Substack, YouTube, Instagram, and Twitch have enabled creators to build business models on top of their communities and content, but in addition to expensive commissions, there is always the risk of de-platforming and censorship, potentially eliminating a particular revenue stream entirely. On the pure donation side, even Twitter and Clubhouse are now offering in-app tipping.

While there exist great tools like Gumroad for monetizing downloadable content and products, content creators need more choices for direct digital payments that are independent of any specific content platform or merchant account. Social tokens facilitate low to no-fee fiat and crypto transactions between creators and their communities.

The ability to hold a balance of a creator's token creates an opportunity for deeper engagement and customer/fan loyalty. Platforms like Discord and Clubhouse or tools like WordPress can confirm a user's token balance through APIs and provide token-gated access to content, events, and VIP discussion channels. Fans can earn rewards by contributing to, supporting and evangelizing the community.

If you have explored NFTs at all, this may sound familiar, as the ability to bake in early/VIP access to special content, merchandise, online and offline events, and other benefits is exactly the same with creator coins.

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The third utility allows for token holders to participate in the decision process around a brand or organization. Maybe you want to pick the color of the next PSG jersey or vote on which subject a content creator should discuss in their next video or podcast. You'll be hearing a lot about Decentralized Autonomous Organizations (DAOs) over the next year and the functionality is the same here; token holders can actively participate in the governance of an organization.

Social tokens can be :

- Individuals, like your favorite YouTuber, podcast, or newsletter

- Brands, like a soccer team

- Communities, like an online forum or NGO, or the social token platform itself, like Rally or Socios (Chiliz).

Why I’m bullish on social tokens: 3 trends

You might be saying, fine, those are a few, recent examples, but is there really huge potential here? There are three signals that suggest that tokenizing content creators' communities could lead to a massive market.

The first is the existing centralized creator economy growth over the past few years. Hundreds of thousands of people now create full-time incomes on YouTube, Instagram, and Twitch. There are hundreds of journalists and writers making thousands (even tens of thousands) of dollars per month through small subscription payments on Substack. Patreon has 200,000 content creators monetizing their communities. During home confinement, practically every band you know used StageIt to perform paid concerts from their sofas. All of this runs through centralized platforms and legacy payment systems. Fans have shown that they are more than willing to financially support their favorite content creators directly.

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The second signal is the rapid growth of NFTs and digital collectibles this past year. While you may be a bit dubious on the potential of pixelated digital art, people continue to innovate around the kinds of content and perks they are creating with non-fungible tokens. Digital collectibles, however, are the evolution of the billion dollar industries behind baseball cards, Pokemon, and comic books. Three year old fantasy football platform Sorare is built on NFTs, has generated more than $100 million in revenue in 2021, and is rumored to have recently raised over $500M at an almost $4B valuation. You don't have to understand the blockchain or care about bitcoin to see the future value in business models built on digital collectibles.

And third, decentralized finance continues to create new financial solutions that don't rely on historical financial infrastructure in the areas of savings, loans, bonds, crowdfunding, and insurance. Each month, more people are discovering and getting comfortable with crypto/blockchain services without necessarily being "into" crypto.

Taken together, these three trends show us a very near future where brands use a mixture of centralized and decentralized platforms and financial services to monetize their communities.

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Still not sure? I already mentioned Lionel Messi but Sorare has 180 officially licensed football clubs and just signed La Liga. Social token-issuance platform Rally just raised $50M and signed a deal with United Talent Agency to begin tokenizing some of the thousands of actors, musicians, and athletes that UTA represents. Sotheby's just auctioned $24M worth of digital collectibles. The Vault ($WHALE) is a social currency fund of curated digital art, blockchain gaming, and virtual real estate, with a market cap of over $100M. The future of finance is social and tokenized.

About the Author

Eethan pierse pic - Monetizing the Creator Economy Through Social Tokensthan Pierse, Director at The CryptoAssets Institute, evangelizing the blockchain economy across Europe and Southeast Asia. Director, Quantum Economics Financial Advisory. Founder of Borderless Ventures focused on FrenchTech, CEE, and ASEAN startups. Former Managing Partner, Nest Venture Capital.  Serial entrepreneur in digital and e-commerce in the US and Western Europe. 20+ years digital marketing strategy advising Coca-Cola, HP, BP, large banks, airlines and governments.   Twitter | Rally

 


NCFA Fintech Confidential Issue 4 250 - Monetizing the Creator Economy Through Social Tokens

This article is featured in NCFA's digital magazine, Fintech Confidential (Issue 4 Oct 2021). Click to read the latest thought leadership, insights and trends about Fintech in Canada:

Checkout NCFA's digital magazine, Fintech Confidential (Issue 4) --> here

 


NCFA Jan 2018 resize - Monetizing the Creator Economy Through Social Tokens The National Crowdfunding & Fintech Association (NCFA Canada) is a financial innovation ecosystem that provides education, market intelligence, industry stewardship, networking and funding opportunities and services to thousands of community members and works closely with industry, government, partners and affiliates to create a vibrant and innovative fintech and funding industry in Canada. Decentralized and distributed, NCFA is engaged with global stakeholders and helps incubate projects and investment in fintech, alternative finance, crowdfunding, peer-to-peer finance, payments, digital assets and tokens, blockchain, cryptocurrency, regtech, and insurtech sectors. Join Canada's Fintech & Funding Community today FREE! Or become a contributing member and get perks. For more information, please visit: www.ncfacanada.org

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