The Creator Economy of the Metaverse : Dwarfing Your Favorite Social Media

Defined as an economic model around independent content creators with a market size of over $100 billion, the creator economy has been the backbone of existing social platforms, creating a wealth of opportunities for creators themselves, as well as for employees and partner brands.
As we have stated in previous articles, the creator economy is critical to the operation of the metaverse and is tied to other constituent elements such as avatars/avatars, virtual economies and games, with implications for product development in both startups and established companies.

In this article, we will focus on how the metaverse can drive the creator economy and how the metaverse version of the creator economy differs from the familiar creator economy of mainstream social media.

Key elements of the metaverse version of the creator economy
For creators, Web 2.0 platforms such as social media provide them with channels to cash in on content and community interaction. For brands, creators can help them market to specific groups with a depth and frequency unmatched by traditional channels. In the metaverse version, the creator-platform-audience relationship is more democratic and fluid, and participants are given more autonomy, especially in the "community-oriented" metaverse projects. In metaverse applications, audiences have more room to interact with creators' work, and with the introduction of more tools, they can become creators themselves. For example, one of the most funded metaverse games, The Sandbox, offers tools to help developers build games, 3D assets and sell NFTs, with creators receiving a 95% share of sales.
An interesting difference compared to current social media is that audiences have more opportunities to interact with creators and even become partners in pursuing team goals, such as playing games together and promoting social tokens/digital assets.

How creators can benefit through metaverse applications
Broader content categories
The main difference that metaverse applications bring compared to existing platforms is that creators can build their own content in a virtual space, whether it is virtual land or virtual buildings, creating a whole new demand for 3D artists. As we described in our previous article on metaverse culture, virtual assets such as avatars/heads and digital clothing can be expected to breed new categories of creators. Among others, we expect to see more demand for music and gaming-related infrastructure and content, with some existing platforms already exhibiting such trends.

We also expect that as the hardware user experience improves, people will spend more time in the metaverse, which will further facilitate the development of non-entertainment applications such as business and education. For example, Mesh for Teams, Microsoft's enterprise metaverse, is dedicated to moving most online meetings to 3D environments.

Reduced reliance on branded sales
Creators are highly dependent on brands for revenue, mainly because of more flexible negotiation terms for brands, the dominance of headliners (luxury brands working with celebrities have rich budgets), and strict profit-sharing restrictions on most platforms (creators need to reach a certain number of audience segments to meet the base revenue-sharing criteria). But with new campaign formats and virtual engagement methods, metaverse apps promise to change this highly dependent situation. For example, creators can build their own in-universe economy and have more opportunities to sell virtual goods to their fans.

A higher return-to-commitment ratio for creators

According to a recent survey by digital identity management provider Linktree in April, only 12 percent of full-time creators earn more than $50,000 a year, and 46 percent earn less than $1,000 a year. Instagram's latest "badges," for example, allow creators' live viewers to purchase and use additional features, but only if the creator has at least 10,000 followers and a 30 percent cut from the Apple App Store. On Youtube, creators with 20,000 views per month earn about $500 per month after the platform takes a 45% cut of the ads.

The metaverse version of the creator economy can bring more ways for creators to make money, including the ability to take advantage of richer digital assets and the decentralized metaverse app, which can be rewarded with significant token sharing and NFT offerings.

The takeaway: Web 3.0's decentralized metaverse will unlock more opportunities for creators
A big reason why centralized social media platforms can charge such high fees is that they have a massive audience in the global market. Despite platform splits as high as 30%-50%, creators have no better options and platforms lack the competition and incentive to lower their prices. web3 is expected to change this landscape as most early stage startups that issue tokens keep 20%-50% of the token issue dedicated to an ecosystem growth fund, with a large percentage allocated to content creators and early stage community members.

Creators who hold these tokens act like shareholders in the emerging platform, and they have more incentive to promote related services and create content. For example, Web3 platforms such as Rally allow creators to design their own social token economy for free, whereby the creators' fans not only support their creativity, but also share the benefits (or share the risk) of the social tokens by holding them as shareholders. In a metaverse environment, this mechanism is expected to deepen as digital asset rewards can be extended from tokens to virtual land, NFT artwork, etc. Open metaverse such as Decentraland has its own land economy, where creators can buy land, build virtual places, and then rent or sell them to others.
In a decentralized meta-universe, the relationships between creators can vary. While the attention economy of mainstream social platforms tends to be a zero-sum game where every creator is more or less a contender for the audience's eyeballs, in a decentralized metaverse platform, creators are, in the end, shareholders in the new platform. As a result, we expect more cross-border collaborations to emerge, further expanding the content diversity of the decentralized metaverse.

While it is too early to talk about these decentralized metaverse applications, including games, social spaces and metaverse platforms, competing with centralized platforms, in the long run, they overall promise to inspire creators to migrate to other platforms as more options and benefits surface. After all, each new wave of technology gives rise to new categories of consumer applications.