Simply put, first we invent our technologies — and then we turn around and use technology to reinvent ourselves as individuals, as communities and as entire societies.
— Paul Saffo
Professor and futurist Paul Saffo from Stanford and Singularity University researches the impact technologies and innovations have in our society in the long run. In his speech from The Creator Economy, he goes over the Industrial Revolution, how it has gone global, and how it has adapted to satisfy the new needs of our society.
These economic changes have two factors in common: 1) Technological revolutions, and 2) media innovations. In this article, we are going to cover all three economies that have emerged in the last 200 years:
Producer Economy: The beginning of the 20th century created the need of buying material goods through the press and the radio.
Consumer Economy: The end of the 20th century created the need of buying goods to increase social status through television.
Creator Economy: The beginning of the 21st century created the need to interact with our products -to be content creators and consumers at the same time- through the Internet.
Blockchain technology and the metaverses can make the rest of the 21st century Creator Economy-based.
Producer Economy
The media (as we know it today) is created when mass societies form. Mass societies are a product of the Industrial Revolution, which took place at the end of the 18th century, with the steam machine as a technological marble and is the historical process in which agrarian societies became predominantly industrial and urbanized. The Industrial Revolution, for the first time, drew an enormous work force to the cities. These first cities were massive, and unorganized. There had not been a need for institutions and infrastructures before just to accommodate so many people living next to each other. It wasn't until the beginning of the 20th century that innovations were made in energy sources (natural gas and electricity), materials (steel and petroleum), means of transport (planes and cars) and the media (the press, the telephone and the radio), which triggered a global economy.
The Industrial Revolution managed to increase production and to cheapen the costs of material goods which were previously scarce, crafted manually, and inaccessible to the vast majority of society members. This was achieved through the systematization of the manufacturing process: how to organize workers efficiently —like machines— to produce more in less time, with a lower cost. Workers and factory owners alike became status symbols.
The media was used, for the first time, as a data gathering source by its workers, through observation, as a means to improve factories efficiency. Frederick Taylor, father of Taylorism (the scientific management), recorded and photographed workers, with the intention of creating brand new ways to make them work more efficiently. The clock-in system became a symbol of the producer economy, used to optimize productivity to its fullest.
The media also played an important role in the promotion and broadcasting of factory-manufactured products: the factory owners were the first investors in media businesses, acquiring its content and advertising spaces.
Throughout the years, the production system became so efficient that in 1914 a Ford worker could afford one of the cars that was being produced with only four-month savings. From the age of 30 through 40, and the Second World War having ended, this industrial process was confirmed as having reached its peak efficiency, as the allies won the war, being able to manufacture more products than the enemy. The saturation of the Producer Economy made it lose its power, as it was creating more products than its consumers would buy.
Consumer Economy
Each new abundance creates an adjacent scarcity as a side-product. When businesses realized they had a demand issue instead of a production one —people didn't want to buy any more goods— the economic system evolved into a search for new ways of selling their products. When the most important figures once were bosses or team managers, that role was moved eventually to sales and marketing managers, on how to convince consumers to buy their products. A desire to consume was being created, and thus, the Consumer Economy followed. The worker wasn't the key foundation anymore, but the consumer. This was clearly shown in 1958, when the first credit card was created: a tool to satisfy the need to consume, even when you don't have the money.
Like the press and the radio in the Producer Economy, the television played a very important role in the emergence of this new Consumer Economy. Television, with unprecedented advertising appeal, fueled consumer demand of purchasing certain products to gain social status, by being a more graphic and exclusive medium.
The overexploitation of advertising and marketing strategies saturated the economy once again, just like it happened with the Producer Economy. People reached a point where they were overfed with information on how many products they could consume. In 1971, Herbert Simon, Nobel laureate in economics, already predicted the next need to satisfy:
“What information consumes is rather obvious: it consumes the attention of its recipients. Hence a wealth of information creates a poverty of attention and a need to allocate that attention efficiently among the overabundance of information.”
Creator Economy
Thus, just as the clock-in device symbolized the producer economy and the credit card the consumer economy, the computer mouse is the symbol of the emerging creator economy
—Paul Saffo
New technological platforms such as Wikipedia, YouTube and Twitter have changed our way of communication. From mass media to personal media, these platforms allow anyone to be a creator, i.e., to be consumer and producer at the same time:
Before Wikipedia, to write an article you had to work in a publishing house.
Before Twitter, to write a headline you had to work for the press.
Before YouTube, to make a movie you had to work as a film producer.
We don’t limit ourselves to being consumers anymore, but instead we create value through our daily interactions. Many times we are creators without even realizing it. For example, every time we make a Google search we are adding value to the platform with our unique and individualized data, which then is included altogether by the search engine to offer us better results. If you don't pay for the product, you are the product.
The triumph of these platforms resides in their change of model from pure consumerism to creating the need to interact, adding value to their products for us to use them. In this way, they take advantage of the value we generate to improve their own systems. The limited resource in this economy is attention and interaction: our data is the currency in which we are paying for the product. In the Consumer Economy we only consumed and bought, whereas in the Creator Economy we participate and create. Social status comes from being a creator.
In the mid-2010s, the rise of the influencer industry allowed creators to start monetizing their audiences through advertising. Platforms like YouTube, Twitch or Instagram began to share their profits with its creators. Today, some of these creators are capable of generating millions of dollars a year by selling digital content, brand advertising or creating online courses:
Last year, youtuber David Dobrik generated more than $275,000 per month, with an average of 60 million views.
In Substack, a platform that allows the monetization of products for your audience, its top 10 creators currently make over 7 million dollars each year altogether.
It is estimated that Charli D’Amelio —who started his TikTok career about a year and a half ago, and recently became the first female creator to reach 100 million followers— has made over 4 million dollars being only 16 years old.
The vast majority of creators, however, are not adequately paid for their work. Returns from content creation are notably unevenly distributed. Only 4% of the 50 million creators are professionals that can make a living from it as their main source of income, in a 100-billion-dollar industry:
Only 1% of all streamers get more than half of the money distributed by the platform, according to the data leak from the recent Twitch hack.
On Patreon —a platform that allows for creators to make monthly subscriptions for their audience— only 2% of their users were reaching the U.S minimum wage of $1,160 per month, in 2017.
On Spotify, artists need 3.5 million plays a year to obtain an annual minimum wage of $15,080.
The creator economy hasn’t yet succeeded, primordially due to these two reasons:
Creator platforms take a wide profit margin and concentrate the distribution of their profits on a small number of creators. An average creator cannot live on it.
Monetization tools for creators are limited, and in reality, they’re only advertising models.
The Solution: The Metaverse
The metaverse opens up a door for creators to have more influence over their audience with new models of interaction, communication and monetization. In many ways, the metaverse is no more than another name for the evolution of the Internet, for it to become more social, more immersive, and far more economically sophisticated than what’s available today:
It better aligns incentives across platforms, creators and audiences to cooperate and to work toward a common goal. This miracle of coordination —previously inconvenient or impossible without blockchain technology— is orchestrated through the ownership of tokens, the native currency of this network.
It is a more immersive media platform with infinite new ways for interaction in which an audience can be created, and can radically change the way we live, work and access information.