Using blockchain to improve the economic ecology of creators

By Chris Dixon, founder/managing general partner of a16z crypto; Translated by DAOSquare

We should be living in a golden age for creators.

Today, technology like the internet, media hosting sites, streaming platforms, social media, and mobile phones are more democratized than ever before, making it easier than ever for creators to reach and interact with. If you want to listen to Olivia Rodrigo’s latest hit, watch Mr. Beast’s new challenge, or catch up on the latest indie film, it’s all just a tap away.

Yet, most creators today still can’t make a living from their work.

While tech platforms have helped us discover and connect with more artists than ever before—including more independent artists—only a handful of mainstream artists are able to influence the platforms. Taylor Swift single-handedly got Apple to change its policy on paying creators when the company didn’t pay artists during free trials. After she threatened to pull her entire catalog from Apple, Apple announced the policy change the next day. Swift thanked them, saying “they listened to us” — and did it in 17 hours — but most other creators and niche artists don’t have that kind of influence or power.

It’s a structural problem in the entertainment industry, and it’s also about how many tech platforms work today: Creators need power, and power comes with control, and control comes with ownership. While platforms are nothing without user-contributed content, those users receive little to no profit from those efforts. They also don’t get to decide what happens on those platforms.

The question is how to put control back where it belongs: in the hands of creators and fans.

The original promise of the internet was to connect people directly and eliminate gatekeepers. Tech companies helped connect 5 billion people around the world in that time, but these companies have since turned from attracting users to extracting profits from them. They first lured us with convenient tools and irresistible network effects, then locked us in: the more people use a network, the more valuable it becomes to everyone using it. Now the platforms owned by these companies hold all the power. Contrary to the initial promise, the internet has become as stagnant and disintermediated as the last era of television, when only three networks dominated.

Don't like it? Sure, you can quit Apple, Facebook, Instagram, Netflix, Spotify, TikTok, and X/Twitter. But you can't take your follower lists, data, or graphs of social connections and interactions with you. Sometimes you can't even take your own content with you. As a result, the most popular social networks attract audiences and can charge astronomical "commissions" for doing so. The commission rate is the percentage of revenue that the platform takes for itself, rather than passing on more revenue to network participants. For Instagram and X, these rates are close to 100%. (And those terms are often opaque.)

Worse still, however, are the platforms’ CEOs’ nearly unchecked power to change the rules for users at will. Not only can they charge higher commissions at any time, they can fire artists and developers without question and change the algorithms that capture our attention (and therefore what artists are watched and listened to) overnight. We’ve all seen the challenges facing creators today: from the Hollywood writers’ strike, which involves a fight over residual streaming rights; to the question of who actually owns a creator’s work (something artists like Taylor Swift know all too well); to musicians earning paltry sums despite tens of thousands of streams.

What will it take for creators to get what they deserve?

Some lawmakers have proposed regulating the platforms as a remedy, but in practice such regulation would only raise compliance costs for smaller companies, further entrenching the dominance of the big ones. Last year, Taylor Swift successfully pushed policymakers across the country (again) — from Minnesota to New York, Texas to Washington — to challenge Ticketmaster’s monopoly. Several policymakers have also proposed laws at the federal level to ensure price transparency, among other things. But these are stopgap measures that seek to stem the massive harm that platforms inflict on artists and fans, rather than addressing structural problems.

Meanwhile, others are insisting that platforms change their practices. Jack Stratton, head of the indie music duo Vulfpeck, urged Apple to “take back the crown” from Spotify. Stratton argues that Apple could offer more direct access to fans, rather than the current pro-rated model that distributes revenue based on an artist’s streams. Stratton also urged Apple to change the standard 70/30 revenue split between music rights holders and the platform to a more favorable 90/10 revenue split. It’s a nice idea, but hopefully it works out in practice.

It’s also another stopgap measure, because it still leaves creators dependent on the will of platform owners. What artists really need is a say in their fate (and help monetize) on the platforms they contribute to. Specifically, creators need a bigger share of revenue; a more direct relationship with their fans; and the ability to freely exit platforms while keeping all their connections, content, and data intact. Most importantly, creators need the ability to help decide platform rules so that the foundations beneath their feet don’t suddenly shift.

While existing platforms can certainly provide better services to users, none of this solves the core structural problem: ownership. That’s where a significant set of new technologies, including cryptocurrencies and blockchain, can help. Forget the price of Bitcoin. Forget dog memes. Blockchain is more than just cryptocurrency; it’s the building block for a different kind of internet—one that shifts power from corporations to communities, both fan and creator.

Blockchains are community-owned and operated, tamper-proof, permissionless networks — meaning you don’t have to seek approval from a single gatekeeper or central intermediary to run them, let alone participate in them. Users (whether creators or fans) don’t have to trust that the leaders of any one big tech platform will keep their promises; the technology encodes those promises. Through blockchain technology, artists can earn more through ongoing royalty payments. They can decide how their music is remixed or repurposed, and even give fans more involvement and ownership of their work. Creators and artists can take back control of their online livelihoods.

With blockchain, creators can own what matters most — their network — and their fate. When users own their relationships, they can exit the platform and take their business elsewhere — a credible threat to take control of the platform. This freedom helps lower the commission rates that platforms charge creators and users: for example, today’s popular blockchain-enabled creator platforms have very low commission rates, some as low as 1%-2.5%. Platforms like YouTube have commission rates closer to 50%.

Yes, our digital and creative world is more expansive, richer, and more accessible than ever before. But it comes with a critical trade-off: creators are dependent on a handful of tech companies that hold all the power. These companies are completely dependent on people using their apps and platforms — but without much control, ownership, or rewards. Large creators may be fine, but small and medium-sized creators are unable to thrive. It’s time to change that. A blockchain-defined future will put power back in the hands of creators and users. Blockchain means ownership, and ownership means independence.

Also see Voices Onchain, which highlights creators who are using blockchain technology to unlock new creative possibilities, build deeper connections with fans, and discover more ways to monetize their work.

Chris Dixon is the author of the bestselling book Read Write Own: Building the Next Era of the Internet (Random House, 2024) and founder/managing general partner of a16z crypto.

The opinions expressed herein are those of AH Capital Management, LLC (“a16z”) and do not necessarily reflect the opinions of a16z or its affiliates. Certain information contained herein has been obtained from third-party sources, including portfolio companies of funds managed by a16z. While such information has been obtained from sources believed to be reliable, a16z has not independently verified such information and makes no representations as to the enduring accuracy of the information or its appropriateness for a particular situation.