How NFTs Unlock a New Revenue Channel for Creators

January 13, 2022
5 min read

Making a living as a content creator is difficult, especially those with a small or medium-sized following.

Getting traction as a creator can be difficult at first and most avenues for revenue generation only bring in a significant amount of money if the creator has a critical mass of followers.

Creators constantly fight with recommendation algorithms for relevancy and virality. Because of this, creators are increasingly having to tailor the content they create to what will get the most traffic.

We explore how creators make money with their content today and why we think NFTs will unlock a new revenue stream for creators all kinds.

How creators make money today

You might think that with the dozens of major platforms that exist today that content creators have a myriad of options to monetize their content.

We’re here to tell you that there are exactly three ways that creators can earn a living.

Only three? Yes. Despite the number of platforms, monetization comes down to three categories — advertising, donations, and direct sales.

Below is a summary of what we see as the only three ways that creators can monetize their content and influence. If you want to read more about the state of content monetization today, we highly recommend this article written by Ish Baid.

1. Ad revenue, platform payouts and brand sponsorships

Whether this comes in the form of a webpage ad spot, an ad at the beginning of a YouTube video, or a sponsored piece of content, creators make money by promoting an individual’s or business’s product.

For most creators, advertising makes up the majority of their earnings.

On one hand, advertising is an incredible way to make passive income for content that they create. If you make a popular YouTube video, that one piece of content will continue to pull in advertising earnings without much maintenance for months, if not years.

For other platforms like Instagram, Snapchat, or TikTok, creators with a significant following get paid directly for continuing to create content on their platforms.

On Instagram, sponsored posts where creators make deals directly with brands remains a popular way of monetizing their following.

Despite the variety of options for creators, there are risks associated with relying on advertisements for revenue:

  • Creators only make meaningful money if they have a large following. In 2021, 97.5% of YouTube creators didn’t make enough to reach the U.S. poverty line. While creators typically monetize their following on multiple platforms, the reality is that the vast majority of creators do not make enough money to pay for their basic expenses.
  • Platforms can change their advertising payout policy at any time. Despite record engagement across all major platforms during COVID, ad revenue for creators actually declined by 33%. This is not unique to the past two years, the amount of advertising revenue that platforms keep for themselves has steadily been on the rise for the past 5 years. Creators could see their earnings fall off a cliff at any point in time if the platform that they rely on decreases their cut of advertising or halts their creator incentive program.
  • Creators have little to no control over the products or services advertised alongside their content. While this is not the case with brand sponsorships, platforms have the last say on what can be advertised to a content creator’s following. If you’re a creator that focuses on environmental content, you have little/no control over whether Chevron is one of your advertisers. In the worst case, ads served up with a creator’s content can actually harm the brand image they’re trying to cultivate.

2. Tips, subscriptions and donations

This comes in several forms — Venmo, CashApp, Patreon, Twitch subscriptions, Facebook Stars — all of which are more-or-less the same. Fans directly pay a content creator either through the platform they are viewing the content on or through a third-party service.

While tips/donations are one-time payments, subscriptions give creators a source of recurring revenue.

Similar to advertising, these methods typically only earn the most popular creators a significant amount of money.

Let’s take Twitch as an example. The base level subscription will cost a subscriber $4.99 plus tax. Twitch takes 50% of subscription revenue, leaving roughly $2.50 for the creator. If a creator wants to earn $1,000 per month on subscriptions, they will need 400 monthly subscribers in order to achieve that.

If you look at the numbers revealed in the Twitch data leak of 2021, the vast majority of Twitch streamers do not have nearly that many subscribers. As with other revenue channels, most of the money is earned by the biggest 1% of creators.

While direct payments do offer creators an additional avenue to increase their earnings, there are major issues:

  • Platforms take a large cut of subscription and donation revenue. Unless fans directly pay creators through Venmo, CashApp, or another payment service, platforms will siphon off a significant portion of the subscription or tip.
  • Tips and donations are one-time events. We’re not saying creators don’t appreciate direct payments. In fact, most creators will tell you that this is the best way for you to directly support their content. However, recurring revenue extremely important as it gives creators a reliable stream of income.
  • Many platforms do not give fans the ability to subscribe to creators. While Facebook has started giving users the option to redeem Stars on some creators’ posts, most platforms do not offer a subscription option.

3. Merchandise and other sales

Content creators offer goods or services to their fans. This category is very broad and can range from clothing merchandise to paid courses.

We’ve seen a rise in the number of clothing, jewelry, and cosmetics brands started by Instagram creators. On Twitch, it’s more common for creators to sell sweatshirts and hats emblazoned with the streamer’s logo or catchphrase.

However, ordering merch or creating a new jewelry brand requires a significant amount of upfront capital and a large following to purchase the products. Even then, they don’t make a large margin on the physical goods they are selling.

For many creators with small or medium-sized audiences, taking the leap of faith to sink that much money and effort into something with no guaranteed payout is just too risky.

While this direct sales channel can work well for creators with a significant following or enough capital to risk, it just isn’t feasible for most creators.

How NFTs will unlock a new revenue channel for creators

If creators only make money in three ways today, how can NFTs unlock a fourth revenue channel?

Let’s look at how today’s supporters are currently paying and what they receive in return:

  • Advertisements: supporters pay with their time and data that platforms harvest. In return, they receive free content.
  • Tips/subscriptions/donations: supporters pay for some platform-specific benefits (custom emotes, a shout-out on stream, etc). In return, they receive any platform-specific benefits and bragging rights.
  • Merchandise/other sales: supporters pay for a good or service. In return, what they receive varies, but it’s typically clothing or some other tangible good.

So how is selling an NFT any different?

By purchasing an NFT, you are investing directly in a content creator.

Let’s look at the dictionary definition of “investment”.

investmentin·​vest·​ment | n. | the action or process of investing money for profit or material result.

A fan is purchasing an eternal piece of digital memorabilia because they believe in what the creator is producing, because of the sentimental value associated with the content, and because they receive a collectible that they can later resell should it increase in value over time.

The fan is not purchasing a consumable good or paying for access to exclusive content for a finite period of time — they are investing in a creator’s future success by giving them the means to grow their audience today.

Do you really think that someone will pay for content that they can already get for free?

Short answer: absolutely.

Creators are already producing content that people enjoy. Platforms then serve the content that they are getting for free (with the exception of creators with exclusivity contracts) up to users that consume the content.

Through every like, favorite, retweet, comment, and share, we see that users get value out of viewing this content.

Today, users pay for this content by viewing ads and giving away their data. Tomorrow, we see users wanting to directly support their favorite content creators.

In fact, this is already happening on platforms like Facebook, TikTok, and Snapchat, where fans are directly paying creators for content that is available for free.

The difference with NFTs purchased on Enshrine — the product that they are paying for has value, lives forever on the blockchain, and can be traded on our resale marketplace (coming in 2022).

Now we’ve got your attention, how can an NFT make a creator money today?

Let’s say that you are prolific on Twitter. Most of your Tweets are witty, relevant, and garner thousands of likes. One of your Tweets just went viral and you want to post it for sale.

On Enshrine, you can simply connect your Twitter account, create a listing for a specific Tweet, set the price, then list it for sale. You could then post a reply to your viral Tweet giving fans the ability to own an NFT version of the Tweet.

We can tell that you’re a bit skeptical. It all sounds too good to be true, right?

Take a look at this Tweet by Twitter founder Jack Dorsey:

Well, in 2021, an NFT of this Tweet sold for just shy of $3 million. While it’s unlikely that most people will create a Tweet that sells for this much, it is undeniable that prolific content has value and that people are willing to pay for something of value.

Enshrine also offers a ton of customizations when selling content as an NFT including, but not limited to:

  • Price
  • Number of editions
  • Creator royalties
  • Link to unlockable content
  • And much more!

Money today is great, but how about recurring income?

Recurring income is absolutely essential for any content creator. We know that relevancy can be a difficult thing to maintain, so ensuring a steady stream of income is important to guarantee future earnings.

Enshrine gives creators the ability to set the royalties they would like to receive whenever their NFT is resold on the Enshrine platform. This can be anywhere from 1 to 50% an ensures that if an NFT increases in value that a creator will be able to capture some of that increase.

If a creator grows from a small following to a large following, both the creator and their day-one supporters benefit.

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January 13, 2022
5 min read

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