By Catherine Yeo, Author of The Creator Revolution
All creators are driven by their fan communities. But how has technology evolved to support this creator-community relationship? In this piece, we explore the evolution of creator-community memberships from Web2 to Web3, specifically diving into NFT memberships and fungible on-chain memberships.
As a creator, your fans have different willingness to pay:
- Casual fans aren’t willing to pay anything.
- Active fans are willing to pay a small amount.
- Super fans are willing to pay a lot.
Kevin Kelly’s “1000 True Fans” model capitalized on this audience segmentation, suggesting that creators could sustain themselves financially by engaging a small base of “true fans,” who Kelly defined as “fans that will buy anything you produce.” For example, if you had 1,000 fans who each paid $100 per year, that would take you to an annual income of $100,000.
In the Web2 world, we see this concept play out through price tier subscriptions with different benefits on platforms like Twitch, Substack, and Patreon. For example, a creator using Patreon might set a $5 tier where fans can join the creator’s Discord community, a $25 tier where fans also receive access to exclusive behind-the-scenes content, and a $50 tier where fans will be mentioned in the acknowledgements of the creator’s content.
In providing tiered offerings, creators are able to better satisfy each segment of their fan community to their preference. The fans who are willing to pay derive value from:
- Accessing premium content.
- Joining an exclusive community, where they can interact with others in the fanbase (and possibly the creator themselves!).
- Being recognized as a more valuable supporter/community member and thus earning a special status.
Today, Kelly’s vision has been somewhat realized — there are many top creators who have succeeded in turning content creation into full-time careers by engaging their small, niche communities. However, successful monetization has not been achieved by all creators, especially the creator middle class.
Web3’s promise of ownership came along as a solution to accelerate their visions, to further simplify the process of monetizing the creator-fan relationship.
A unique advantage on-chain memberships have is that they can easily plug into other applications in the Web3 ecosystem. This means a creator can plug their contract address (any kind of token contract) in and experiment with a range of third-party integrations, such as adding token-gated merch on their Shopify.
For example, we can see how NFT memberships enhance Web2 creator memberships in several ways:
- Digital scarcity ensures better value delivery to the super fans. As Odyssey DAO’s Peter Yang aptly describes, “an NFT is a ticket to an exclusive group. Think: Soho House or a country club, but membership is online-first and entry hinges on being a token-holder vs. having the right connections.” By restricting the supply of memberships and thus creating exclusivity and scarcity, a creator can easily identify their super fans and focus on providing utility (through exceptional real-world benefits and experiences) to them.
- The incentives between creators and fans are aligned. A Web3 membership program is exceptionally unique because the value of the membership is a two-way street. Yes, creators earn money from the NFTs and fans receive perks and rewards. But unlike before, due to NFTs having inherent monetary value, it is now in the interest of both the creator and the fans (token holders) to actively raise the value of the NFT memberships over time. Not only are creators held accountable for providing great benefits, fans are held accountable to champion and advocate for the creator.
- They further reduce middlemen fees. Twitch currently keeps 30-50% of the subscription revenue, which is a crazy take rate given that the creator deserves far more than 50% of the credit in engaging their fans! With NFT memberships, creators keep most of the revenue they receive from the initial mint and earn more through royalties from secondary sales.
However, NFT memberships aren’t perfect. Their primary utility comes from real-world benefits or the existence of the community itself; you otherwise cannot do much with the NFT as a holder. So we turn to fungible on-chain memberships, which further extends the idea of what a Web3 creator membership can look like.
In addition to offering the same benefits as NFT memberships, fungible on-chain memberships also have the following advantages:
- The membership benefits are on-chain. NFT memberships are almost an afterthought when a strong community is formed, so their membership benefits are usually not on-chain. Fungible on-chain memberships are built into a smart contract where a creator can define the membership fee, number of social tokens distributed, tiers of membership, etc. This holds creators to be extra accountable in what they plan to deliver to their community.
- Memberships are more personalized and enable price tiering at even greater granularity. Web2 memberships allowed creators to earn more by targeting fans at tiered segments. Web3 memberships enable creators to earn even more by targeting fans across all segments. However, the pricing of NFT memberships in the secondary market is not set by a creator or their community, which means prices vary significantly while membership benefits stay the same. In contrast, creators have more control designing tiers of fungible on-chain memberships and how many tokens to charge for each tiers to differentiate and personalize experiences. A greater level of granular pricing means creators can satisfy greater demand and more preferences.
- Fungible memberships offer greater liquidity. On Web2 platforms, if you no longer wanted to support a creator, you simply canceled your subscription. Meanwhile, social tokens can be bought, sold, or traded by anyone on the internet. This means you can sell your membership tokens and thus keep some monetary reward. Better yet, every time a membership is resold, the creator also receives a royalty. Only blue chip NFT communities have liquidity, so fungible memberships are able to better serve the creator middle class.
- The circulation of tokens strengthens community engagement. NFT memberships only contain one gate to pass, so once you are in, the only incentive to strengthen engagement is to drive the NFT value up. Fungible memberships offer more incentives, since they allow members to purchase and spend tokens within the community after unlocking gated access.
It is important to note that NFTs and social tokens are not mutually exclusive. NFTs can create strong communities with a sense of exclusivity, whereas fungible token-based memberships can be a better mechanism to further strengthen engagement within an existing community and/or add to a NFT-based community.
One day we could potentially see social tokens become the main mechanism of how a creator offers, transfers, and extracts value from their community. I’m excited to see a future where both creators and fans can grow together in harmony and success from Day 1.
[This article was written in collaboration with Roll. A version of this article with more specific references to how Roll supports on-chain memberships can be found on their blog.]
Catherine Yeo is a creator, entrepreneur, and investor studying Computer Science and English at Harvard University. She recently published the book The Creator Revolution (available now on Amazon), which examines the historic rise of digital content creators and their impact on transforming both our present and our future. You can find her on Twitter @catherinehyeo.