How Microtransactions Can Change the Creator Economy

Connor D | October 18, 2021

Last updated on February 5th, 2022

Blockchain has potential to disrupt the creator economy in many ways from digital art NFTs to secure payments. One of the ways blockchain can change the creator economy is through microtransactions, an alternate way of distributing revenues from content to creators.

In the current creator economy, a creator is limited to large and popular platforms if they want to have any chance of earning income. The platform we will use as an example is YouTube. Platforms like YouTube offer a lot of value to creators, with over 2 billion users and programs for creators to earn money such as the YouTube partner program. The YouTube partner program splits revenue, delegating 55% to the creator and 45% to YouTube. While this may sound great to some, there is a catch. Many creators feel handcuffed because they must follow strict YouTube community guidelines. While some guidelines may be for the greater good others may be designed to benefit the platform while limiting creativity and expression. Creators often feel pushed to cater their content to platforms such as YouTube rather than to their community. 


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Centralised Platforms Benefit the Company, Not the Creator

Over the years, YouTube has often changed its community guidelines and rules without letting creators know beforehand. As a result, creators may find that one day a video is monetized, then the next day it is not monetized because a rule has changed. These unpredicted changes can have dramatic consequences on a creator’s bottom line. For example, in 2018, YouTube received complaints that ads were playing unsavoury content. YouTube responded by demonetizing many videos discussing anything unsavoury in any context. While defunding videos that may promote violence or bigotry is easy to agree with, the issue arises from the implementation. YouTube didn’t just demonetize bigots and unsavoury videos. They demonetized history channels that may reference Nazis or past violence, videos preaching against hate, or videos discussing hunting and hunting products. This decision protected YouTube from potential fallout but impacted many creators income. While educators, hunters, and self-defense coaches found themselves without a paycheck, these videos continued to attract viewers and profit from YouTube. This chain of events has ushered in a new era of YouTube that has seen YouTube prioritize advertisers over their community and their own bottom line over their creators.    


What Are Microtransactions?

Microtransactions, as the name might imply, are small amounts paid for a service. Blockchains have leveraged microtransactions to create self-sustaining economies inside applications. For example, a Basic Attention Token (BAT) is a cryptocurrency paid out to users of the Brave web browser when they view ads. Users can then use their BAT to leave small microtransaction tips on web pages they visit. BAT has value because it can be sold back to advertisers who use it to pay for ads on the browser. Systems like this leverage microtransactions to create a closed-loop that rewards content creators according to community sentiment rather than what is in the best interest of a centralised company like YouTube.


How Microtransactions Will Benefit the Creator

CPM (Cost per thousand viewers) for most YouTubers is $2-$4. If a Youtuber ends up having a $2 CPM, then their take home will be $1.10 for every 1000 viewers. This number depends heavily on a creator’s niche and the target demographic with high-value niches like finance and users from wealthier countries driving higher CPM. These factors should allow for a predictable income source for content creators who consistently generate high-view content, but unexpected demonetization can have devastating and sudden impacts for creators to find themselves outside YouTube’s best interest.   

In the future, gas prices on blockchains platforms such as Cardano and Polkadot will be low enough to support microtransactions. On decentralised applications that provide services currently provided by centralised companies like YouTube. Decentralised services have the benefit of supporting community interest rather than corporate interest. A decentralised community is better suited to mediate content than a corporate body. In addition, returns from microtransactions could exceed current payment programs. With centralised company, profits are consumed by share growth, executive salaries, and a commercial bottom line. Decentralised applications are governed by the community for the community, and as such, profits are distributed to users rather than shareholders. The figure below compares earning potential on YouTube versus selling content for microtransactions on a future blockchain.

If you look at the first row and 5th rows, you will see that microtransactions can generate five times more revenue than YouTube with only 1/5th of the views. A small percentage of YouTubers have a CPM  high enough to justify staying where they are. It is clear the microtransaction model has the potential to generate profits for creators in a way that is managed by the community rather than by a company. Microtransactions on blockchains are far from mature but stand to disrupt the creator economy in a big way.



Many creators have already leveraged platforms like Patreon and Onlyfans to demonstrate that the community is willing to pay for content.  Microtransactions offer a new way for communities to support creators with low costs to users. Though the microtransaction model is a very new option and has not been explored in its entirety, there is clear potential for it to compete with current models for paid content.

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