Insights

How DAOs Can Better Reward & Align Incentives Between Creators

tl;dr: creator DAOs have the opportunity to create better incentives between creators and fans leading to improved discoverability, more accessible creator resources, and shared financial upside through ownership.

Last week Instagram, Facebook, and What’s App went down with many in web3 roaring for decentralization. Earlier this week, Pomp’s YouTube channel was deleted (and later reinstated) without warning with the reason being ‘encouraging illegal activities. Pomp’s comment section and quote tweets echoed the same roars from the previous week around the need for decentralization. A completely decentralized platform isn’t the answer for creators (yet), but a decentralized autonomous network (aka DAO) is the answer to aligning incentives between creators, their fans, and the platforms utilizing their content.

The DAO Ramp

We first thought NFTs were going to be the way to onboard creators into web3 and that was partially right. Now more and more we’re seeing the shift from NFTs to DAOs. DAOs such as FWB, Party DAO, and Olympus are showing us what’s possible when you have a clear vision, align incentives, and ensure members have access to ownership. DAOs are the current rage because, unlike NFTs, there isn’t the technical hurdle of understanding what is fungible vs. non-fungible when you’re being onboarded.

If web2 is the internet on single-player mode, web3 is the internet on multiplayer mode, and nothing highlights the added benefits of playing the internet in multiplayer mode than a DAO. For creators specifically, DAOs can be the answer to solving discoverability, improving creator payouts, creating peer support groups for mental health and burnout, and sharing the financial upside between creators and the network they create content for. This also includes the opportunity for creators fans to provide support and have ownership in the network by contributing to the growth of the DAO.

The Lay of the Land

Web2 competition > collaboration, aka PVP

Web2 platforms survive and thrive from their ad-driven business models. This is common knowledge but the full gravity isn’t understood until you look at the numbers.

Example: TikTok’s parent company revenue is $34B and the company’s U.S. creator fund is $200M. It’s not uncommon to hear stories of a creator that garners millions of views to earn $70 in payout from the TikTok’s fund. Clearly, something is broken. The byproduct of ad-driven models which use creator funds as marketing plays is that it forces creators to compete with each other for attention with little upside for collaboration.

web2 vs. web3

Web3 is collaboration > competition, aka PVE

In a web3 world, creators form DAOs that incentivize collaboration and continued growth of the network vs. individual creators. Creators, fans, and community members can share in the financial upside of the DAO by helping grow the network while owning a piece of it.

The misalignment between web2 platforms and creators is what makes the opportunity for a creator-owned media network within reach. Who knows a creator needs better than a creator? Why should the people that aren’t actively creating content be the individuals who decide what’s good for creators? In a collaborative environment like a DAO, creators are able to align incentives between other creators and their fans. Financial incentives aren’t the only appeal of the DAO but it’s the easiest way to highlight the potential value of joining one.

The Crawl, Walk, Run for Building a Creator DAO

Despite the cries for complete decentralization, creators aren’t in a place for a fully decentralized network. For many, completely abandoning web2 platforms would mean destroying their careers and income. Web3 needs web2, and more than ever, content creators need web2 to be able to build their ideal web3 vision. Web2 is the highway for creators and their audiences to reach their web3 home, aka their DAO.

Building a Creator DAO

Crawl Phase

A group of creators partner together to create a DAO. The DAO is focused on a medium (TikTok, IG, YouTube), specific topic/area (e.g. web3), or problem (e.g. discoverability).

In the crawl phase, the primary goal is getting creators and fans onboarded, aligned, and ready to put boots on the grab.

The goal of the crawl phase is to ensure the following:

  • Identify the goal of the network
  • Genesis team of creators get their fans into the DAO
    • fans invite others in their network
  • Educate/onboard early members on how they can contribute and share in the success of the network (perfect time to airdrop early members)
  • DAO setup
  • Design tokenomics to generate liquidity from the beginning
    • Separate governance tokens and liquidity tokens
  • Identify team structures and key areas of focus

Walk Phase

The DAO becomes more decentralized while focusing on growth of the community and the achievement of their Northstar or primary function.

  • Reputation systems are fleshed out to help ensure high quality content/insights are shared
    • Additional systems are made to curb spam, self promotion and the highjacking of votes
  • Clear alignment between creators, fans, and members on how they can benefit the DAO
    • New members are able to jump in contribute on bounties while existing contributors and team leads are focused on solving the core mission
  • Key decisions that impact the DAO are taken to vote for the community
    • decisions that impact direct teams are left to those teams responsible

Run Phase

The DAO scales both vertically and horizontally. As the DAO accomplished or achieves its key function, the decision is then to scale and tackle new challenges. The Run phase of the DAO is dependent on the success of Crawl and Walk phase.

Let’s DAO it.

The next large media entity will be a creator DAO. Why? Because the longer platforms benefit from creators’ work without giving back to them, the more likely creators will become frustrated with platforms and form DAOs. The areas where creators struggle the most; ownership in the content and network they’re creating on, discovery, earning a livable wage, production/operations support, and burnout, are the areas a creator media DAO are able to tackle better than existing platforms. The ultimate success and benefit of a DAO are that it doesn’t reward you with just followers, but it gives you the opportunity to be fairly rewarded for your contributions and share in the financial upside of the DAOs growth.

If you’re building a DAO, interested in creators, or like to nerd out about web3. Shoot me a DM and let’s jam.

/ GCR Exclusive, Insights