When historians write about the rise of the " creator economy," there are two moments (a decade apart) that are sure to occur. The first moment was inthe spring of 2007, when YouTube began sharing advertising revenue with creators—a decision that arguablylaid the foundation for what we know today as the " creator economy ." The second moment came inthe spring of 2017, when the cracks in this foundation became impossible to ignore,andquestionsabout the “legitimacy” (also translated as “legitimacy”) of the platform economy began to emerge. Spring 2017 marked what creators now commonly refer to as the “ Adpocalypse.”YouTube is facing an exodus of advertisers as advertisers worry that their ads will appear next to objectionable content. So the platform completely reformed its advertising policy. YouTube chose to conduct a more thorough review of the content of the platform, introduced increasingly stringent content terms and revenue mechanisms, and adjusted the video content classification and recommendation algorithms to ensure advertising delivery of video content is "ad-friendly." As a result, thousands of creators have seen their views and revenue plummet — some by as much as 99%.One YouTube creator toldNew Yorkmagazine at the time: “Almost everyone’s views have been cut in half. So we’re fighting this (YouTube’s) system and the new algorithm, and it’s like, how do people rely on this now? life?” For many YouTube creators, the Adpocalypseincidentwas a wake-up call. For the first time, they realize that their income — and in some cases, their entire livelihood — is attached.This is the first time creators have questioned the legitimacy of their deals with platforms.But it won't be the last time. After the firstAdpocalypse event in 2017 , YouTube had its second, third and fourthAdpocalypse events in 2018 and 2019 . YouTube isn't the only platform with strained relationships with creators.In 2016, Facebook faced a backlash when it made changes to Instagram's algorithm feedthat affected creators' engagement on the platform. WhenOnlyFans announced content policy changes in the summer of 2021, the creator backlash was so swift that the platform was forced to put the changes on hold almost immediately. If this pattern sounds familiar — groups of people raising objections to the policies that govern them and demanding better terms from the powers that make them — it’s no accident. What else can a change in the platform’s profit policy be, other than a form of taxation that has not received support from users? What is creator if not a new type of labor seeking protection for an emerging type of work that never existed before? Like feudalism and the monarchical theocracy before it,the creator economy(at least in its current highly centralized form)is going through alegitimacycrisis. Creators are questioning the terms that govern their relationship with the platforms they regularly use, and the platform's right to set them in the first place.How the ecosystem responds—that is, what alternatives are proposed, who builds them, and how—will determine the next phase of the creator economy.
01. What is legitimacy? Where did it come from?
Legitimacyislike air quality, we don't usually think about it until something goes wrong. We all participate in various political, economic, and social institutions—governments, schools, workplaces—that govern our behaviour.When we think these systems are fair, we believe them to be "orthodox". We think it's "unorthodox" when we think it's unfair and we deserve better.Therefore,when enough people in the system question the fairness of the system, it threatens the ability of the system to continue to operate, and there will be alegitimacycrisis.Ethereum co-founderVitalik Buterinwrote: "Orthodoxy is a higher-order mode of acceptance. If people in a certain social context widely accept and play their part in formulating that outcome, and each reason do so because they expect everyone else to do the same, and the result is orthodoxy in a certain social context. ” The term “crisis of legitimacy” was coined by sociologist Jurgen Habermas ) was created in the 1970s. But for centuries, philosophers and social thinkers have wondered about legitimacy—who owns it, where it comes from, and how it disappears.Forexample, the ancient philosopherAristotleproposed that political legitimacy rests on “legitimacy of reward”—ajust system in which everyone benefits according to his or her own merit. Two millennia later, the political philosopherJean-Jacques Rousseau argued thatgovernment legitimacy rests on the general will and the common good(as opposed to individual interests such as a monarch or a small elite). A century after Rousseau, the German sociologist Max Weberproposed three basic sources of legitimacy:
- Traditional orthodoxy- essentially, rule by the status quo. "Follow me because it's always been done that way."
- Charismatic legitimacy—in other words, the reign of a cult of personality. "Follow me because I'm charming and persuasive." (The rise to power of many authoritarian leaders has followed this pattern.)
- Rational-legal orthodoxy—in other words, rule by reason. "Follow me because the rules and legal systems I build are clear and objectively make society run better."
Ultimately,legitimacy comes from trust: trust that the governing order is just, trust that the actors who establish and enforce itdo so for the benefit of the majority.When this trust is eroded, a crisis of legitimacy occurs—when the ruled no longer believe that those in power exercise power for the collective good. The concept of legitimacy is not limited topolitical institutions.Economic systems and power can also have legitimacy or lose it. In Europe, for example, when laborers – made scarce and therefore valuable due to the devastation of the Black Death – gained greater bargaining power and used this to ensure greater individual autonomy and (Eventually) greater economic freedom, feudalism lost its legitimacy as an economic system. This eventually led to urbanization and the creation of a merchant class. The Industrial Revolution and the subsequent Gilded Age led to a crisis of legitimacy among factories and workers who demanded better working conditions, child labor laws and weekends, and the American middle class was born. Our understanding of legitimacy, and where it comes from, is in constant flux. In fact,shifts in orthodoxy are often the impetus for a crisis of legitimacy: 400 years ago it was more or less believed that the legitimacy of government arose from thebirthright of the monarch;The notion that all power should come from the consent of the governed" became popular during the Enlightenment, whendemocracy replaced the monarchyas the only orthodox government structure in much of the world. All of this brings us tothe current conflict in the platform economy.More and more creators no longer trust that the decision-making of the platform is based on the collective interests, and no longer trust that the results of the platform's decision-making will make all participants get a fair return.Not so long ago, the orthodoxy of these platforms—their centrality to creators and the attention economy, their role as the primary intermediaries of 21st-century commerce—was largely unchallenged. Understanding how these platforms gained legitimacy—and how they lost it—is important for understanding what needs to happen in order to resolve this crisis of legitimacy.
02. How do platforms gain and then lose legitimacy?
Initially, these platforms all derived their legitimacy fromthe three sources Max Weber listed above: charismatic legitimacy, traditional legitimacy, and rational-legal legitimacy. In the early days, platform orthodoxy was largelycharismatic orthodoxy: founders like Mark Zuckerberg (Facebook founder) and Jeff Bezos (Amazon founder) Convincing visions of the future possible for his creations, casting himself as a king of technological geniuses and philosophers. Platform orthodoxy also has a stronglegacy bias:platforms are free to build and manage products as they see fit, since they are private companies,usually with founders controlling the board, and traditionally, private companies are structured as they see fit and the right to administer its own domainwas unchallenged. However,most of these platforms establish their legitimacy through “reasonable-legal” means—that is, gaining legitimacy through rules and legal systems that everyone understands and agrees to.Through terms of service and content moderation policies, “objective” algorithms, and “impartial” oversight boards, platform creators have constructed what amounts to their own legal system. These systems are built to protect everyone and maintain the best community possible for all.But over time, flaws in the social contract between platforms and creators began to show. Changes in platform policies similar to those enacted during YouTube's Adpocalypserevealtheextent to which platform policies and practices are designed to protect and advance the interests of the platform, regardless of their impact on creators. Algorithms can be tweaked so that platforms can give or take traffic away from creators based on whether the content keeps viewers engaged and generates a steady stream of revenue for the platform. Data ownership policies lock creators and their audiencesinto a specific platform, making the platform a middleman and regulator of the relationship between the two, and the platform has the right to unilaterally determine the fees. The result is that platforms exercise near-authoritarian control over the creators who frequent their platforms. YouTube can ban well-known creators at will; TikTok can ban its biggest stars indefinitely; Apple can decide who can be featured in its App Store, and OnlyFans can decide the ethics of its creators to appease their paying partners and investments By. As creators begin to define themselves as a distinct category and gain recognition—such as as skilled professionals, as craftsmen, as partners who provide value to the platforms they often use—they increasingly Ask yourself questions about the field they work in, and come to the conclusion thatthe system is not set up in their favor. Each subsequent monetization change or policy failure has further eroded creators’ trust in the platform — not dissimilar to the series of colonial-era parliamentary acts that endedwith the US Declaration of Independence.Which brings us to today, and the current state of the social contract between platforms, creators, and platform ecosystems. Today, platform legitimacy is largely dependent on traditional legitimacy —arguably the weakest ofthe three aforementioned sources of legitimacy , and the most easily abused . That is, platforms make their own rules, and thus set the terms of the creator economy, because that’s how it’s always been done, and because no one has come up with meaningful alternatives to the status quo. Fortunately, this is starting to change.
03. How the crisis of legitimacy in the creator economy ends
A crisis of legitimacy canresolve itself in two ways: first, regimesreassert legitimacy by aligning their rule with social interests and norms(as industrial-age factories did by enacting fairer work policies); Or,the system is overturned and a new system is built that better links values and incentives between people to relationships of power.These platforms have used the first routein an effort to regain the recognition of creators by increasing the various monetization channels available on the platform. Both Twitter and YouTube have added tipping features to their sites. Facebook recently announced plans to pay creators $1 billion in "bonuses" by 2022.But these realignment efforts reveal the extent to which platforms are unable or unwilling to actually change their relationship with creators.For example, Facebook's bounties will only be available to select creators and will be tied to specific "milestones" related to product and growth goals set by Facebook. It is clear that the second option will need to be adopted if the crisis of orthodoxy in the platform economy is to be resolved: theemergence of genuine, credible platform challengersthat offera more democratic and decentralized alternativeto the current The built platform economy.The first generation of such companies has already emerged. Over the past few years, products like Patreon,CameoandSubstackhave gained tractionby targeting traditional platforms' monetization issues for creators, offering creators avenues to generate revenue directly from viewers , rather than solely relying on platform control advertising revenue.But as we’ve seen,profitability is only one aspect of the crisis of platform legitimacy .It’s not just about money:it’s about agency and autonomy, and the opportunity to participate in decisions that directly affect your livelihood, and it’s about breaking down the unilateral powerthat platforms hold as centralized points of control in ecosystems. Fortunately, the innovations that many founders are pursuing in Web3 are precisely the corrections needed to introduce platform ecosystems to address the current crisis. Founders who want to drive the next generation of platform economies should focus onthree areas in particular :data ownership and portability,participatory decision-making and collaborative business models, anddecentralization through Crypto and open source protocols.
1) Ownership and portability of data
In the current platform economy, one of the most important sources of conflict ishow data is controlled and delivered. Platforms own the data created on their platforms—including identities, content, interactions, and engagement—and by extension, this enables platforms to control creator-viewer relationships.In this model, creators are essentially captive, unable to leave a platform without losing their users and business.An important step in reshaping the social contract in the platform economy will be to change this dynamic,giving creators the ability to own and transfer the data relevant to their businesses. Next-generation platforms have begun to move toa more data-portable model. For example, Substack gives authors full ownership over their readers, allowing them to take their subscribers' email lists with them if they decide to leave the platform; furthermore, authors use their own Stripe accounts, which means subscription relationships are not Bound to the Substack platform. More and more creators are turning to building their own independent properties, monetizing directly from users through tools like Stripe and Venmo. In contrast to the current closed paradigm of building consumer platforms,decentralized networks (encrypted networks) are built on top of open data(stored on public blockchains), giving users transparency and control over what is happening. For example, creators can mint NFTs(Non-Fungible Tokens)and sell them across many different platforms, with no single marketplace "owning" that NFT. This dynamic means creators can operate outside of a particular platform and move to other networks and services that better suit their needs and values. True creator consent and legitimacy occurs when creators are able to participate in the system from a place of their free choice (rather than a data-driven lock-in).
2) Decentralized construction through open source development
Open source protocols played a key role in developing early web infrastructure, including email. Over time, open source was largely crowded out by a more proprietary model, as companies built centralized networks that far outstripped the capabilities of open source protocols (compare Facebook to email). As the current crisis of legitimacy resolves itself andthe platform economy shifts towards a more democratic and representative model, open source protocols will once again play a central role. The platform's proprietary product development is a major reason they are able to maintain control over their ecosystem. Platform owners and internal teams decide what features are developed, what integrations are available, who they can be made available to, and under what terms creators must accept if they want to participate in the platform. This in turn has the effect of locking creators into specific platforms and prioritizing platform monetization over creator autonomy and empowerment. With open source development, this dynamic can be broken.Platform features will be chosen based on what makes the most sense to the community as a whole, not based on unlocking more advertising revenue or preventing users from leaving the platform.
3) Participatory Decision Making & Collaborative Business Model
I've written before thatI believe true creator empowerment involves more than data ownership.In a platform economy that truly empowers creators, creators will own the platform itself. From this perspective,cryptographic tokens represent one of the most promising innovations, enabling ownership to be distributed and transferred over the Internet as easily as information.Cryptonetworks are decentralized networksthat utilizecryptographic tokensto incentivize and reward user participation;Bitcoin and Ethereumare early examples of cryptonetworks that started by rewarding participants with native tokens (representing ownership in the network).A DAO(Decentralized Autonomous Organization) is an online community owned and operated by its members through tokens. I've compared DAOs to "crypto-native cooperatives" before. In a DAO, decisions about the direction of a community are made by its members. It’s conceivable thatin the future, decisions about monetization, algorithmic prioritization, and other things that platforms have made unilaterally in the pastwill be made by creators and users themselves. An example of this model is Mirror,a crypto-native content distribution platform. On Mirror, the WRITE token will allow users to become members of the Mirror DAO, who will collectively decide how to allocate their treasury funds and product development. Whilecrypto tokensprovide the strongest form of distributing ownership to the community,smaller-scale outcomes can also be achieved by inviting creators into the platform as shareholders or advisors,which will also give creators the opportunity to actively participate in decisions affecting the platform , and better coordinate incentives between creators and platforms. One example is Airbnb's Host Advisory Board, which is made up of 18 hosts who meet regularly with company leadership.
04. Towards a Bright Future of the Platform Economy
A few years ago, when I was first interested inPassion Economy(that is, creators produce certain content and products through their own enthusiasm and preferences, and fans pay for their output), whatattracted me was,These platforms seem to promise a new, more personal, and more autonomous way for creators to make a living outside of the traditional workplace.The more time I spend in this ecosystem, the more time I spend talking to creators and watching the dynamics between them and the platforms they use, the more I realize that there is a lot of work to be done to deliver on this promise . The current platform economy—highly centralized, highly intermediary, with a few people making key decisions—has the potential to replicate the same problems in the traditional economy that have led to widespread burnout and financial instability among workers in the traditional economy and the erosion of workers' rights. Throughout history,crises of legitimacy have often been resolved with new, more collectively representative forms of governance. That's the opportunity I see in today's platform economy. However, this is not a given: As with all change, the outcome depends on who takes the lead and the choices they make. Butif the next generation of networks can optimize creator ownership and autonomy, and more representative decision-making, we will be closer to realizing the promise of afuture of truly free work.
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