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The best is yet to come: What’s next for blockchain and the creator economy

The global pandemic changed everything for creators: The stay-at-home orders accelerated the shift toward blockchain and Web3 advancement.
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The global pandemic changed everything for creators: The stay-at-home orders accelerated the shift toward blockchain and Web3 advancement.

After two years and many COVID-19 restrictions finally subsiding, the world is welcoming the return of in-person theater, movies, comedy, music and sports. This has left some wondering what will happen to the legions of digital creatives who occupied and entertained us while normal life was at a standstill — and to the multibillion-dollar economy they inhabit.

Will the world forget the platforms and artists they discovered during the pandemic now the doors of festivals, fashion shows and concerts are open to them again? Is the creator economy, which recent estimates suggest will exceed $100 billion this year, strong enough to withstand a stampede back to real-life experiences?

I strongly believe it is. Government-imposed restrictions may have accelerated the pace of change, but the transformative trends in video streaming we witnessed during the pandemic were nascent before and would have caught hold regardless.

And, while I claim no deep training in macroeconomics, I am a technologist who has spent the past several years working in and around one of the most transformative new technologies to arise in decades: the blockchain. This is the technology that will completely reshape digital life, supercharging the creator economy in the process.

Related: Decentralization revolutionizes the creator’s economy, but what will it bring?

Playing on a digital stage

The enforced slowdown has given many artists the time — and the push — needed to experiment in the digital sphere, find new audiences and explore new ways to showcase their talents.

Even musicians who might never have given serious thought to live streaming a concert have taken to the digital stage. And, there’s evidence this will continue. Take singer Dua Lipa, who broke paid livestreaming records with 2020’s Studio 2054 concert. Initially said to be reluctant, Dua Lipa decided to go the livestream route after being forced to postpone an album tour. This turned out to be a good call: Her digital appearance drew more than five million views globally.

A survey from Middlesex University and funded by the UK Economic and Social Research Council showed that some 90% of musicians and 92% of fans believe livestreaming would remain an effective way to reach fans unwilling or unable to travel to venues in the post-pandemic world. Providers should take note: The study also found that audiences do not expect free access to live music and are not particularly discouraged by paywalls.

The rise in creative energy has inspired the developer community as well. New niche streaming platforms have grown up, helped by the emergence of low-cost decentralized infrastructure that allows application builders to encode video, store data and handle identity without having to pay expensive centralized cloud providers for such services.

Related: Music in the Metaverse creates social and immersive experiences for users

These centralized providers will increasingly find themselves on the defensive. Two attention-grabbing incidents in 2021 are illustrative: Hackers attacked Twitch and released private information about its code and its users to the world. And, Facebook suffered colossal reputational damage from a lengthy outage and whistleblower claims that its management has repeatedly chosen to prioritize profit over safety.

What comes next?

Big Tech’s woes and pandemic-related restrictions have sped up fundamental changes already underway in how the world produces, consumes and uses video content — changes likely to propel growth in the creator economy well into the future. And, given the increasing availability of low-cost decentralized blockchain infrastructure, these emerging players have a shot at mounting a serious challenge to the FAANG-run streaming providers.

There are five ways that blockchain will hasten growth in the creator economy, and help cement it as a central force in worldwide culture and entertainment:

Exclusivity: Nonfungible token- (NFT-) gated access and NFT ticketing are only two of the decentralized tools that improve the digital experience for event-goers: NFT tickets curb scalping while giving attendees a unique souvenir, all while token gating supports unique experiences for fans such as access to private groups and direct messaging with creators.

Fan ownership: The Web3 era is defined by the shift from extracting value from renters to accreting value to owners. Just as the blockchain enables fans to engage directly with their favorite creators, it offers a pathway to asset ownership in individual creator economies outside of traditional centralized platforms.

Low-cost streaming: Video streaming accounts for more than 80% of Web2 internet traffic and counting. Developers, eager to seize a piece of this market without being crushed by high costs, are increasingly seeking blockchain-based affordable infrastructure to support creator streams. With their new ability to draw global audiences through on-demand access-anywhere streams, creators are turning to uniquely Web3 features such as tipping, paid entry and live shopping to monetize their content.

Immersive interactivity: The one-way nature of Web2 publishing is already giving way to immersive interactivity that rewards users for participation. With the ability to record immutably and securely on the blockchain, creators can incentivize interactions without sacrificing privacy.

Niche down: While Web2 was built to scale up, Web3 is built to niche down. With its lower cost, increased security and resistance to censorship, the blockchain makes it possible to build micro-communities serving smaller niches than would be economically viable in Web2. That’s a fundamental shift that not only puts creators in control but also makes communities less appealing to attention-seeking trolls.

The stage has been set for a blossoming of creative activity, and those poised to take it will be assisted by decentralized infrastructure.

Related: The Metaverse will change the live music experience, but will it be decentralized?

Digital creatives have always recognized that they must be nimble to succeed. Now, there is a technology that will empower them and their analog peers to reach new audiences on their own terms without having to cede power or profit to tech behemoths like Google and Amazon.

My faith in the ability of musicians, gamers, influencers and creators to adapt to the new realities to come — and to thrive in them — has never been stronger.

The creator economy? The clue’s in the name.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Doug Petkanics is a co-founder at Livepeer, where the team is building a decentralized live video broadcast platform to enable the next generation of video streaming. Prior to Livepeer, Doug was co-founder and CEO of Wildcard, a mobile browser. He also co-founded Hyperpublic, which was acquired by Groupon. He was the VP of Engineering at both.

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There Goes The Fed’s Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

There Goes The Fed’s Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

Two years ago, we first said that it’s only a matter…

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March 19, 2024

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There Goes The Fed's Inflation Target: Goldman Sees Terminal Rate 100bps Higher At 3.5%

Two years ago, we first said that it's only a matter of time before the Fed admits it is unable to rsolve the so-called "last mile" of inflation and that as a result, the old inflation target of 2% is no longer viable.

Then one year ago, we correctly said that while everyone was paying attention elsewhere, the inflation target had already been hiked to 2.8%... on the way to even more increases.

And while the Fed still pretends it can one day lower inflation to 2% even as it prepares to cut rates as soon as June, moments ago Goldman published a note from its economics team which had to balls to finally call a spade a spade, and concluded that - as party of the Fed's next big debate, i.e., rethinking the Neutral rate - both the neutral and terminal rate, a polite euphemism for the inflation target, are much higher than conventional wisdom believes, and that as a result Goldman is "penciling in a terminal rate of 3.25-3.5% this cycle, 100bp above the peak reached last cycle."

There is more in the full Goldman note, but below we excerpt the key fragments:

We argued last cycle that the long-run neutral rate was not as low as widely thought, perhaps closer to 3-3.5% in nominal terms than to 2-2.5%. We have also argued this cycle that the short-run neutral rate could be higher still because the fiscal deficit is much larger than usual—in fact, estimates of the elasticity of the neutral rate to the deficit suggest that the wider deficit might boost the short-term neutral rate by 1-1.5%. Fed economists have also offered another reason why the short-term neutral rate might be elevated, namely that broad financial conditions have not tightened commensurately with the rise in the funds rate, limiting transmission to the economy.

Over the coming year, Fed officials are likely to debate whether the neutral rate is still as low as they assumed last cycle and as the dot plot implies....

...Translation: raising the neutral rate estimate is also the first step to admitting that the traditional 2% inflation target is higher than previously expected. And once the Fed officially crosses that particular Rubicon, all bets are off.

... Their thinking is likely to be influenced by distant forward market rates, which have risen 1-2pp since the pre-pandemic years to about 4%; by model-based estimates of neutral, whose earlier real-time values have been revised up by roughly 0.5pp on average to about 3.5% nominal and whose latest values are little changed; and by their perception of how well the economy is performing at the current level of the funds rate.

The bank's conclusion:

We expect Fed officials to raise their estimates of neutral over time both by raising their long-run neutral rate dots somewhat and by concluding that short-run neutral is currently higher than long-run neutral. While we are fairly confident that Fed officials will not be comfortable leaving the funds rate above 5% indefinitely once inflation approaches 2% and that they will not go all the way back to 2.5% purely in the name of normalization, we are quite uncertain about where in between they will ultimately land.

Because the economy is not sensitive enough to small changes in the funds rate to make it glaringly obvious when neutral has been reached, the terminal or equilibrium rate where the FOMC decides to leave the funds rate is partly a matter of the true neutral rate and partly a matter of the perceived neutral rate. For now, we are penciling in a terminal rate of 3.25-3.5% this cycle, 100bps above the peak reached last cycle. This reflects both our view that neutral is higher than Fed officials think and our expectation that their thinking will evolve.

Not that this should come as a surprise: as a reminder, with the US now $35.5 trillion in debt and rising by $1 trillion every 100 days, we are fast approaching the Minsky Moment, which means the US has just a handful of options left: losing the reserve currency status, QEing the deficit and every new dollar in debt, or - the only viable alternative - inflating it all away. The only question we had before is when do "serious" economists make the same admission.

They now have.

And while we have discussed the staggering consequences of raising the inflation target by just 1% from 2% to 3% on everything from markets, to economic growth (instead of doubling every 35 years at 2% inflation target, prices would double every 23 years at 3%), and social cohesion, we will soon rerun the analysis again as the implications are profound. For now all you need to know is that with the US about to implicitly hit the overdrive of dollar devaluation, anything that is non-fiat will be much more preferable over fiat alternatives.

Much more in the full Goldman note available to pro subs in the usual place.

Tyler Durden Tue, 03/19/2024 - 15:45

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Household Net Interest Income Falls As Rates Spike

A Bloomberg article from this morning offered an excellent array of charts detailing the shifts in interest payment flows amid rising rates. The historical…

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5 hours ago

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March 19, 2024

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A Bloomberg article from this morning offered an excellent array of charts detailing the shifts in interest payment flows amid rising rates. The historical anomaly was both surprising and contradicted our priors.

10 Key Points:

  1. Historical Anomaly: This is the first time in the last fifty years that a Federal Reserve rate hike cycle has led to a significant drop in household net interest income.
  2. Interest Expense Increase: Since the Fed began raising rates in March 2022, Americans’ annual interest expenses on debts like mortgages and credit cards have surged by nearly $420 billion.
  3. Interest Income Lag: The increase in interest income during the same period was only about $280 billion, resulting in a net decline in household interest income, a departure from past trends.
  4. Consumer Debt Influence: The recent rate hikes impacted household finances more because of a higher proportion of consumer credit, which adjusts more quickly to rate changes, increasing interest costs.
  5. Banks and Savers: Banks have been slow to pass on higher interest rates to depositors, and the prolonged period of low rates before 2022 may have discouraged savers from actively seeking better returns.
  6. Shift in Wealth: There’s been a shift from interest-bearing assets to stocks, with dividends surpassing interest payments as a source of unearned income during the pandemic.
  7. Distributional Discrepancy: Higher interest rates benefit wealthier individuals who own interest-earning assets, whereas lower-income earners face the brunt of increased debt servicing costs, exacerbating economic inequality.
  8. Job Market Impact: Typically, Fed rate hikes affect households through the job market, as businesses cut costs, potentially leading to layoffs or wage suppression, though this hasn’t occurred yet in the current cycle.
  9. Economic Impact: The distribution of interest income and debt servicing means that rate increases transfer money from those more likely to spend (and thus stimulate the economy) to those less likely to increase consumption, potentially dampening economic activity.
  10. No Immediate Relief: Expectations for the Fed to reduce rates have diminished, indicating that high-interest expenses for households may persist.

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One more airline cracks down on lounge crowding in a way you won’t like

Qantas Airways is increasing the price of accessing its network of lounges by as much as 17%.

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5 hours ago

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March 19, 2024

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Over the last two years, multiple airlines have dealt with crowding in their lounges. While they are designed as a luxury experience for a small subset of travelers, high numbers of people taking a trip post-pandemic as well as the different ways they are able to gain access through status or certain credit cards made it difficult for some airlines to keep up with keeping foods stocked, common areas clean and having enough staff to serve bar drinks at the rate that customers expect them.

In the fall of 2023, Delta Air Lines  (DAL)  caught serious traveler outcry after announcing that it was cracking down on crowding by raising how much one needs to spend for lounge access and limiting the number of times one can enter those lounges.

Related: Competitors pushed Delta to backtrack on its lounge and loyalty program changes

Some airlines saw the outcry with Delta as their chance to reassure customers that they would not raise their fees while others waited for the storm to pass to quietly implement their own increases.

A photograph captures a Qantas Airways lounge in Sydney, Australia.

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This is how much more you'll have to pay for Qantas lounge access

Australia's flagship carrier Qantas Airways  (QUBSF)  is the latest airline to announce that it would raise the cost accessing the 24 lounges across the country as well as the 600 international lounges available at airports across the world through partner airlines.

More Travel:

Unlike other airlines which grant access primarily after reaching frequent flyer status, Qantas also sells it through a membership — starting from April 18, 2024, prices will rise from $600 Australian dollars ($392 USD)  to $699 AUD ($456 USD) for one year, $1,100 ($718 USD) to $1,299 ($848 USD) for two years and $2,000 AUD ($1,304) to lock in the rate for four years.

Those signing up for lounge access for the first time also currently pay a joining fee of $99 AUD ($65 USD) that will rise to $129 AUD ($85 USD).

The airline also allows customers to purchase their membership with Qantas Points they collect through frequent travel; the membership fees are also being raised by the equivalent amount in points in what adds up to as much as 17% — from 308,000 to 399,900 to lock in access for four years.

Airline says hikes will 'cover cost increases passed on from suppliers'

"This is the first time the Qantas Club membership fees have increased in seven years and will help cover cost increases passed on from a range of suppliers over that time," a Qantas spokesperson confirmed to Simple Flying. "This follows a reduction in the membership fees for several years during the pandemic."

The spokesperson said the gains from the increases will go both towards making up for inflation-related costs and keeping existing lounges looking modern by updating features like furniture and décor.

While the price increases also do not apply for those who earned lounge access through frequent flyer status or change what it takes to earn that status, Qantas is also introducing even steeper increases for those renewing a membership or adding additional features such as spouse and partner memberships.

In some cases, the cost of these features will nearly double from what members are paying now.

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