Paper 11: Creator Contracts
The first step to independence in the metaverse
I’ve always said trading JPEGs ain’t forever.
Since it became clear that blockchain / NFT technology was revolutionary, it was very important to me that I found a way to be useful in this economy so that I wouldn’t have to rely on the wildly volatile NFT market for income.
One of the ways I have begun contributing is by advising independent creators on how to launch themselves into this space with NFTs. (I am currently in early-stage discussions with three very different creators in the media/entertainment industry, all of whom are actually pretty big in their respective fields.)
Why do I want to do this?
Fire - creators have something burning inside them which they want to get out; that is inspiring and nice to be around
Economic - creators have historically always had it hard; the internet has helped enormously - but it’s still tough
Competence - it’s what I’m good at. At the very minimum as a former teacher and lawyer I can explain anything which I’ve learned with competence. And with my experience over the last year in the space, I’ve learned an insane amount of specific knowledge which I hope can help people
Fun - this is fun (full stop)
So this article is a short look at the first step to independence for creators in the metaverse market: the creator contract.
What is a smart contract?
At a high level, a smart contract is like a vending machine. It guarantees certain ‘outputs’ in response to certain ‘inputs’.
In the context of digital art:
money + art selection = art dispensed
The smart contract essentially governs the sale from the creator to the collector: it replaces the person who might have ordinarily ‘sold’ the art to the collector.
Every creator needs one of these contracts to get their NFT to market. (See my previous paper if you are just starting out and wondering why NFTs are valuable in the first place.)
Why is art from a creator contract better than other options?
The primary reason that a creator contract is better than another type of contract (like the shared contracts administered by Nifty Gateway and OpenSea, for example) is that art produced by a creator contract is perfectly identifiable as by the creator. It is obvious to everyone that the creator is the true creator of the work, because it has come directly from their very own contract.
This is not the case with shared contracts, which mix up all of the art produced by the platform in a way which means there is no provenance (no proof that the art was directly created by the creator, only proof that the art was directly created by the platform).
When you mint with a platform contract, you're giving your art to the platform; they're registering it on your behalf. When you have your own smart contract, it's the equivalent of having your own warehouse, your own inventory. And when you mint with your own smart contract, you have full control over it, because you have the keys to your warehouse.
Manifold on Smart Contracts and Creative Sovereignty, Zora Zine interviewing Eric Diep, Founder of Manifold
This is a big deal for two reasons:
Collectors value provenance — proof of the origin of art has throughout history been of exceptional value (see my previous paper on the importance of provenance). Now is no different.
Shared contracts are vulnerable — anyone can change the metadata of NFTs produced from a shared contract at any time (!), meaning the NFT can substantially change in nature without the approval of either the creator or the collector!
What are the other benefits of the creator contract?
Creator contracts can provide you with all sorts of control over your work which you’ve never had before.
You can share royalties easily with other recipients; you can give administrative access to trusted individuals; you can make your NFTs dynamic and change them over time; you can airdrop more NFTs to holders of your NFTs.
There are so many options that this has been described as an “infinitely programmable canvas”.
What else is important to be independent in this space?
It’s important to consider the various elements of launching, surviving and thriving in this space (accepting that it won’t be a one-size fits all answer).
This diagram (which I wrote a while ago and may need an update!) highlights some of the various important elements of a creator-centric launch.
Final thoughts
The purpose of this Paper was to provide some foundational knowledge on creator contracts as a first step to independence in the metaverse - but this knowledge is just the first step.
To truly survive and thrive a creator would need a thoughtful strategy with respect to every aspect highlighted in the diagram above - and would need to execute on their promises.
For the practical knowledge on how to execute these contracts, I am producing a more detailed write-up soon.
If you or anyone else you know are launching soon and would like to chat on strategy, give me a shout!
Have a great day,
B
Please do leave me any questions or thoughts here - I respond to every one!
And if you thought this was interesting, please consider subscribing to this Substack here and following me @BCheque1 on Twitter for more on NFTs and Web 3.0.
Disclaimer: The content covered in this newsletter is not to be considered as investment advice. It is for informational and educational purposes only.
I hold some of the NFTs mentioned in these newsletters.