Three months ago, I was catching up with one of my previous engineering managers. He told me about a new startup he joined called Mirror which was building a decentralized protocol for writers.
Over the past year, I saw a few failed projects try to do something similar so I was immediately skeptical. But after speaking with the team and learning about recent developments in the space, I’m now convinced that a protocol for crypto-native newsletter businesses is a really interesting opportunity.
I’m so convinced that I decided to join the Mirror team to help build this future.
Crypto provides new tools for financing, monetization, and growth, These tools can enable more creators to succeed as independents. This is what excites me most about the space. Many of these ideas can be applied not just to newsletter businesses, but any media business on the internet.
In the rest of this post, we’ll explore:
Leaving the corporate world to go independent seems to be the hot new thing. But after speaking with newsletter writers and media execs, the same problems seem to crop up.
Problem #1: It’s risky to get started as an independent writer
Most independent writers rely on savings until they start generating significant cash flow. As a result, this limits the number of people that can take the plunge to go independent.
Problem #2: Writers are limited to just a few monetization channels
The two main monetization channels for newsletter writers are: subscriptions and ads. Subscriptions are great because they provide recurring revenue but it usually takes a bit of time to build enough trust for people to pay for a subscription. Subscriptions also suffer from what I call “the paywall paradox”.
If you put your best content behind a paywall, it’ll be harder to acquire new subscribers. But if you make your best content free, it’ll be harder to retain subscribers.
Meanwhile, ads allow you to monetize publicly accessible content. However, it’s a pain in the ass to constantly go through the cycle of sourcing ad partners, closing deals, and managing the relationship.
Problem #3: Sustainable growth is hard
I love reading newsletters but I’ve found myself subscribing and unsubscribing to paid newsletters pretty frequently these days. There’s only a finite amount of time I have to read newsletters each month and I inevitably end up paying for a few that I never actually read.
I try to support writers even if I’m not reading their work but I wonder how many independent newsletters will end up being successful as more get started over time. I think bundling newsletters is a potential antidote to newsletter fatigue which we’ll cover in a bit.
Problem #4: Risk of burnout
Writing is hard. Writing every week is really hard. Writing something so good every week that people are willing to pay you is really fucking hard.
There needs to be better ways of helping writers collaborate so they can share the workload, make a sustainable living and feel like they’re being their best creative selves.
Contrary to what many crypto people will lead you to believe, crypto can't solve all of the world's problems. But it's pretty good at a few things.
Here are some ways crypto can enable new models for newsletter businesses.
Reduce the risk of going independent through a global permissionless crowdfund
Crowdfunding has existed on the internet for a while now. But the main issue is that it can be restrictive. Many times, crowdfunding platforms limit who can contribute based on where you live geographically or whether you’re an accredited investor.
Crypto enables global permissionless crowdfunds. As long as you have an Ethereum address and some ETH, you can participate. This opens up the opportunity for people all over the world to raise money for any creative project.
This past summer, Stir had a cool drop where creators could spin up a landing page and build an email list of supporters before going independent. But what's the crypto-native version of this?
With crypto, creators can spin up a landing page that allows supporters to send ETH and ERC20 tokens to an escrow contract in return for a newsletter token. Once the creator is ready to go independent, the funds could be streamed to the creator and backers could reduce fraud risk by periodically voting to ensure the creator is hitting certain milestones. Early contributors can also share in the upside by receiving dividends in proportion to how many newsletter tokens they hold.
In crypto, bits are money. As a result, we can develop clever systems for reducing risk and aligning incentives between creators and their communities.
Monetize through NFTs
I’m surprised I got this far without mentioning NFTs 🥴 Beyond the hype, I believe NFTs are a key primitive for helping creators unlock value.
NFTs turn any digital media file (eg essays, songs, art, podcasts, etc.) into an economic asset that can be monetized directly. Instead of being limited to subscriptions or ad revenue, you can monetize each individual essay by minting it as an NFT and selling it to your superfans as a collectible. This enables digital media to be monetized without a paywall or ads.
We’re still super duper early, but I think this gets really interesting when tools are built to turn essays into their own IP universe.
Imagine you want to do an in-depth profile on Drake. You could raise money through a crowdfund, commission an artist to create digital art pieces that reflect themes in the report, mint them as NFTs and sell them as collectibles. You could also auction off access to exclusive communities and discussions.
The takeaway here is that NFTs open up an entirely new design space for monetization that we’ve still barely explored.
Accelerate growth through community ownership
By using crypto rails, you can issue tokens to your community to align incentives and supercharge growth. I think the coolest thing you could do with a newsletter token is give token holders a percentage of future earnings in the form of on-chain dividends. As revenue accrues to an on-chain treasury for the newsletter, token holders can periodically receive payouts.
Token holders can also participate in governance decisions like what topic a writer should cover next, what media formats they should expand to, and what writers should be added to the bundle.
Similar to NFTs, the design space for newsletter tokens is still underexplored. Yet, I believe crypto's ability to align communities through economic incentives will help creators develop new models for acquisition, engagement, and retention.
Easily create bundles / collectives through standard smart contracts
Only the most talented writers will be able to build a sustainable business as a one-person show. I think the majority of writers will end up joining some sort of bundle or collective. Collectives are a great way for writers to increase distribution, optimize willingness to pay, and reduce burnout risk.
We’re still early, but crypto provides powerful tools for building shared collectives around creative work. If you want to create a newsletter bundle in web2, you’ll probably need to build a complex stack for tracking analytics, executing revenue share agreements, a CMS, a branded website, and more.
If you squint, these newsletter bundles start to look more like SaaS businesses than writer collectives. Talented techies can make this work, but most writers can’t. Cryptonetworks natively provide tools that make these types of collectives much easier to start, scale, and govern.
Things like royalty payments and rev shares will eventually become standard smart contracts that anybody can plug into. The best part is that you don’t need to trust that the collective will compensate you fairly. As long as you use a standard smart contract, you can be pretty confident that you’ll get paid based on a deterministic set of rules.
Once we build these standard smart contracts, I believe it’ll eventually become the default way for creative work to be produced, shared, and owned on the internet.
To reiterate, this stuff is still quite speculative. We have ideas about how this could work in theory, but still need to prove them out. Here are some of the hardest problems today with building crypto-native newsletter businesses.
Before you can participate in a cryptonetwork like Ethereum, you need to install a smart wallet and turn fiat into ETH. It’s not rocket science, but it’s also not anything like signing up with an email and password. You also need to overcome the mental hurdle of trusting these decentralized systems. (“What do you mean it’s not FDIC insured?”)
High gas fees
High gas fees price out large swathes of the population from buying ETH and minting NFTs. There are a lot of really smart people working on solutions like L2 protocols, new L1 blockchains, cross-chain bridges, Ethereum 2.0, etc., so I’m pretty confident this will get solved eventually.
Writing secure, composable, and powerful smart contracts
If you’re a decent software engineer, it’s fairly easy to learn how to write smart contracts. However, it’s difficult to write secure contracts that can handle billions of dollars of volume without being exploited. The best smart contract engineers also have a deep understanding of mechanism design and domain expertise in whatever they’re building. We need more world-class engineers building these systems.
If a newsletter token just serves as a way to access exclusive content and participate in community governance, then it probably passes the Howey Test (this determines whether a digital asset should be regulated by the SEC as a security). However, things get murky when token holders begin receiving cash flows.
I believe in the importance of securities laws to protect consumers but I also believe in the power of creators building decentralized economic networks. We need more thoughtful discussions around how to reconcile the tension between regulation and decentralization.
Here are a few features and tools I’d love to see built for crypto-native media businesses in the next few months. These tools can also be abstracted in a way that they can be reused to support any sort of creative work. Whether that's a collective for musicians, digital artists, podcasters, etc.
Moar smart contracts
Crypto-native media businesses have a few components: tokenized crowdfunding, publications, ability to mint NFTs, community governance, a treasury, etc. There are some smart contracts that perform these functions but we’ll need standards and audits around these contracts so developers can compose and remix these features as they please.
One of the common complaints with existing newsletter products is that they don’t offer enough customization. Crypto-native newsletter products should be easy to customize like a SquareSpace site or Webflow. To do this, there needs to be easy to use tools like subgraphs and SDKs for 3rd-party developers to build their own interfaces for on-chain data.
Better writing experience
Mirror has already added the ability to include crypto-native features like crowdfunding and NFTs into essays but what are other ways we could make writing more expressive and multimedia? What does a crypto-native version of Notion look and feel like?
Build an economic social graph
In Web2, social graphs are weighted based on engagement metrics such as likes, retweets, shares, etc. In Web3, bits are money. Therefore, we can build social graphs weighted based on economic engagement. For example, what if I could go to your Mirror profile and see all the projects you contributed to, how much you contributed, how early you were, and how much money you made?
Food for thought - what would a “Crunchbase for Creators” look like using crypto rails?
There really is no such thing as an independent writer. All creative work is collaborative. Maybe you have an editor, or a researcher, or a graphic designer.
So how do we build crypto-native marketplaces that allow people to easily find jobs they’re suited for and get compensated fairly?
Community-driven capital allocation
How do we build tools for people to post bounties for creative work they'd like to see, get it crowdfunded, let contributors decide who gets to perform the bounty, and allow supporters to share in the earnings?
How do we help products spin up crypto-native creator funds where the community decides who gets to receive investment? How do we help the community receive a share of the earnings produced by the selected creators?
From the outside looking in, a lot of stuff in crypto looks like overengineering.
Yet, I think we’re just starting to understand the importance of helping creators tap into a global permissionless economic network. The importance of helping creators monetize their work in new and creative ways. The importance of helping creators build economically incentivized communities.
Crypto isn’t just a new technology, it’s a new philosophy for how creative work is produced, shared, and owned on the internet. As one artist said on Clubhouse a few nights ago: “power to the fucking creators”.