Licens Whitepaper

The Flaws of Web2 Creator Economies

The primary challenge in the creative licensing market today is the increased level of centralization, which leads to an array of problems for the creator as well as the licensee.

Centralization & Monopolization

Existing infrastructure for Web2 creator marketplaces has enabled a few companies to consolidate in recent years to the point of having an overwhelming market share:

• Canva’s design and publishing platform acquired stock media sites Pexels and Pixabay in 2019, with revenue increasing from $291M to $1B from 2019 to 2021.⁴ Today, Canva sees 292 million unique visits per day.⁵
• Shutterstock has acquired 9 companies in the last 5 years, including Turbo Squid and PicMonkey in 2021, and Pond5 in 2022.⁶
• In 2021, Getty Images acquired the free image site Unsplash, which now has 2.5 million free images and over 100 million downloads per month.⁷
• Adobe, who achieved record revenue of $4.43B in Q3 2022 (73% from its digital media segment)⁸ engineered its biggest acquisition to date when buying media collaboration tool Figma in September of 2022⁹.

Market consolidations are taking place as the industry experiences 6.5% YoY growth, leading to a few industry giants decisively cornering a monopolistic share of the market. Creators and content users in these marketplaces pay the price for this level of centralization on multiple fronts:

High platform commissions

Centralized content licensing marketplaces take a large cut from the creator sales, 55%-85% on iStock¹⁰, 60%-85% on Shutterstock¹¹, and 75%-77% on Adobe Stock¹². Not only are they cornering the market, but these handful of public companies have established a monopoly over the revenue of each creator.

Zero transparency

Licensing is controlled by the company and both creators and licensees are unable to access historical data on the content listed on the marketplace. Businesses and entrepreneurs cannot easily review an image’s or video’s history of usage before purchasing it for their own brand.

Lack of control

While digital creations are the root of the business model, the creators themselves have zero say over how the process works. Web2 creator platforms own the creator’s audience, data, and most of the revenue while fully controlling how the audience is serviced and how revenue is generated and distributed. They use a subscription model to maximize their own revenue and profitability while the creators’ payout gets diluted with each download, often resulting in creator earnings of only ~$1 per download.

Breakdown of Creator & Licensee Pain Points

For Creators

• Lack of Fairness: ~55%-85% of revenue taken by centralized marketplaces.
• Absence of Immediacy: Minimum payout requirement and delayed payout schedule.
• Censorship: Subject to content policies and review process.
• No Ownership: No access to customer and transaction data.
• Lack of Transparency: No idea of where and how content is used.
• Powerlessness: No influence on the system.

For Licensors

• Lack of Transparency: No access to licensing history and usage.
• Low Level of Verifiability: Can’t easily prove their rights.
• Lack of Permanency: May lose access to their assets.
• Non-Transferable: Can’t transfer licenses to others.
• Powerlessness: No influence on the system.