Zora Raises $2M to Fuel Sustainable Creator Economy | Crypto News

Dee Goens and Jacob Horne possess remarkably different, yet complementary, backgrounds – precisely what you might anticipate from the founders dedicated to establishing a sustainable economic model for creators and their communities. Their experience encompasses areas like Coinbase, university-level crypto and blockchain projects, KPMG, and Merrill Lynch. However, a crucial element was missing: an understanding of the arts.

“It might surprise you to learn I once aspired to be a rapper,” Goens shares with a laugh. “There’s likely a SoundCloud recording still floating around. That early passion sparked an exploration of the music industry’s mechanics. I frequently questioned friends within the industry about advance payments and 360 deals, only to discover fundamental flaws in those systems.”

These established deal structures, despite often being created with good intentions, frequently result in the exploitation of artistic talent, often relinquishing the majority of an artist’s ownership rights. “I became increasingly concerned by the fact that artists were unable to effectively leverage support from their communities, and instead felt compelled to accept potentially unfavorable agreements. I found this unacceptable.”

Horne explains that he had long held a desire to launch a fashion brand. 

“I initially envisioned a fashion brand as a future endeavor, following my work in the crypto space,” he explains. “While I’m enthusiastic about cryptocurrency, it felt overly focused on financial aspects and lacked a certain dimension. This led me to explore the possibility of merging these two interests, ultimately resulting in the creation of Saint Fame.”

During his time at Coinbase, Horne developed Saint Fame as a personal project, drawing inspiration from concepts showcased in Zora. It functioned as a marketplace where individuals could buy and sell items using cryptocurrency, acquiring tokens with variable values redeemable for future products. 

“I came to the realization that culture itself is shaped by a financial system that is inherently biased against artists and their communities,” Horne states. “The fundamental framework of ownership dates back to the 17th century, originating with the Dutch East India Trading Company and early Nation States. It’s a rather perplexing situation.” 

In today’s world, with the internet enabling instant information sharing with a global audience, the ownership structure remains unchanged from a time when communication required months-long sea voyages. A modernization is essential. Any online community should have the ability to collaborate, pool resources, and pursue shared objectives. This begins with empowering creators and artists to control and benefit from the culture they produce, ultimately extending to internet communities addressing broader societal challenges.”

Their proposed solution is Zora, a marketplace built on a single core principle: fostering sustainable economics for creators. 

Frequently, creators only benefit from their work during the initial sale, while the secondary market continues to generate value without their participation. Consider an artist who sells a piece for its current market price. While this is positive, any subsequent work they produce – building their reputation, brand, and community – adds value to that original piece. The artist, however, receives no financial benefit from this increased value, relying instead on future sales to fund their endeavors. 

A similar pattern exists across the music industry, fashion, sports, and even social media – numerous intermediaries and associated fees. Unsurprisingly, creators of color, who are instrumental in shaping contemporary culture, are disproportionately disadvantaged. 

Zora’s core offering is a marketplace that enables creators and artists to launch products and then continue to profit from their secondary market value. 

The Zora team explains the concept as follows:

Early successes have already been observed. Designer and marketer Jeff Staple released a limited run of 30 Coca-Cola x Staple SB Dunk customs through Reverseland, and their value has increased by approximately 234% since the initial offering. A Benji Taylor x Kevin Doan vinyl figure has seen a 210% increase in value. 

I’ve encountered similar initiatives previously. While at StockX, founder Josh Luber introduced their Initial Product Offerings, a Dutch auction system that allowed the market to determine the price of an item, with a portion of any price exceeding the market value returning to the manufacturer or brand. This focused on brands rather than individual creators (although they did collaborate with Ben Baller on a release). Enabling brands to benefit from secondary market value for limited-edition goods is a less radical concept, but the underlying principle is comparable. I considered it a promising idea then, and I believe it’s even more valuable when used to promote inclusivity rather than maximizing profits. 

It’s worth noting that the team is experimenting with innovative approaches, such as utilizing their own marketplace to assess the value of participation in their TestFlight group. I question whether this is permissible, but I admire their creativity and have not encountered a similar approach elsewhere. 

Zora was established in May 2020 (amidst the ongoing pandemic). The team comprises Goens (Creators and Community), Horne (Product), Slava Kim (Design), Dai Hovey (Engineering), Ethan Daya (Engineering), and Tyson Battistella (Engineering). 

Zora has secured $2 million in seed funding, led by Kindred Ventures, with participation from Trevor McFedries of Brud, Alice Lloyd George, Jeff Staple, Coinbase Ventures, and others.

Tokenized community

The conventional notion that valuable items, whether physical products or digital works, must exist as limited, defined units is being questioned. Goens and Horne are actively challenging this concept with Zora’s latest significant offering: community tokens. The first of these from Zora, the $RAC token, is constructed on the Ethereum blockchain. André Allen Anjos, known professionally as RAC, is a Portuguese-American musician and producer celebrated for his web-streamed remixes, original compositions, and commercially successful work in major advertising campaigns. 

Despite possessing a substantial and dedicated fanbase numbering in the tens of thousands, RAC doesn’t command overwhelming influence on social media platforms. The distribution of the token, and the subsequent trading and sales activity, are solely motivated by the commitment felt by his supporters. This presents a crucial insight for many involved in this emerging economy: sheer follower counts are akin to a roadside billboard – they may attract attention, but don’t necessarily translate into engagement. Today’s creators are building direct relationships with their fans, offering exclusive access and interacting through platforms like Discord, Snap, and comment sections. 

The token launch achieves several objectives: 

• It consolidates fans from various platforms. Regardless of whether they connect on Instagram, TikTok, Spotify, or Snapchat, they can all acquire tokens. This token functions as a common, recognizable unit of value within the community, providing a shared focal point. It represents a unique, digital representation of an artist’s presence.
• It establishes a value pool that artists can control and distribute independently. Currently, $RAC cannot be purchased directly; it can only be earned. A portion of the tokens are being retroactively awarded to long-time supporters. For example, individuals who followed RAC on Bandcamp as early as 2009 will receive a share of 25,000 RAC tokens. Purchases of RAC merchandise also qualify for token rewards. Future token distributions will be allocated to Patreon subscribers, merchandise buyers, and others.
• It keeps value within the artist’s ecosystem, preventing it from flowing into external currencies. This mechanism allows artists to incentivize, reward, and energize their fanbase. RAC fans who purchase his mixtape receive tokens, which they can then redeem for additional merchandise. 
• It provides greater flexibility for creators whose work doesn’t easily fit into traditional product categories. Performance art, activism, and short-form entertainment are difficult to monetize through conventional “drops.” However, a circulating token that increases in value alongside audience growth presents a viable solution. 

Zora’s immediate future plans involve developing a self-service version of the marketplace, enabling creators and entrepreneurs to launch their products without requiring a direct partnership or extensive onboarding process. While numerous challenges remain regarding traction and messaging, the team faces many uncertainties. However, initial releases have demonstrated potential, and the underlying philosophy is both sound and essential. As the creator economy – or passion economy, depending on perspective – continues to expand, there is a clear opportunity to re-evaluate how the value of creative contributions is determined and whether it’s possible to convert the sustained effort of community building into lasting value. 

The most recent transaction price for RAC’s tape, BOY, was $3,713, representing an increase of 18,465%.