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Learnings about Creator Economy


History of Creator Economy


There are two broad categories of creators:
Influencers: Provide entertainment
Experts: Share knowledge
Many expert creators have built their audience on Twitter, but to date, the company hasn't given these creators any tools to own their audience or make money. That's why creators send their Twitter followers to other platforms - Substack, Gumroad, etc. - to make a living.
Layer 1: Foundational Media Platforms. Since the late 2000s, we witnessed the birth of platforms like YouTube, Instagram, iTunes, Spotify, and more recently Snapchat, Twitter, Medium, Twitch, TikTok, etc. Platforms help creators get discovered and establish an audience by investing heavily in their recommendation and curation algorithms — they solved the distribution problem for creators. No longer were creators at the mercy of large production companies who decided what content to produce and who the audience would be.
These platforms contributed to the rise of multi-channel networks like Maker and Fullscreen. They aggregated creators and equipped them with audience development tools before they were bought for hundreds of millions, while new networks like Brat TV and Tastemade emerged. The platforms also necessitated the creation of multimedia editing tools that helped creators polish their content.
But platforms don’t always have content contributors’ best interests in mind so the smart creators learn to cross-promote and diversify their presence on different apps to minimize “platform risk”. That way they’re not vulnerable to one platform’s decline, change in priorities, removal of features, or reduction in opportunities that can hurt them, which is known as “platform whiplash”.
Layer 2: Monetizing Influencer Reach. Once top creators had built an established audience who trusted what they had to say, brands started to recognize the return on investment of paying creators to harness their on-platform reach to advertise products and services.
While some platforms split traditional ad revenue with creators, others left it up to the content makers to figure out how to monetize, leading to the rise of sponsored content and companies like Niche that brokered the deals. There are now hundreds of companies in this space including influencer agencies, sponsorship marketplaces, talent representation companies, and more. According to Mediakix, the current influencer marketing TAM is ~$8bn and it’s expected to grow to $15bn by 2022, making it one of the fastest-growing business sectors. Ideally, creators work with sponsors that match their personal brand, and don’t sacrifice content quality to overtly push a corporate message.
However, as influencer marketing grew more common and more brands started paying for it, influencers noticed a pattern: with each paid post, they’d lose some of the trust that they established with their audience, hurting their engagement and growth. Which brings us to the latest wave of creators’ evolution…
Layer 3: Creators as businesses. This is where we are today! Having developed fandoms that follow them off-platform, creators can become full-fledged businesses with multiple revenue streams beyond ads. Companies have arrived to help creators earn money by selling products such as premium content, merchandise, books/ebooks, newsletters, or selling services such as fan engagement, coaching, consulting, speaking engagements, etc.
This lets creators focus on delighting their biggest fans and making more unique niche content, rather than desperately seeking the biggest possible audience and making more generic clickbaity content.
Essentially, creators have to balance the distribution potential of certain platforms with the risk of becoming dependent on them, and monetize by either earning a little off of each fan from mainstream content for a big audience or earning a lot off of deeper connections to a smaller set of fans through niche content.
The big trend we see here is that over time, creators are becoming more diversified in their revenue streams and are being funded directly by their fans.

TAM for Creator Economy

Here’s our bottom’s up TAM (total addressable market) analysis, which adds up to 50 million creators:
Professional Individual Creators (~2M+) – Making content full-time
YouTube: Of the 31M channels on YouTube, ~1M creators have over 10K subscribers ()
Instagram: Of the 1bn accounts on Instagram, ~500K have over 100k followers and are considered active influencers ()
Twitch: Of the 3M streamers on Twitch, ~300K have either Partner or Affiliate status ()
Others: including musicians, podcasters, writers, illustrators, etc total ~200K
Amateur Individual Creators (~46.7M) – Monetizing content creation part-time
YouTube: Of the 31M channels on YouTube, ~12M have between 100-10K subscribers ()
Instagram: Of the 1bn accounts on Instagram, ~30M have between 50-100K followers ()
Twitch: Of the 3M streamers on Twitch, ~2.7M are non Partner or Affiliates
Others: including musicians, podcasters, writers, illustrators, maybe a total of ~2M<
Currently how influencers/ creators earn money is:
Advertising revenue shares
Sponsored content
Product placement
Tipping
Paid subscriptions
Digital content sales
Merchandise
Shout-outs
Live and virtual events
VIP meetups
Fan clubs

Graphics

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Birth of Media Platforms

Opportunity Assessment
Pros: Once these platforms gain traction they can grow rapidly thanks to virality. There have been huge outcomes in this space.
Cons: Very saturated market with the winners in each category already identified. Difficult for new entrants as incumbents all have strong network effects.

Emergence of Influencer Marketing

Pros: There is an opportunity to build a large, scalable business in the platform/marketplace segment given that brand marketing is still the #1 way that creators generate income. Who will be the DoubleClick of influencer marketing
Cons: There has been no major outcome in this space, with Twitter’s buy of Niche and Google’s acquisition of FameBit only ranging in the tens of millions. Our hypothesis is that there are several reasons why:
None of these platforms can monopolize on supply — influencers are incentivized to sign up with as many of them as possible. Defensibility is a key question.
Top influencers work with agencies, not platforms/marketplaces. These platforms typically capture a long tail of small to medium-sized influencers.
Influencers all have distinct personalities and are thus hard to manage — platforms are not equipped to do so.

Creators as Businesses

Pros: Integrated platforms like Twitch or YouTube can charge a high 30-50% take rate because they can leverage the consumer engagement they already have to provide creators a ton of value on building an audience.
Cons: In contrast, standalone companies have a low take rate of typically 5% because they don’t have additional value add and need to align themselves with the creators. Given that the largest platforms in this space have under 500K creators, a 5% take rate off an average of $10/month donation will be tough to build a large business.

a16z

They’re accessible to everyone, not only existing businesses and professionals
Now the ability to make a living off creative skills has trickled down to individuals at scale, helping everyday people to launch and grow businesses.
Companies have the opportunity to engage entrepreneurs in the early stages, then capture economic value as they grow. They might start with a and add product capabilities as their customers earn revenue and develop new needs.
They view individuality as a feature, not a bug
New platforms highlight variation among workers in categories that can benefit from more diversity in user choice.
For new platforms, this model can pose a sizable risk: once consumers are able to work directly with a preferred provider on an ongoing basis, they may take that relationship offline.
They focus on digital products and virtual services
Whereas past generations of entrepreneurship-enabling platforms typically focused on selling physical products (e.g. Amazon, Etsy, Ebay, Shopify) or in-person services (e.g. Task rabbit, Care.com, Uber), new creator platforms are focused on digital products
They provide holistic tools to grow and operate a business
Platforms are incentivized to help creators succeed and grow, rather than driving discrete, one-time transactions.
Some platforms offer marketing tools like custom landing pages, coupons, and affiliate programs. Others provide behind-the-scenes support: Walden, for instance, connects new entrepreneurs with coaches for strategy and accountability.

Creator Economy Platforms

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A diagram of all the current platform that play within in the Creator Economy. Platforms within the creator economy have four purposes but are unable to do all of them and effectively help amateaur creators monetize their creation .

Four Purposes
Content Discovery - You’re looking to discover content so you can find inspiration, pass time, discover new ideas, and more. Examples of these platforms are as followed - pinterest, twitter, instagram, youtube,tik-tok, youtube, medium, and substack. These platforms hold content in different forms for users: videos, short- form, newsletters, blogs, short-words, pictures, etc.
Create/ Find Community - As creators start to find their niche and develop their fans - they are shifting to the creation of communities which they can utilize to increase engagement of followers, increase referrals, and monetize. Similarly, users , once feeling a sense of belonging with an influencer/creator and niche, they will similarly look for communities of this nature. Platforms that live within this space are like - discord, reddit, twitch, luma, patreon, instagram

Commerce - Not all creators monetize based on their creation like posting videos, making tik-toks, or affiliate links. Creators are able make landing pages, templates, courses,small hacks, etc. Platforms that live within this space are like: gumroad, kanjabi, ghost, grailed, etc.

Creators as Businesses
I am not a businessman, I am a business, man!’ — Jay-Z
Creators have been able to utilize content discovery, individuality, and community to monetize and build trust with people who consume digital content. this has led to platforms in the above categories to focus on funding creators, creating turn/keys and resources to help them grow. Some of these platforms include: patreon, tik/tok, substack, youtube, or cameo

Diffusion lives in the middle, by doing a little but of everything just right, and targeting the long tail of the creator economy ( ~48M) we should be able to create the middle class of creators to help them build their 100 true fans and monetize.

Wealth/Audience Pt 1


Audience is one of the many things that allows for people to reach a level of social capital and status that allows them to rise to the level of idolization.
Humans used to only purchase and follow their idols - people chase and try to attain a social capital and status by mimicking their vibe.
Now, increasingly, people are becoming friends with their idols. The rise of platform technologies has allowed intimate relationships to be built with creatives and people who we idolize. Leading to what we are beginning to call ‘The Creator Economy’.

It is well understood that the internet has created extraordinary abundance in information and products. Abundance solves problems for humans, but via commoditization, it creates others. In a state of abundance, ownership conveys no status. In a world of commoditized products, little personality is expressed through purchasing.
The internet has altered that dynamic — rather than passively watching a commercial on TV, we actively follow the lives of different creators, ask questions of them, and peek behind the curtain.
Abundance has made all things equal. Creators are simply aggregating friends to sell products.
Models of Wealth Building

Three Ways of Monetizing Audience
Promote → Leverage audience to sell others products to your following. You are able to profit from impressions and engagement → ads ( display/audio) and affiliate programs
Sell - Leverage your audience to sell your products & profit from the sales → products can be either digital ( premium content, courses, software, community, e-books, online events) or physical ( CPG, books, events, in-person)
Invest - Leverage your audience to build ownership ; profit from upside → direct investment → syndacite → think calacancis or mr.beast
Tldr - Leveraging audience to build wealth by promoting products, selling products, or investing in their audience or along side with them.

Wealth/Audience pt 2


How do we pay creators?
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Promote


There are three stakeholders in a promotion-based monetization model: creators, audience members, and advertisers. Each party pays with a different currency.
Creators pay with effort. They put in the work to create a product in the hopes the audience consumes and engages with it. Audience members, on the other side of this interaction, pay for this effort with attention.
This is a symbiotic relationship, up to a point. Each party benefits, though no money is earned. Advertisers solve that problem. They buy the attention accumulated by the creator and pay with money.
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Sell

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Creators remove the need for advertisers by monetizing from audience members directly. Creators pay with effort while the audience pays with money first, attention second. Functionally, that means, ceteris paribus, a creator prefers a subscriber that pays but never consumes to one that consumes but never pays. Attention is important to the extent that it acts as a lubricant for conversion and retention — creators that have an attentive audience will find it easier to increase their following and retain members.

Investing

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Creators that build wealth by investing in startups add a stakeholder to the mix: the company’s founder. This model can be leveraged in conjunction with those listed above, or independently. Isolated, creators buy ownership from founders with money and audience attention. The agreement they make is that they will expose the founder to their audience in addition to the cash provided (a commodity).

Sharing


Effort, attention, money, and ownership can all be distributed within an audience but What are we trying to achieve?
Co-Creation
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Creators can better serve this desire by sharing the effort required to bring a product to life. For example, rather than creating a new course on analyzing SaaS businesses, I could solicit interest from the community, selecting applicants to help out. In the process, audience members become "contributors," learning and applying new skills.The problem is curation — it may be difficult to grasp an individual's abilities and commitment without considerable assessment time. But as creators get to know their audience better, this issue should be mitigated
Sharing Attention
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We all seek a sense of belonging. It's what inspires our desire to seek out groups of like-minded people. Once that fit is established, there's status in being a community leader. The most direct example here is Reddit: the moderator of a particular subreddit holds status to those engaged in the community. Even a contributor that writes a popular comment benefits — receiving upvotes and other awards for their involvement. This form of anointment is not common in creator circles.
The creator could (and should) highlight those contributors that worked to create the product or engage with the community on a regular basis. By doing so, they share attention. Within the confines of a particular community, that attention can grant status.

Again, this is an opportunity. While existing platforms track audience members as paying or non-paying entities, there's no system (that I've found, at least) that classifies members based on effort and engagement. That could prove a valuable tool that recalibrates the creator-audience relationship.
Our behavior depends on whether we believe ourselves to be a medic or soldier, engineer or manager, creator or audience member. While those roles have meant that traditionally creators pay with effort and audiences pay with attention or money, new models allow for mediation. Boundaries are movable, lines are blurring.
In this period of dynamism, this dance of frameworks, creators must decide what they want to achieve. Those that learn to share — to distribute effort, attention, money, and ownership — have the chance to build deeper relationships with their audience, and eventually subvert the concept of an audience in and of itself. In the end, the goal is not to be one thing or another, to be some half of a circle, light or dark. It is to be in the arena, to bring others in, and together, to build something greater than ourselves

The Era of Antisocial Social Media

Social platforms are still reporting robust growth — yes, — despite a growing chorus of opposition. Social conversation continues to shape everything from to the to our most intimate . And we now , with endless scrolling through our social feeds being a chief reason why.
But dig a little deeper, and a more nuanced picture emerges about social media users today that has important implications for the ways in which brands reach customers. Specifically, when you look at who is — and more importantly, who is not — driving the growth and popularity of social platforms, a key demographic appears to be somewhat in retreat: young people.
For example, 2019 from Edison Research and Triton Digital show social media usage overall among Americans 12 to 34 years old across several platforms has either leveled off or is waning, while 2019 from Global Web Index suggests that the amount of time millennial and Gen Z audiences spend on many social platforms is either flat, declining, or not rising as greatly as it has in years’ past.
To understand what’s driving this shift, you need only talk to young people. They’re saying that after years spent constructing carefully curated online identities and accumulating heaps of online “friends,” and make real friends based on shared interests. They’re also craving , safety, and a respite from the throngs of people on social platforms — throngs that now usually include their parents.
To reach these younger audiences on social, marketers are going to have to re-think their approach. The first step is to understand the distinct characteristics of these more closed, and often more private and interactive online spaces. Since I believe that naming a trend helps provide a framework for understanding it, I have dubbed these spaces “digital campfires.”
If social media can feel like a crowded airport terminal where everyone is allowed, but no one feels particularly excited to be there, digital campfires offer a more intimate oasis where smaller groups of people are excited to gather around shared interests.
I’ve identified three categories of digital campfires: private messaging, micro-communities, and shared experiences. Some digital campfires are a combination of all three.
Let’s examine the characteristics of each, as well as how brands are successfully navigating the challenges of reaching the audiences in these environments.

Private Messaging Campfires

Private or small-group messaging — usually but not always with one’s real-life friends — is the primary purpose for gathering.
In a 2019 from ZAK, a youth-focused creative agency, nearly two thirds of the 1,000 people polled, all under 30, said they prefer to talk in private message threads rather than on open forums and feeds. Sixty percent of respondents stated that talking in private groups means they can “share more openly.”
Private messaging campfires often exist on traditional social platforms. Facebook Messenger and WhatsApp are among the most well-known examples. According to the ZAK survey, 38% of people under 30 only use Facebook for the private messenger function. Instagram, the rare platform among younger Americans, recently launched a new, standalone app, called Threads, designed expressly for via the camera and text.
For the most part, brands aren’t invited into these private chats. Some have responded by adapting similar technologies, like texting (whether with actual humans or ), to mimic the intimacy of personal conversations with friends.
For example, there’s , a members-only, text message-based, personalized restaurant recommendation service from the dining review site (a favorite among millennial foodies). Users can text questions like “Where should I take my date in midtown Manhattan?” or “What’s the best midday sushi in Santa Monica?” and receive answers from actual humans (Infatuation staffers).
Similarly, there’s — another text-based service that launched last year to help facilitate direct conversations with their fans via text messaging “” Community’s primary users are celebrities (among them: Kerry Washington, Amy Schumer, and Paul McCartney). But some fashion and lifestyle brands like ,
and have already signed on, and the opportunity for brands to speak more directly to their customers via a channel they’re already using is a promising development.
Tip: This is the hardest campfire for marketers to penetrate. Get to know your audience intimately in ways that go way beyond simple demographics. Specifically, work to understand their habits — especially how they consume content and communicate across multiple platforms — and use this to inform the channels on which you communicate with them. Think about how you can reach customers by mimicking their behavior.

Micro-Community Campfires

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