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#12 - A Fireside Chat: The Creator Economy Boom
Welcome to the new subscribers! And if this is your first article, hello 👋 I write about the ideas, products, and tech advancing the creator economy every week.
How did we get to this point in the creator economy?
What are the current trends and challenges?
What’s coming next?
In this post I’ll lay out my thoughts on these topics. Would love to hear what others think, so if you have anything to add, Tweet at me.
1. How did we get here (2021 Creator Economy)?
Fundamentally, our arrival at this point in the creator economy can be attributed to the continual advancement of creation, distribution, and consumption technology. These three aspects progressed rapidly and in lock-step, fueled by people’s insatiable appetite for free-flowing information, entertainment, and knowledge.
Plenty has been said about why the last 18 months have been a whirlwind for the creator economy. I won’t be rehashing that. Instead, I will share a broad historic view, and a 21st century view.
Broad historic view
If we go all the way back to the 15th century, when Johannes Gutenberg invented the printing press, we have one of the earliest turning point that simplified creation and publishing of textual content.
With the first version of the printing press, it only took three years to print 200 copies of the era’s most popular book — The Holy Bible. Although that seems slow today, this was an impressive feat as the only previous option was to hand copy a book. Even in these early times, people valued information and knowledge so much that a hand-copied book costed as much as a house.
Unfortunately, the printing press was commercially worthless until the advent of a distribution network for books, long after its inventor had passed away 🪦. The lack of adequate distribution channels hamstrings the impact of even the most significant creation technology advancements.
This bottleneck is observed in the modern day as well — e-books struggled to find a market, until the invention of Kindle and other e-readers. This is why it’s critical to have progress in creation, distribution, and consumption together.
There have been numerous inflection points through the ages where creation, distribution, and consumption were made easier, and we will always be in the midst of improving creation and distribution tools. Historic examples:
Creation: Printing press, typewriter, camera, motion picture photography, PC, software with powerful editing capabilities
Distribution / Consumption: Literacy*, newspaper, theater, radio, TV, internet, smart phones, wearables, VR / AR
* before most people could read, literate people had jobs that entailed reading newspapers out loud to an entire town.
21st century view
If we zoom in to the last two decades in the creator economy, we see the birth of something that unequivocally improved creation and distribution by orders of magnitude, and brought the mass market UGC (user-generated content) ecosystem into existence — YouTube.
YouTube unlocked creativity by simplifying the process of capturing and sharing video for many people who had never even considered posting videos on the internet. YouTube gave the everyday Joe/Jane a voice, and opened the world to free flowing information through a high bandwidth format.
Importantly, this started a shift away from traditional media, where a few gatekeepers held all the power when it came to distribution. Up to this point, men in suits who worked in New York skyscrapers decided what / who gets distribution; they directed attention at will to content they deemed worthy, because they were the only game in town. When YouTube launched, it looked like a toy rather than an existential threat. This allowed the platform to grow while the gatekeepers in power ignored it.
Fast forward 15 years, and the internet has matured in ways that allowed similar platforms to grow and facilitate easier connections between people and content. Over this time period, gatekeepers continued to lose control over distribution, because creation and consumption experiences had become much better elsewhere.
Consumption behaviors have largely shifted from traditional media (TV and newspapers) to digital content platforms. Today, the titans of yester-year are mere shadows of their former selves. The US Newspaper industry serves as one data point, where revenue has fallen from $38B in 2008 to $13B in 2020 (-66%). Terrestrial radio has held steady in comparison, but one has to wonder how long it can last.
What really propelled the incredible surge in people becoming creators are highly visible, outlier success stories. Creators and artists such as Justin Bieber, NigaHiga, Casey Neistat, Liza Koshy, Emma Chamberlain, and Ninja grew on these platforms and became iconic household names. They firmly laid the foundation for more adults to become at least part-time creators, and seeded the examples that led 75% of kids to dream of becoming content creators.
2. What are current trends & challenges?
There will be a wide range of answers depending on who you ask, what role they play in the ecosystem, and where they are in their career. I will focus on a few very common challenges for creators.
Distribution remains difficult. As a creator, you have better creation tools than ever, but so do all other creators. With easier creation, there’s now more content being published than can ever be consumed.
This means distribution remains a challenge, but the nature of the challenge has evolved. Today, the issue is no longer a lack of a microphone, it is rising above the noise of all the other microphones.
Being rewarded fairly remains unsolved. On the content distribution side, platforms are still trying to figure it out. YouTube paid $30B to creators and publishers in the past 3 years, more than 65% of its revenues. Last year alone, YouTube paid out $4B to the music industry.
Even so, the large majority of YouTube creators would fall below the poverty line if YouTube were their only source of income. Meanwhile, TikTok creators amassing millions of views a month are getting paid peanuts without a brand partnership.
There’s a ground swell of start ups focused on rewarding creators. They will need to figure out how to unlock the power of community with BYOA, because the incentive structure of existing distribution platforms inherently lead to some limitations that are difficult to change.
Creators are getting over the fear of “selling out” as they branch into new businesses. This is great for the ecosystem. Even the renaissance had to be funded by patrons.
Burnout. This is both common and severe. Creators on every platform fear that their fans will forget them if they take a vacation. Ninja famously “lost” 40,000 subscribers over a short break, which roughly nets out to -$2.4M in annual subscription revenue.
Companies have learned that sustainable lifestyles lead to healthier, more productive employees that contribute to the company’s goals over a longer period of time. How do we transfer this knowledge to creators to help them with longevity? Burnout should not be a foregone conclusion for creators who find success.
Safety. We’re spending more time online than ever, along with that is more bad stuff (e.g. egregious violence, hate speech, exploitation). How we remain safe and keep future generations safe is a matter that cannot be punted down the road. This is a problem that affects creators and consumers alike, and companies are aggressively staffing up Trust & Safety teams to work on this problem.
“There’s no time”. When I asked 20+ creators — all with a certain level of success, earning 6 figures or more — about their biggest challenges, more than half answered with this. They each wanted to try branching out with new content and business ideas, but they can’t. They’re too busy doing everything on their own.
One concrete step that successful creators need to take is invest in their own growth by collaborating with others, and delegating aspects of their business. Winning creators find a way to focus their energy on where they alone can deliver unique value.
More disintermediation. For creators, advancements in decentralization such as NFTs represent a future where they can own, nurture, and monetize the community relationships they’ve built on their own terms. Meanwhile, Social Tokens represent an opportunity to further align fan and creator incentives by offering fans partial ownership, future upside, and access to a creator.
The NFT hype is bound to die down in the medium term, but over the long term (10 years), creators and artists will use this paradigm shift to unlock the uncapped value from their casual followers and super fans.
Creators —> Businesses. This is a big one, and it’s here to stay. Now that successful creators have shown what can be done, the world has taken note. Countless startups have formed to help creators manage their budding businesses, elevate their craft, and make money. At the same time, creators themselves are experimenting with more businesses beyond content — merch, digital products (e.g. courses), creator brands (e.g. MrBeast Burgers, Emma Chamberlain Coffee). We are about to witness business-minded creators teleport to the next level.
An interesting branch of this theme is investing, specifically, how company are investing in creators (CreativeJuice, JellySmack), and how creators are becoming investors and owners (Nebula, Atelier Angels). With distribution power, cultural clout, and loyal fans, creators can be incredible additions to startup cap tables.
Fan funding. Fans want to help creators succeed and make a living. Companies seem to be announcing tipping, subscription products, digital goods features every month.
Collaboration. This is an infinite, positive sum game, and creators are wising up to it. They're making time to be together to allow co-creation, cross-promotion, mutual learning to take place naturally. As I said previously:
More creators are recognizing this, and putting forth explicit efforts to be in proximity of each other so that there’s more opportunity for frequent collaboration. More of these projects such as Launch House are popping up lately.
Creator Funds. Platforms bridging the income gap between emerging creators and established creators. Platforms including TikTok, YouTube, and Snap have announced creator incentive funds to encourage creators to choose their platform as the place to create and distribute content.
The incentive funds across the board are veiled in mystery in terms of criteria, but serves as a short-term way to reward short video creators who otherwise are not making much money, if any.
Creator / Brand Marketplace. Brands need to earn awareness, favorability, and trust with consumers. In 2021, people have grown numb to traditional ads, and consumer trust can’t just be bought with ad dollars. Trust is earned over time, which is exactly what creators have done over years of consistent content output and relationship building. So brands are re-allocating their ad dollars from traditional ads to partnerships with creators, who bring positive association, consideration, and sales.
As brands see more success with this tactic, they allocate more of their budget to it, which leads more brands to follow suit. In the meantime, platforms are noticing this trend, and are building platform-owned marketplaces (Instagram, TikTok), where they can create lock-in and extract more value.
3. What’s coming next?
The time scale we’re looking at provides an important frame of reference to consider. Progress in the near-term will center around iterative improvements around the challenges and trends outlined above.
Foundational work will be done by incumbent platforms and startups to poke at what it means to advance the creator economy. However, the more interesting blue sky opportunity lies in where we’ll be in 30 years.
30 years from now…
A much higher proportion of the population will be creators. There will still be a spectrum of different outcomes as creators, but more of us will actively create.
Creation and distribution capabilities will improve beyond our imagination. Perhaps even our ability to consume will be enhanced.
More creator businesses will flourish into major brands and media empires.
Tools and technology will exist to help creators directly monetize the deep relationships and trust they build with their fans.
Content will be more ever-present than today, in mediums that aren’t possible today (immersive mixed reality and virtual reality), fitting into parts of our lives in ways that are infeasible now (playing video games when we’re driving).
The Metaverse will be mainstream, and we as a society will spend a significant portion of our lives in the Metaverse, which means the surface area for how we engage with content and creators increases exponentially.
If we zoom out to a 30 year time horizon, these changes are inevitable, and I can’t wait to get there.
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