I have always likened becoming successful as an influencer as this day's equivalent of becoming a professional athlete, A-List actor or the next Taylor Swift. Great in theory, but what about the rest of us. Most folks need a way to become a part of the future of work even if they are performing non-zero margin work. Tens of millions of people fit into that category vs a few hundred or thousand that will strike it rich or even make a living as an influencer.
Such a great perspective! I've heard lots of folks say that TikTok and LinkedIn (??) are two of the last platforms that still offer solid organic reach for "middle class" creators. I love that TikTok's algorithm makes a point to bubble up random stuff -- it's part of what makes it feel so different from Instagram and FB.
Hopefully, emerging platforms will emulate that... it's such a great way to lure in the creators to drive a platform's growth!!
Regarding sponsored content as an creator revenue model, it's also important to consider the massive (and generally opaque) fees that influencer networks take from both sides of the marketplace. Removing $0.50 from every $1 spent by a brand for creator content is unacceptable and impacts smaller creators, who are more reliant on these networks for income, the most. We're doing our part to level the playing field, but I would love to see this get more airtime.
Ambitious topic! You help to illustrate important trends and linkages between the experience economy, platform economy, and the middle class economic squeeze. Yet, if you speak to many platform founders, they will tell you the problem isn’t supply. There are a lot of creative people producing all sorts of interesting things. The challenge is demand. It is very hard to build a business around the fans from the general public. Brands are an important alternative. They spend billions annually on creative content. However, most brands have in-house teams or buy through agencies not platforms. For the creative class to flourish, platforms need to find ways of making brands a bigger part of creator sales. TikTok is moving in this direction with TikTok for Business. However, most brands need more help and prodding to tap into creator platforms, and thereby get access to great authentic content AND help dampen the squeeze to the creator middle class.
Seriously great Li. Thank you for the time and effort that went into this. As a creator *and* a platform owner, this is very eye-opening and helps me think through the work that I'm doing to support creators next year.
As I read, I kept hearing Canadian philosopher Marshall McLuhan’s words: “The medium is the message.”
What he meant is that every societal shift (especially when it comes to media and innovation) has "unanticipated consequences.”
I’ve been a big fan of the burgeoning creator economy, but I can’t help but wonder: as the ground shifts underneath us, are there ramifications we’re not considering?
One thing that worries me is that the primary distribution channels for creators still tend to be big owned channels (YouTube, Twitch, Twitter, Instagram).
We, as individual creators, can carve out a living on this “rented land,” but it doesn’t feel stable.
Question- Isn't it in the platform's interest to keep it more egalitarian amongst the creators? The real Superstar creators are likely to leave once they have big enough distributions. So platforms must be actively working towards stopping this right?
Great end-of-the-year write-up, thank you. I've been wondering how and to what extent the creator economy influences (or needs to influence) independent consultants — actually I'll participate in a roundtable about it tonight, the question being "how to avoid being stuck with one client?" and a lot of answers are to be found in the creator economy "pillars" you just described.
Wealth concentrating at the top is not a bug of the creator economy, it is a feature.
This is because venture capitalists want founders to create moats which will protect their investments, giving them higher valuations with each succeeding round. For consumer-facing companies, this means acquiring the largest number of registered users at the lowest per-person cost, usually with creative (and highly expensive) marketing campaigns. Since the leading ad media platforms are Google and Facebook, the money flows to those two giants. Google and Facebook get richer, while everyone else tries to survive on the scraps which fall under the table.
Then, when it comes to sharing revenue with publishers, Google and Facebook only share revenue with the whale publishers which drive the largest amount of traffic; everyone else barely gets buy.
Google and Facebook have algorithms which are constantly updating to traffic conditions, keyword changes, etc. The purpose of these algorithms are simple: To provide the best paying monetary rewards to the publishers who drive the most traffic, and to keep as much of the ad revenue for Facebook and Google themselves so that their share prices is on an upward trajectory. This is the moat which Facebook and Google have built for themselves, and this is how venture capitalist funding rewards their monopoly.
Because these Google, Facebook algorithms are company secrets, and are the secret sauce for their success, and the US has no laws forcing them to reveal the ingredients of their secret sauce, they are constantly tweaking their algorithms to maintain their monopoly positions.
There is a way out.
As the monopolies get bigger and more successful, they gradually shut down their APIs. When starting, many companies publish their APIs to win over developers, but as they get larger, they shut down their data sharing by gradually shutting down their APIs. APIs make it possible for other startups to query databases for data subsets so that they can build their own sub-audiences. For instance, booklovers would frequent Goodreads (owned by Amazon), and smaller websites would access the Goodreads APIs to build their own smaller sites for niche audiences such as fantasy, romance, crime fiction, etc. This way, these companies could build their own content and audiences within their own niches. But now, Goodreads is shutting down their APIs, making it much more expensive for them to build their own content and audiences. (Amazon does this with most companies it acquires.)
One way to build out the middle of the creator economy would be for the US government to enforce the larger platforms (Google, Facebook, Amazon) to publish open APIs so that there can be free data exchange, making it much cheaper and easier to build out the creator middle class. On the technology level, this can be done because Web APIs are freely available.
The problem here is mainly a political and business issue, because this would run counter to the interests of most VC investors. The Internet was built to be open, but the investors wants to build silos with the money continuing to flow to them in an endless stream.
I have always likened becoming successful as an influencer as this day's equivalent of becoming a professional athlete, A-List actor or the next Taylor Swift. Great in theory, but what about the rest of us. Most folks need a way to become a part of the future of work even if they are performing non-zero margin work. Tens of millions of people fit into that category vs a few hundred or thousand that will strike it rich or even make a living as an influencer.
Such a great perspective! I've heard lots of folks say that TikTok and LinkedIn (??) are two of the last platforms that still offer solid organic reach for "middle class" creators. I love that TikTok's algorithm makes a point to bubble up random stuff -- it's part of what makes it feel so different from Instagram and FB.
Hopefully, emerging platforms will emulate that... it's such a great way to lure in the creators to drive a platform's growth!!
Great analysis, Li!
Regarding sponsored content as an creator revenue model, it's also important to consider the massive (and generally opaque) fees that influencer networks take from both sides of the marketplace. Removing $0.50 from every $1 spent by a brand for creator content is unacceptable and impacts smaller creators, who are more reliant on these networks for income, the most. We're doing our part to level the playing field, but I would love to see this get more airtime.
Ambitious topic! You help to illustrate important trends and linkages between the experience economy, platform economy, and the middle class economic squeeze. Yet, if you speak to many platform founders, they will tell you the problem isn’t supply. There are a lot of creative people producing all sorts of interesting things. The challenge is demand. It is very hard to build a business around the fans from the general public. Brands are an important alternative. They spend billions annually on creative content. However, most brands have in-house teams or buy through agencies not platforms. For the creative class to flourish, platforms need to find ways of making brands a bigger part of creator sales. TikTok is moving in this direction with TikTok for Business. However, most brands need more help and prodding to tap into creator platforms, and thereby get access to great authentic content AND help dampen the squeeze to the creator middle class.
Hey Li, still reading and really appreciate the thought put into this great article! I just wanted to mention that on twitch, one viewer is not one subscriber, it's more likely about 1% or less. (here's some "evidence" which supports my intuition: https://www.reddit.com/r/Twitch/comments/ckexfz/whats_your_followsubscriptionview_ratio/)
This would make the Youtube per-view monetization rate very close to Twitch's.
Anyway great article :) Subscribed!
Hey Li - on the financing side, look at what the guys at Spotter.la are doing on the Youtube ecosystem, it's really interesting!
This is awesome. Thanks !!!
Seriously great Li. Thank you for the time and effort that went into this. As a creator *and* a platform owner, this is very eye-opening and helps me think through the work that I'm doing to support creators next year.
Excellent article Li!
As I read, I kept hearing Canadian philosopher Marshall McLuhan’s words: “The medium is the message.”
What he meant is that every societal shift (especially when it comes to media and innovation) has "unanticipated consequences.”
I’ve been a big fan of the burgeoning creator economy, but I can’t help but wonder: as the ground shifts underneath us, are there ramifications we’re not considering?
One thing that worries me is that the primary distribution channels for creators still tend to be big owned channels (YouTube, Twitch, Twitter, Instagram).
We, as individual creators, can carve out a living on this “rented land,” but it doesn’t feel stable.
Thank you for this deep dive. Creators provide the vibrant energy of cultural evolution. But creative work, for many, is both rocky and lonely.
Question- Isn't it in the platform's interest to keep it more egalitarian amongst the creators? The real Superstar creators are likely to leave once they have big enough distributions. So platforms must be actively working towards stopping this right?
Amazing work, thanks Li!
Great end-of-the-year write-up, thank you. I've been wondering how and to what extent the creator economy influences (or needs to influence) independent consultants — actually I'll participate in a roundtable about it tonight, the question being "how to avoid being stuck with one client?" and a lot of answers are to be found in the creator economy "pillars" you just described.
it's infrastructure time, baby. i love it. let's go.
Wealth concentrating at the top is not a bug of the creator economy, it is a feature.
This is because venture capitalists want founders to create moats which will protect their investments, giving them higher valuations with each succeeding round. For consumer-facing companies, this means acquiring the largest number of registered users at the lowest per-person cost, usually with creative (and highly expensive) marketing campaigns. Since the leading ad media platforms are Google and Facebook, the money flows to those two giants. Google and Facebook get richer, while everyone else tries to survive on the scraps which fall under the table.
Then, when it comes to sharing revenue with publishers, Google and Facebook only share revenue with the whale publishers which drive the largest amount of traffic; everyone else barely gets buy.
Google and Facebook have algorithms which are constantly updating to traffic conditions, keyword changes, etc. The purpose of these algorithms are simple: To provide the best paying monetary rewards to the publishers who drive the most traffic, and to keep as much of the ad revenue for Facebook and Google themselves so that their share prices is on an upward trajectory. This is the moat which Facebook and Google have built for themselves, and this is how venture capitalist funding rewards their monopoly.
Because these Google, Facebook algorithms are company secrets, and are the secret sauce for their success, and the US has no laws forcing them to reveal the ingredients of their secret sauce, they are constantly tweaking their algorithms to maintain their monopoly positions.
There is a way out.
As the monopolies get bigger and more successful, they gradually shut down their APIs. When starting, many companies publish their APIs to win over developers, but as they get larger, they shut down their data sharing by gradually shutting down their APIs. APIs make it possible for other startups to query databases for data subsets so that they can build their own sub-audiences. For instance, booklovers would frequent Goodreads (owned by Amazon), and smaller websites would access the Goodreads APIs to build their own smaller sites for niche audiences such as fantasy, romance, crime fiction, etc. This way, these companies could build their own content and audiences within their own niches. But now, Goodreads is shutting down their APIs, making it much more expensive for them to build their own content and audiences. (Amazon does this with most companies it acquires.)
One way to build out the middle of the creator economy would be for the US government to enforce the larger platforms (Google, Facebook, Amazon) to publish open APIs so that there can be free data exchange, making it much cheaper and easier to build out the creator middle class. On the technology level, this can be done because Web APIs are freely available.
The problem here is mainly a political and business issue, because this would run counter to the interests of most VC investors. The Internet was built to be open, but the investors wants to build silos with the money continuing to flow to them in an endless stream.
Eu sempre comparei tornar-se um influenciador de sucesso como o equivalente de hoje em se tornar um atleta profissional, para melhor minha alta estima