Empowering the new generation of Content Creators
Traditionally, creators tend to be individuals or small groups. There is a good reason for this: their products (creations) reflect their distinct personalities, artistic sensibilities, and visions. They are non-fungible and valuable in their uniqueness. Yet for years, the economic viability of independent creator-driven businesses has been nearly nonexistent for all but a handful of exceptionally talented individuals due mainly to lack of scale. This is primarily because these businesses need more scale and face high transaction costs. As a result, individual creators often must rely on intermediaries and rent-takers, which reduces their profit margin.
The rise of social media platforms marked a shift in the creator economy. These platforms decreased the costs of marketing, distribution, and content creation while giving more power and control to consumers of content. As creators began to professionalize and media introduced programs that shared advertising revenues with creators, platforms established a successful business model for themselves.
Why do consumers buy from creators?
Many factors contribute to the current state of the creator economy, including the manipulation of social media platforms, declining trust in institutions, and the human desire for imitation. However, I would like to focus on two specific explanations: abundance and commoditization.
It is widely recognized that the internet has dramatically increased the availability of information and products. Whereas in the past, consumers were limited to the information and products in their local area, they can now access an almost unlimited amount of both online. Websites like Amazon offer various similar items that may be similar. For example, in the past, a homemaker might have chosen a specific detergent brand to express their identity. Still, many more options are available today, making this decision more complex. While abundance can solve consumer problems, commoditization can also create new issues. Ownership does not necessarily convey status when products are abundant. In commoditized products, personal identity is not typically expressed through purchasing decisions.
The emergence of content creators is partly a response to commoditization. The internet has changed how we consume content, allowing us to actively follow creators’ lives, engage with them, and get a behind-the-scenes look at their work. This increased intimacy and connection leads to greater trust. Instead of just idolizing celebrities, we can become friends with them. When content creators have a personal relationship with recommending products to us, our perception of the object changes. It is no longer just a generic commodity but a reliable recommendation from someone we trust. By purchasing through this channel, we can regain a sense of identity and status lost in the commoditized world.
Creators are entrepreneurs, and entrepreneurs are creators
As creators have been able to eliminate intermediaries and increase their profits, they have become more attractive to investors. By building a loyal audience and partnering with other creators, they can capture a larger market share in their respective industries and create bigger businesses than themselves.
In some cases, creators have even become investors and owners themselves. An excellent example of this is Night Ventures. This talent agency has become a venture capital firm with over 50 top creators from platforms such as TikTok, YouTube, and Twitch as its limited partners. Additionally, numerous companies have emerged to support creators in their entrepreneurial endeavors by providing support services.
Creators have also leveraged their brands beyond traditional content creation businesses. Many creators, especially in professional sports, have teamed up with others as co-owners to start entirely new companies. These creators may not be directly involved in the business’s day-to-day operations but instead offer their branding expertise and network connections to help the company grow.
Likely, this business model will also be adopted by other sectors of the creator economy. We may also see creators investing in their spaces in the long run. Currently, investing in podcasters or OnlyFans celebrities is difficult due to investors’ need for clear outcomes. However, as successful creator businesses emerge, they may be formalized into an asset class that can be rationalized, leading to the potential for ownership as a monetization strategy.
Technology as the enabler of the Creator Economy
With the abundance of platforms available for creators, it can take time to determine the most beneficial. Some platforms may act as unnecessary middlemen and detract from the trend toward creator ownership. However, some platforms are specifically designed to support and uplift “Middle Class” creators — those who may not be at the top of their field but can still make a living through their creative pursuits. These creator-focused platforms can democratize the creation tools and help empower this group of creators. Overall, it is essential to carefully consider which platforms align with the values of creator ownership and support the growth and success of all creators.
Another big bet for creators is how blockchain technologies, cryptocurrencies, and decentralized finance will radically transform the Creator Economy. Decentralized technologies have the potential to revolutionize the way we do business by enabling open infrastructure and paving the way for new business models and types of content. By eliminating the need for intermediaries or platforms to facilitate transactions, these technologies allow buyers and sellers to interact directly. This shift could disrupt traditional business models, such as those employed by platforms like Spotify, YouTube, and Twitter, and empower creators to work now with their customers. As Ethereum founder Vitalik Buterin pointed out, blockchain technology can disrupt platform-based models rather than replace creators and give creators more control over their work and customer relationships.
The potential for individual creators to thrive in the future Creator Economy goes far beyond the possibilities mentioned. One exciting development is the emergence of creator-driven decentralized autonomous organizations, or “creator DAOs.” These businesses would be owned and operated by creators in collaboration with their backers, consumers, and other collaborators, with all parties having a vested interest in the success of the creative endeavors. These new models of ownership and operation have the potential to benefit creators and their work significantly.
Who’s going to make it?
→ The leading technology partner for trainers and learners: Learnworlds
Learnworlds is the developer of an e-learning platform designed to simplify how online courses are created and sold. The company’s platform features tools for creating interactive online courses, a customizable front end, advanced analytics, and an intelligence sales engine, enabling trainers and course providers to develop and sell their lessons online. The company has raised to date $33m and is backed by Insights Partners and Marathon Ventures Capital.
→ Embracing the AI Revolution in podcasting: Wondercraft AI
Wondercraft enables users to generate podcasts using Text-to-Speech technology. Wondercraft turns blog posts, articles, and essays into audio content. Wondercraft was founded in 2023 and is backed by Y Combinator.
A Path to stronger societies and Platforms
The creator economy is built on leverage — creators who emphasize their unique, non-replicable skills and services have more power and bargaining power over platforms than easily interchangeable gig workers. This means that platforms often have to cater to the needs and preferences of top creators to keep them on the platform, leading to a dynamic that can perpetuate inequality. However, finding a balance between recognizing and supporting top talent and providing opportunities and support for newcomers and up-and-coming creators is essential.
Societies and platforms flourish when there is a path for everyone to have upward mobility, achieve financial security, and learn and grow. The beautiful thing is, in the natural and digital worlds, it’s up to us to build this path.
The initial thought behind this blog was to empower everyday readers to understand and stay informed about the technology shaping our world. In Discovery Series, my main priority is to demystify complex technology concepts and showcase the creativity and innovation happening in the startup world.
