How the Creator Economy is creating new wealth.
How a new generation of subscription driven monetization platforms are decentralizing legacy media, and making consumers into creators whilst building a Billion Dollar market.
In the past, aspiring entertainers needed media companies, such as newspapers, magazines and TV backing to get discovered in the hope of becoming a sensation and possibly star. However only the top 10% in their field could sustain a living. In today’s digitalized world, consumers are becoming stars with direct connections to an audience that is willing to pay for accessing such content via a subscription model.
The new creator platforms benefit from being the marketplace, facilitating AI driven content engagement algorithms, payments facilities with self management tools that capitalizes on the creator’s work.
This new User Generated Content play is creating multi billion dollar companies that in the next 5 to 10 years will be more valued than traditional legay media groups.
We live in the age of a “creator economy” — and it’s an economy in which companies like Youtube (Ad Driven Video), Patreon (Subscription & Donations for Youtube creators), Medium (Writing), Clubhouse (Podcast Live Groups) Anchor (Podcasts), Twitch (Gamers) and OnlyFans (Adult) and over 50 other platforms with each having a niche focus, have broken the data-driven AdTech business models of Facebook and are now delivering value to users through “direct monetization”.
Rest assured, these new platforms are data-driven in order to power their propensity models and content recommendations. The difference in these platforms is their monetization models, users are paying directly to the content creators via the platform — that takes a cut in the transaction.
This paradigm shift, as The New Yorker’s Kyle Chayka points out, has taken the spotlight away from the magnetic charms of “influencers” and turned it onto “creators” who depend on creating content and delivering value to their consumers. It’s a shift that seems to be paying dividends with Influencer Marketing Hub now estimating its total market size to be around $104.2 billion.
It’s a trend that took off in the pandemic, however, as technology decentralizes traditional media business models, and creators, consumers and businesses reign in the benefits of this passion-driven economy, there remains little doubt that it’s a trend that’s here to stay.
Good for Creators — Good for Business
Platforms like OnlyFans, founded by two brothers and their banker father in 2016, have revolutionized and democratized a constricting traditional adult-entertainment industry.
Once dependent on agents and courting the favor of studios and producers, adult-entertainment performers are now using direct-monetization platforms to take control of their careers and increase their revenue streams.
In a 2019 article for The New York Times, Jacob Bernstein highlights the story of Dannii Harwood, a Welsh adult-entertainer who has built a lucrative and rewarding career through OnlyFans. Unsatisfied with low-paying traditional mediums such as Playboy and British tabloid newspapers, Ms. Harwood teamed up OnlyFans founder Tim Stokey to be one of its first 10 models in 2016. Since then, Ms. Harwood has seen the platform grow and is now bringing home 5 figure monthly revenues.
In 2020 alone, OnlyFans oversaw $2 billion in sales and earned over $400 in revenue from its 20% fee charged to all content creators These are impressive results, and investors haven’t left them unnoticed, and according to Bloomberg, the company is now seeking new funding at a valuation of above $1 billion.
The company’s potential investors remain a mystery, however, all signs indicate the company’s desire to shift away from its reputation as an “adults-only” service provider and into the more mainstream business landscape. It’s a pivot that has the tech industries biggest players paying attention — a fact evident with reports of Facebook planning to launch its own competitive platforms in order to reassert dominance in the digital landscape.
Value, Passion and Individualism Before IPOs
OnlyFans isn’t the only company reaping the benefits of this new creator-to-consumer business landscape. Since 2013, Patreon has helped over 200,000 independent creators build wide ranging subscription based support, and due to its pandemic boom, has now tripled its valuation to $4 billion.
Yet despite speculation and hints that Patreon may take advantage of this new valuation to go public, company CEO Jack Conte remains adamant that an IPO is not their current focus and that the company remains committed “building value for creators, helping them make money and build their businesses.”
This willingness to build value and monetization through passion and individualism isn’t held by Conte alone. Li Jin, founder of Atelier Ventures, whose main investments include Patreon and Substack, recently penned an article for an16z in which she outlines how through the monetization of individuality, platforms are building better customer relationships and differentiating themselves from the competition.
A New Face for New Media
Unquestionably, the lure of that big IPO payday remains a key motivator for any startup, however, as platforms like Patreon and OnlyFans are showing, the pursuit of fortune doesn’t mean that creators and consumers, who are the very backbone of their models, need to be left behind.
As an ever increasing number of startups enter the creator economy, and build their business models on passion, value, individualization and creativity, one can start to hold high hopes for the future of the entertainment industry for both creators and consumers.
No matter how this brave new economy begins to shift, shape and evolve, it’s definitely one worth keeping an eye on in the months and years to come.
It’s enough to make you consider creating your own content based on a passion, even if it may be just to pay your bills or hit a financial goal, and then decide on what platform to use to monetize your content.