Issue #14 - Who Wins the Creator Economy
When TikTok announced they were launching a Cameo feature, it struck me that we might be officially finishing the first leg of the creator economy race. Looking back, the first leg can be pretty simply described as:
Identify segment of creators already out there
Build the minimal infrastructure they need to get paid
Spin that flywheel as fast as possible to gain momentum
Almost all the biggest private companies in the creator economy (Substack, Mighty, Kajabi, Patreon, Cameo, Gumroad, OnlyFans) have basically done that. In each of these cases, the company built a small bit of platform (Substack’s newsletter editor) and a lot of plumbing (Patreon’s subscriber management stack). They also ignored the prevailing wisdom that creators can’t monetize their audiences directly. The winning formula was not only a technical one but a mindset one as mindsets are hard for incumbents to change quickly. This combo has given those companies 2-5 years of runway to get to scale.
Along the way the incumbent platforms recognized that all these new cash flush creators have been hanging out on their own platforms for years. Course creators have been putting up content on YouTube, everyone on Cameo has social profiles on all the major platforms, and digital goods creators have been using social platforms as the top of their funnel for ages. These new creator economy companies were creating a lot of entropy from their platforms.
While delivering emails to millions of people a month, managing quality behavior in a marketplace, and global payments infrastructure is non-trivial technical work, especially at scale, these are also not the most complicated computer science problems to solve. Let’s face it, part of Clubhouse’s origin story is that they built it in a week. Once the big platforms changed their mindset (whether their hand was forced or the altruism of helping their customers prevailed), the floodgates of copy-paste innovation opened. Now the major platform companies are rolling out competitive products at light speed. Copying TikTok to make Reels is pretty damn hard, building Bulletin to copy Substack (technically) is not comparatively a challenge.
What does the creator economy look like at the end of the first inning of the game? I think it looks like a world where there are maybe ten X types of creators and Y types of ways to monetize. X and Y are still pretty small here, probably less than 10. Every incumbent platform will pick the large subset of Y that makes sense for their creators and content formats and offer those as table stakes. You can see this already happening from our platform report. It’s only a month old and is missing about 10 more products that were announced since we wrote it. Facebook alone has added newsletters, podcasts, and affiliate links since then.
If the incumbent platforms are going broad and offering a collection of monetization products, what are the private companies doing? They are either doubling down on being the undeniable leader in one creator segment (Patreon for artists, Substack for writers or Cameo for celebrities) or going broad as fast as they can. Gumroad now offers digital goods, memberships and tipping, Mighty Networks added courses and events to their community play, and Kajabi just announced an additional slate of products including newsletters, podcasts and coaching.
[Authors’ note: In a last minute entrant to this newsletter, Substack just announced they are heading further into podcasting subscriptions. This is definitely a horizontal move against Patreon’s core business. Interesting!]
Who wins here?
It’s clear that the incumbent platforms win in the sense that they continue to stay dominant and relevant. But this feels a lot more like a game of Pepsi vs Coke or Bud Light vs Coors Light. Over time they will roll out more tricks to win or preserve market share but they will be fighting over a small % of the market. Here’s a nice history of Coke and Pepsi’s battle over the years and some of the techniques they used. Feels like Facebook’s $1B investment-in-creators announcement is a heck of a lot like Coke’s early coupon campaign.
When it comes to private companies we also think this ends up in a multi-party winner system. Companies that are doubling down on a vertical will likely keep driving scale then have to become something more foundational. Patreon might become a creator payments company and Cameo might become a media company (would it be so crazy to see Cameo produce a Carole Baskin documentary? I don’t think so). Consolidators (Kajabi, etc..) will find themselves in a similar battle for market share as the incumbents but with a smaller overall scope. Let’s not forget the incumbents still have a much bigger business which is being open content platforms for billions of people with massive advertising businesses. The creator economy may be the engine but the engine is only part of the vehicle.
So, to be honest, none of this sounds like someone winning the creator economy. We can shake the feeling that there just has to be one (or at least a few)!
Going back to basics about the creator economy we noticed that very few private companies were focused on getting as many types of creators as possible on their platform. Mighty reported 10K creators, Gumroad 70K, and Kajabi say “tens of thousands” of creators are on the platform. They have intense focus on one or two segments and that’s likely what’s making them successful to date.
So we went looking for creator economy companies that have a broad purview. We only found three private companies who think about how to attract a diverse set of creators - linktree, influence.co [spoiler alert, this is going to get a bit self promotional] and Discord. All three of us think in some shape or form about being horizontal and how to attract large swaths of the creator economy to our platforms.
One thing to keep in mind is that the creator economy is actually three types of entities: creators, businesses, and audiences. It’s not just creators who get forgotten sometimes. If you want to play a broad game you need to not only attract creators but some to all of everyone else as well.
Linktree has 10M+ users who are mostly creators and businesses (the business segment of link in bio tools is huge). Influence.co has 300K users who are creators, businesses and some of their audiences. Discord has 140M MAUs, some of which are creators and their audiences. The value props are very horizontal in nature: a simple view of your digital presence, a professional network for the creator economy, a place to chat to people with similar interests. We all serve everyone, don’t care what the incumbent platforms are, and rise with the increasing tide of the creator economy.
As the creator economy blows past 50M global users into the hundreds of millions in the next decade, it’s easy to see how horizontal companies could end up being the biggest winners. Will 500M people use Discord every month in 5 years - probably. Link-in-bio tools are still in the early stages of penetration in the market so it’s not hard to imagine that 100M creators and businesses worldwide will have these tools in 5 years. And the growth potential for a professional network built from the ground up for anyone involved in the creator economy is, we think, pretty damn big as well! In the end, the ability to aggregate the most people in the creator economy in one place with a unique value proposition is the asset that becomes most valuable. Once you have this asset, the types of scale revenue businesses you can build with it are immense. Subscriptions can be huge, audience monetization is huge, identity is huge, advertising is huge and business tools focused on creators as SMBs can be huge.
Horizontal is always a long play and the creator economy is only in early innings. The next couple of years will be very telling. Please keep your eyes out for other horizontal players and let us know if you find any more!