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📱 Creator economy - Where do we stand? What are the opportunities?
Good evening Upscalers’ followers.
Time to bring you the 16th edition of our weekly journal. This week, we’ll talk about the Creator Economy 📱
As always, I’ll also give you some news about what happened in the European Tech ecosystem this week.
Feel free to like, comment, react and respond. Thanks for reading!
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📱 Creator economy — Where do we stand? What are the opportunities?
Almost 15 years ago in his 1,000 True Fans’ essay, Kevin Kelly predicted that the Internet would allow people to make a living out of their creation (as artists, entrepreneurs, authors…). Eventually, he believed that creators would be able to bypass traditional gatekeepers and middlemen (e.g., large production and publishing companies) and get paid directly from a bunch of “true fans”, thanks to the Web.
Unfortunately, we took some detour along the way. Centralized social medias became the n°1 way for creators to grow an audience, and they developed an ad-driven business model, ripping off most of creators’ revenues to their own benefit.
Eventually, we are trending back to Kevin Kelly’s vision today. As Li Jin (a16z) says:
“The creator economy in the midst of a decisive shift — from a “bigger is better,” ad-driven revenue model to one of niche communities and direct user-to-creator payment”.
Let’s see how we got there.
Here we go ⬇️
1. Foundational steps to the creator economy
Since the late 2000s, we’ve witnessed the birth and rise of almighty social platforms like Youtube, Instagram, Spotify, Twitter, Instagram and more recently TikTok. These platforms played a decisive role in shaping the creator economy. They allowed creators to build larger than ever audiences for free. Using algorithmic recommendations and content curation, they became the new “matchmakers” between creators and users — or let’s say between users and users as they turned each Internet user into a potential creator.
Distribution problem solved. Creators were given options to augment their audience much more efficiently than they would have through traditional production companies or publishing houses. Cooperation started and went well, as these centralized platforms had all interest in recruiting users and creators to make their service more valuable. Network effects.
With these platforms, the number of creators exploded. 50M people now call themselves content creators worldwide.
Eventually, these platforms also contributed to the rise of content editing tools to help creators polish their content and professionalize. See below.
That was Creator Economy 1.0.
Unfortunately, brands quickly realized the huge investment opportunity in sponsoring creators to harness their audience. Call it influencer marketing. See it in the number of influencer agencies, sponsorship marketplaces or talent representation companies out there.
Creators started monetizing their audience through brand deals, but this all quickly turned into a zero sum game, where they put the trust of their audience at risk for each sponsored post they made. On top of this, creators were deprived a massive share of the revenues they made on-platform by centralized social media companies.
Didn’t this all start to remove intermediaries in the first place?
That was Creator Economy 2.0
2. Where do we stand today?
Having developed large audiences accross platforms, creators are now seeking to move their top fans off of social networks to run independent businesses by themselves, and to generate direct revenue streams beyond ads.
That is Creator Economy 3.0 (today).
Here is how it works. Creators build large audiences on centralized social platforms (for free). Then, they convert some of their followers into regular fans which are likely to buy some content at low price or donate. Creators can then leverage some of those buyers, and turn them into true fans, who are likely to pay a premium for extra content, exclusive access or direct interaction with creators.
Think of it in concentric circles, with true fans at the center, a wider circle of regular fans around them and ordinary followers around them again.
Essentially, creators are now left with two choices…
… earning little money off of each follower producing mainstream content for a big audience (which is Creator Economy 2.0 ad-driven model), or…
… increasing their earnings per fan by focusing on a subset of their follower base (fans and true fans) and producing niche content for them.
Now, there is a substantial difference between monetizing followers and monetizing fans, as much as there is a difference between monetizing fans and true fans.
Followers don’t pay the creator. Fans pay to benefit the creator out of a desire to support his / her work. True fans are willing to pay more for something that will benefit themselves and help them grow. That is a value-driven model, which no longer relies on the size of the audience, but on the quality and uniqueness of work, the result it can have and the bonds a creator can create with his / her community.
Back to what Kevin Kelly was saying:
To be a successful creator you don’t need millions. You don’t need millions of dollars or millions of customers, millions of clients or millions of fans. To make a living as a craftsperson, photographer, musician, designer, author, animator, app maker, entrepreneur, or inventor you need only thousands of true fans.
A few true fans can bring more money than millions of followers.
3. Where are the opportunities for startups?
In the wake of social media platforms, there was already a first wave of startups that were built, either to help creators to create content (e.g., Descript, Veed.io…), own their audience (e.g., Circle, Discord, Substack…), monetize it (e.g., Memberful, Podia, Kofi, Teachable…) or manage their business.
See below ⬇️
So, where do opportunities lie today?
Creating tailored tools / platforms 🎯
Though this is already a crowded space, I believe there are huge opportunities for startups to build platforms on niche verticals, targeting a specific persona of creators, and looking to go beyond the standard “creator tool”.
Grouping all “creators” together is a convenient shortcut to talk about the creator economy in a 5-min-to-read newsletter. However, this group has its own layers. To produce the most effective outcomes, startups willing to enter the space have to match these layer-specific needs. A hobbyist creator does not have the same pain points as a full-time creator. Similarly, a creator in the Learning space and a creator in Fashion cannot be served the same way, just as an author and a video-maker cannot be using the same tools.
New startups opportunities can simply be unveiled by considering the levels of creators in a more nuanced way.
Don’t believe me on this one, trust Dan Runcie (founder of Trapital).
Connecting creators with web 3 👾
Crypto, especially NFTs, have the potential to accelerate the trend of creators generating direct revenues from their fans. According to Chris Dixon, there are three ways NFTs can offer better economics to creators:
They remove commission-seeking intermediaries (that’s the very basic principle of blockchain)
They allow very granular price tiering. As with Web 2.0 content creation platforms (e.g., Substack), NFTs allow creators to offer special items or content to the most passionate fans they have. The difference is that granularity is higher and easily manageable.
They turn true fans into owners, reinforcing bonds with creators. To the point of eventually blurring the lines between creators and their community?
If you want to go a step further into the topic, I encourage you to read Li Jin’s full thread on the matter.
🌍 All eyes on the EU... and elsewhere
Alright, now is the time to give you a quick overview of what happened in the European Tech ecosystem this week.
European funding in January 🇪🇺
SoSyncd being named as a Top 15 startup to watch globally 😍
I know we’ve been bragging around a lot with SoSyncd. For those who (still?) don’t know it, SoSyncd is the first investment we made with Upscalers’ community. That was back in March 2021.
A little more than 9 months later, SoSyncd has just been named as a Top 15 Tech startup to watch globally in 2022 by Fast Company
Keep it up!
Skipr being named as a Top 10 startup to watch in Belgium 💪
Just wanted to say congrats to @Mathieu and @Jean-François, both members of Upscalers community on putting Skipr on the list of the Top 10 startup to watch in Belgium.
Great job guys!
Dog-eat-dog going ahead in grocery delivery 🛵
A little while ago when sharing my predictions for European Tech in 2022, I told you that a wave of consolidations in the grocery delivery business could be expected this year.
Latest developments won’t prove me wrong…
On Sunday, Getir announced it had acquired the U.K-based grocery delivery startup Weezy — which only raised a pre-seed (after founding the company in 2019).
I guess Gorillas was jealous. So the German startup announced on Monday that it was planning on acquiring Frichti, a French startup focused on delivering ready-to-meat meals and groceries.
Who’s going to be the last man standing in your opinion?
Two new European unicorns 🦄
And there were two more! This time they’re not French (though I must admit that Spain has also been doing really well in the past couple of weeks).
Fever 🇪🇸, the entertainment platform has just raised a €200M round, joining the Spanish Unicorns’ club.
Deliverect 🇧🇪, the Belgian startup which is building a SaaS platform for restaurants to manage delivery services, announced on Monday it had raised a $150M Series D round, putting the value of the company at over $1.4B.
Cool times to be a European aren’t they? 🇪🇺
Thanks again for reading guys
See you next week 👋