The Creative Age: Part 2
“The creator economy”, sometimes referred to as “the passion economy”, has been getting a lot of buzz lately. This “new” type of worker, the creator, is the talk of the town across board rooms, news channels and living room couches. As someone who grew up during the prime years of MySpace and Instagram and now TikTok, the “rise of the creators” isn’t really a surprising, or novel, concept. Creators have been around as long as I can remember, influencing everything from the clothes I wore to the music I listened to. For people who aren’t as accustomed to the motion of scrolling on your phone for countless minutes a day and who didn’t grow up in a time where your online presence defined many aspects of your life, the notion of the accelerating creator economy can be confusing. It can seem niche, catering to a small group of teenagers who are obsessed with social media. The reality is that this is far from the truth. The evolving creator economy we’re seeing unfolding before us today is far-reaching across demographics, generations, and skillsets, and it’s here to stay. So, let’s explore this deeper. How big is the creator economy truly, and why is there so much appetite for this ecosystem?
The reality is, today anyone can be a creator. What once was a world narrowly accessible only to celebrity individuals who could garner mass social media popularity, is now open to anyone with content to create and an internet connection. The largest accelerator of this change is the development and adoption of new and enabling technologies.
From a production standpoint, new software has democratized the process of creating content. Just a few years ago (before the age of high-def iPhone cameras), to post a quality video of themselves online, a creator would often need to buy potentially expensive audio and video equipment, upload footage to their computer and then post it to a content channel. This process could be expensive, cumbersome, and inefficient. Today, with the accessibility of tooling that can be as simple to acquire as an app on your iPhone, this can be done in literally minutes.
From a distribution standpoint, new platforms have enabled entirely new personas and types of content. Original content distribution mediums consist of Instagram, YouTube and other traditional social media channels. What didn’t exist were the purpose-built channels for alternate types of content. If you were an independent journalist or a teacher or a fitness instructor, there was no simple way for you to share your relevant content or attract the right target audience, which often differed from the general social media consumer. Today, platforms like Substack, Teachable, Podcastly, and Playbook are solving for this by building curated tools that welcome new types of professions to the creator space, enabling these groups to go direct to consumer for the first time, and completely expanding what it means to be a creator.
One of the most important factors, making money, has become more accessible than ever with new tools that bypass the traditional revenue-generating models of ad revenue and brand sponsorships. In these models, platforms take a large cut of the revenue and don’t leave much on the table for creators. These have historically only been lucrative for the top few percent of creators, and have made it almost unattainable for an emerging creator to sustain themselves. Now, with the many startups that are helping creators own and monetize directly from their audience, there’s actually opportunity for more people to make a living wage. This is all made possible through a variety of micropayments for things like merchandise, social tokens, and tipping, that for the first time, a high enough number of consumers are willing to pay for, generating meaningful income for creators.
It’s no revelation that COVID-19 accelerated online shopping behavior and made people more comfortable with purchasing in new ways whether from social media, through messaging, or via new storefronts hosted by Shopify or Etsy. But more than this, the most interesting and effective phenomenon driving consumers to pay creators is the impact of Gen Z. Social platforms being utilized for transactions is not a new idea. The number of consumers who have purchased natively from a social media site grew to 80.1 million in 2020, with 43% of Gen Z’ers saying they have done so1,2 . This is an especially impressive number considering that a large portion of this generation has not yet reached their prime working, or spending, years. But what is a fundamental shift in consumer behavior is what Gen Z’ers value, and how they want to spend their money.
Gen Z’ers are the first truly digitally native generation. Mobile and internet were not new technologies that came about halfway through their lifetime, but have been around and accessible for as long as Gen Z’ers can remember. In fact, the iPhone was already 5 years old when the youngest of this generation were born, and internet in your palm was a widespread normality. So, growing up in this ecosystem it shouldn’t be surprising that this generation does everything online. From meeting friends and significant others, to interviewing for jobs, for Gen Z, the internet is an activity.
It’s no longer a place to passively follow a handful of people, but rather a place to participate. It has moved from an extension of physical interactions to, in many cases, an entire replacement. In fact, 45% of Gen Z’ers say they are online “almost constantly”3. Therefore, the types of digital content and experiences Gen Z’ers value is entirely new. They no longer are awestruck with just the few unattainable social media “whales”, but rather with creators who share in their passions and hobbies, and who engage in a way that reflects an almost bidirectional relationship. Because they value these niche digital experiences, they’re willing to pay for it. I’d go as far as to say they’re willing to pay even more for digital goods, ranging from access, to exclusivity, to live interaction, than for physical goods. If you don’t believe me, the proof lies in the numbers. While the included data isn’t limited to just Gen Z, I do believe they are the inspiration that led many of us to reconstruct how we think about content and digital goods, driving the very material user traction and payments we see across creator platforms today:
Clearly there is demand from both consumers and creators to participate, and it’s only poised to grow as the younger group of Gen Z’ers come of age and as more creators start to move to new and upcoming platforms.
All this goes to show, that while the creator economy is not new in its entirety, the breadth to which it now expands and the ability for people to make a living wage creating, is nothing short of a revolution. For the first time, people don’t have to rely on others to form their own career. Humans have long been entrepreneurial by instinct. There is a quote by the 2006 Nobel Peace Prize Winner, Professor Muhammad Yunus, who said “All human beings are entrepreneurs” and blamed a flawed system for weakening people’s ability to create11. There’s a lot of truth to that. Whether it be through corporate constructs or an agent managing you or a platform taking a cut, for far too long there has been a middleman limiting most people’s ability to capture sizable value doing what they love. While the idea of “being your own boss” and “following your passions” has long been touted as the ultimate pillar of success, the truth is, existing technology has not been accessible or inclusive enough to actually make this dream possible for anyone who wants it. But, as the D2C revolution hits the creator economy, opportunity to circumvent traditional channels and to make money has never been as attractive as it is now. Because of this, we’re going to continue to see a fundamental shift in the working economy we know today.
The best part is, we’re just in the early innings. While there are many startups out there already trying to be a part of this revolution and tackle the existing problems for creators, there’s still work to be done. The likes of Patreon and Linktree have been pioneers in helping creators direct traffic from traditional social media platforms to their own pages where they can truly own and monetize their audience. We believe there’s a lot more to come, especially for solutions that are focused on a few pillars:
Overall, we’re excited about this market opportunity and the startups that are helping to enable the new creative age. Stay tuned for our second post in this series where we’ll dive deeper into specific investment areas we think are interesting.