Creator economy flywheel

Monetisation is the Key to unlock The Second Renaissance in the Creator Economy

To get the flywheel of the creator economy moving, monetisation is key. The Platforms and creators are working hard to make it happen.

Creators that are able to grow a community while keeping engagement levels high have a greater opportunity to make a living from their craft more than ever before in history.

Consider this:

Jack Conte, Patreon’s CEO summarised it beautifully in the video below (or on this blog post if you prefer reading) by breaking down the evolution of the creator economy. He calls this period in time “The Second Renaissance”. You’ll notice that monetisation is a key part of the flywheel.

  • There are over 4 billion people online
  • Over a billion of them have a smartphone capable of creating high quality media
  • Creativity and content creation online are booming
  • The cost of creating content has gone down to almost zero
  • More than 50 million people in the US alone describe themselves as ‘creators’
  • New monetisation tools mean that creators are able to make a living from their craft
  • Their success is starting to impact culture, as kids aspire to become creators themselves

Show creators the money

As you can see, unlocking payments is key to driving more content creation and the platforms are racing to introduce new monetisation tools for creators. We’re moving from an ads model (based on volume) to a subscription/commerce model, based on engagement/value.

The audio space is heating up and a flurry of announcements around creator monetisation came out in the past few weeks:

And elsewhere creator monetisation tools and revenue streams continue to expand:

  • Ads and brand dealsYoutube reported $6 billion in revenue for Q1 2021, a 50% growth rate from the equivalent period last year. The sum is equivalent to the combined annual revenue of Snap and Twitter for 2020. While not all of it goes to creators, Covid-19 lockdowns drove a huge amount of volume to the platform.
  • Donations/pledgesPatreon, the early mover of creator monetisation tools, raised $155M on a $4 billion valuation in April 2021, tripling the valuation from a previous round in Sept 2020. They already distribute over $100M a month amongst their 200,000+ creators.
  • Premium contentTwitter announced “super follow” to enable users to charge their followers for access to additional content.
  • Digital collectibles and NFTs exploded (and then calmed down) as a way for creators to monetise digital collectibles and art. Opensea, Nifty Gateway, Rarible, Superrare are just some of the NFT marketplaces that popped up in the past few months and have already processed hundreds of millions of dollars in sales. Watch this space.
  • Social tokensRally is offering creators to launch their own social token, or ‘creator coins’. While traditional NFTs have an environmental impact due to the energy it takes to mine Ethereum, Rally is creating ‘environmentally friendly NFTs’ with this new approach. True to form, they recently raised $57M from the community in the form of tokens.
  • Social commerce – creators can monetise fandom by driving ecommerce purchases or selling their own merchandise via the social platforms. Examples include Benchmark-backed Popshop Live, or India’s SoftBank-backed unicorn Meesho.
  • Paid 1:1 Interactions and Livestreaming – from the celebrity greetings marketplace Cameo to dedicated providers like SuperPeer, Wisio or Heywith.
  • SubscriptionOnlyFans, the adult content subscription platform reported that revenues surged to $2.4 Billion in 2020. Fans pay between $5 and $50 a month to get access to images, videos and other content.
  • Merchandising – t-shirts, hoodies, caps – anything you can put your name/brand on that will make fans interested is fair game. Merch is big on Twitch and with gaming streamers, esports teams, musicians etc. For example, Youtuber PewDiePie makes $6.8 million a month from Merch alone. Who’s going to be the ‘Amazon or Shopify of Merch’?

For creators to monetise better, the platforms need to continue innovating. A16Z, did a great job summarising how companies (vs. individual creators) are monetising beyond ads in their series ‘social is back’.

Source: A16Z, Six Ways New Social Companies Will Monetize Beyond Ads

Platform take rates = tax

Most creators build their audiences on Platforms etc. The platform provides the tools and in most cases the audience, but that of course, comes at a cost. The top creators are able to negotiate rates directly with the platforms and cut deals. For everyone else, take rates are ‘an invisible tax‘ on creators as Li Jin from Atalier Ventures puts it. Jin is advocating for the need to create a creator middle class to broaden the path for success.

The issue of payment fragmentation and take rates deserves as post of its own, but Lenny Rachitsky shared an interesting take on the topic earlier this week.

Creator Funds

If you agree that creators can effectively become small businesses by building a community and engagement, one of the opportunities in this space is providing the start capital for emerging creators. Patreon already provides cash advances, effectively ‘equity investments’ in the creator’s future revenue streams, and Tiktok announced a $1 billion creator fund last March to attract creators to the platform. Not everyone is happy, it seems.

New ‘creator funds’ are starting to emerge. A recent example is Creative Juice, a $2M fund to invest in emerging creators, backed partly by Index Ventures, Inspired Capital and creators like MrBeast. It’s described as “a groundbreaking way for creators to support each other and invest in their peers’ businesses.”

Creators are also increasingly becoming angel investors in B2C startups, similar to celebrity investments which are also on the rise, leveraging their profile to help their portfolio stand out.

Finally, a small plug to Remagine Ventures. If you’re a founder in the creator economy with a fresh take on these issues, we’d love to hear from you! We’ve made several investments in the space (some are still in stealth).

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Co Founder and Managing Partner at Remagine Ventures
Eze is managing partner of Remagine Ventures, a seed fund investing in ambitious founders at the intersection of tech, entertainment, gaming and commerce with a spotlight on Israel.

I'm a former general partner at google ventures, head of Google for Entrepreneurs in Europe and founding head of Campus London, Google's first physical hub for startups.

I'm also the founder of Techbikers, a non-profit bringing together the startup ecosystem on cycling challenges in support of Room to Read. Since inception in 2012 we've built 11 schools and 50 libraries in the developing world.
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