In the world of the creator economy, there is a growing need for a middle class. The concentration of wealth in the top 1% not only threatens the sustainability of nations but also poses risks to the defensibility of platforms. When wealth is concentrated in a few top creators, there is a higher chance that a competitor could poach them and potentially threaten the entire business. Therefore, it is crucial for creator platforms to provide paths for upward mobility and democratize opportunities for success.

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Sep 24, 2023

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In the world of the creator economy, there is a growing need for a middle class. The concentration of wealth in the top 1% not only threatens the sustainability of nations but also poses risks to the defensibility of platforms. When wealth is concentrated in a few top creators, there is a higher chance that a competitor could poach them and potentially threaten the entire business. Therefore, it is crucial for creator platforms to provide paths for upward mobility and democratize opportunities for success.

Sherwin Rosen, an economist at the University of Chicago, predicted in a 1981 paper the emergence of the "superstar phenomenon" in markets with heterogeneous providers, such as the creator economy. Success tends to disproportionately favor those at the top. To counter this trend, platforms can make strategic design decisions that make success attainable for a larger number of creators.

One way to achieve this is by focusing on content types with lower replay value. Categories with high replay value, like music and game platforms, tend to concentrate wealth among a few mega-hits. By directing users to content types where there is greater appeal in experiencing a wide array of content, platforms can create more opportunities for creators to succeed.

Another important aspect is serving heterogeneity in user preferences and empowering niche communities. By recognizing and catering to diverse interests, platforms can foster an environment where creators with unique content can thrive. This can be achieved by algorithmically recommending content with an element of randomness. When algorithms do the searching for users, there are more opportunities for niche creators to be discovered and appreciated.

Furthermore, platforms should facilitate collaborations and build communities among creators. By enabling creators to connect with one another for emotional support, collaboration, and education, platforms can foster a sense of belonging and provide valuable resources for growth. Startups in the creator economy have an opportunity to create platforms that prioritize community-building and provide the necessary tools for creators to connect and learn from one another.

In terms of financial support, platforms can provide capital investment to up-and-coming creators. This helps level the playing field and gives emerging creators the resources they need to establish themselves. Additionally, decoupling creator payouts from audience demographics can also promote a more inclusive creator economy. For example, TikTok's Creator Fund payouts are driven by engagement and views, while YouTube incentivizes creators to cater to an affluent, advertiser-friendly audience. By diversifying the criteria for payouts, platforms can create a more equitable distribution of wealth among creators.

Platforms should also explore ways for creators to capitalize on their superfans. Superfans are the most dedicated and loyal supporters of a creator, and providing opportunities for creators to monetize this relationship can be a game-changer. Whether through exclusive content, merchandise, or other means, platforms can empower creators to generate income from their most passionate followers.

Moreover, the concept of Universal Creative Income (UCI) could be a valuable addition to the creator economy. Similar to Universal Basic Income (UBI), UCI would provide a base level of income to creators, allowing them to focus on their craft without the constant pressure of financial instability. This would not only support individual creators but also contribute to the overall growth and development of the creator economy.

Education and training are also crucial elements in nurturing a thriving middle class in the creator economy. Platforms can offer mentorship programs, workshops, and resources that help creators sharpen their skills, develop their business strategies, and position themselves effectively in the market. Substack's Bridge mentorship program, for example, pairs emerging and established writers to provide guidance and support.

Lastly, platforms should explore opportunities for creators to generate passive or almost-passive income. This could include licensing their content, selling merchandise, or creating subscription-based models. By diversifying income streams, creators can establish more stable financial foundations and reduce their dependence on a single platform or revenue source.

In conclusion, the creator economy needs a middle class for its sustainability and the defensibility of platforms. By implementing platform design decisions that promote upward mobility, democratize opportunities, and foster community-building, platforms can create an environment where success is attainable by many. Additionally, offering capital investment, decoupling creator payouts from audience demographics, capitalizing on superfans, providing UCI, offering education and training, and creating passive income opportunities are actionable steps that can contribute to the growth and development of a thriving middle class in the creator economy. By prioritizing these initiatives, platforms can ensure a more equitable and sustainable future for creators.

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