How The $100B+ Creator Economy Is Going To Be Shaped By Big Tech - CB Insights Research

How The $100B+ Creator Economy Is Going To Be Shaped By Big Tech - CB Insights Research

The creator economy has become a massive market, estimated to be worth over $104 billion and growing. In recent years, influencers have become frustrated with big media platforms that earn significant revenue from their high-traffic content, while offering relatively little in terms of rewards for creators. However, big tech companies are now realizing the importance of retaining their labor force and are making efforts to cater to the needs of content creators.

For example, Facebook has introduced features to monetize content and support creators. The number of content creators on Facebook earning $10,000 a month from ads and fan support grew by 88% from 2019 to 2020. Facebook's native tipping system, Stars, allows users to tip creators, and the platform plans to allow creators to charge for access to Live Audio Rooms. Additionally, Facebook has launched an Audio Creator Fund to support emerging creators. By integrating these features, Facebook aims to capture a larger share of the creator economy.

Other platforms, like Substack and Revue, have also entered the creator economy space. Substack takes a 10% cut from newsletter creators, while Revue takes 5%. Newsletters have become a flourishing part of the creator economy ecosystem, and Facebook is looking to integrate itself further into this space.

Amazon is another big tech company that is shaping the creator economy. Its Amazon Live Creator app allows influencers to earn commissions through livestream sales. Twitch, Amazon's game streaming service, has also seen significant growth. In Q3'20, creators streamed 206 million hours, nearly double the previous year. To fuel subscription growth, Twitch recently launched tiered subscriptions that differ by country to account for local pricing. Amazon is also venturing into livestream shopping, a critical next step for companies looking to succeed in social commerce.

Google-owned YouTube is a major player in the creator economy, with over a billion hours of video watched every day. YouTube is expected to generate $30 billion in ad revenue in 2021. However, YouTube's platform fee, which takes a 30% cut, has been a point of contention. Gumroad founder Sahil Lavingia believes that the creator economy would be 10 times larger if platforms like Apple reduced their fees from 30% to 3%.

The shift of big tech companies into the creator economy is driven by their desire to retain users. By offering features and monetization options for creators, these companies aim to keep users engaged on their platforms. However, creators are increasingly becoming platform-agnostic and building independent brands to reduce dependence on any one platform.

Keep Them Coming Back: 23 Habit-Making Insights for Product-Minded Founders

Behind every great product is an understanding of human psychology. It's not enough for a product to meet a user's needs; it also has to make them feel good while using it. The emotional experiences that users have while using a product are crucial. For founders, it's important to have clarity on the emotional experience they want users to have and engineer for it.

Creating habits is key to keeping users coming back to a product. The criteria for a habit-forming product are that it satisfies a user need and has sufficient frequency. If a product is not used again within a week's time or less, it's difficult to change a consumer habit.

To create habits, products need triggers, actions, variable rewards, and investments. Triggers can be internal or external, and actions should be simple and easy to do. Variable rewards create anticipation, and investments increase the likelihood of the user returning to the product.

Simplicity is also crucial in changing user behavior. The Law of Least Effort states that people will choose the easiest option, so products should be designed to be simple and easy to use. Additionally, stories and emotional connections play a significant role in making a product sticky and central to a user's life.

Understanding the emotional value and status that comes from owning virtual goods is important, as it can create emotional attachment and make a product more valuable. The best consumer founders are psychologists who understand human behavior and apply that knowledge to their products.

Overall, the creator economy and the habit-forming insights for founders are both focused on understanding and meeting the needs of users. By incorporating these insights and providing value to creators, big tech companies can shape the future of the creator economy, while founders can create products that keep users coming back.

Actionable Advice:

1. Understand the emotional experiences users have while using your product and engineer for them. Focus on how users feel, not just what they want or need.
2. Create habits by satisfying user needs and ensuring sufficient frequency of use. If users don't return to your product within a week, it's difficult to change their habits.
3. Keep your product simple and easy to use. The Law of Least Effort states that people will choose the easiest option, so make sure your product fits this criteria.