"Launching a new platform, he said, was like starting a new country: Getting users to move from an established network that had an ossified economy and social classes to a new network requires the possibility of success"

"the new social network had to create upward mobility for all users, to “make sure there’s a middle class coming up."

"The current creator landscape more closely resembles an economy in which wealth is concentrated at the top."

"The sustainability of nations and the defensibility of platforms is better when wealth isn’t concentrated in the top 1%."

"In the real world, a healthy middle class is critical for promoting societal trust, providing a stable source of demand for products and services, and driving innovation."

"Google has revealed that on a daily basis, 15% of all queries have never been searched before, a figure that has remained stable since 2013."

"the lack of an upper limit for engagement in games, and the social nature of games leading to winner-take-all network effects."

"Rosen argued that in markets with heterogeneous providers, like most creator economies, success accrues disproportionately to those on top"

"the best performers in a given field are freed from physical constraints like the size of concert halls — and can address an unlimited market and reap a greater share of revenue."

"Creator platforms flourish when they provide opportunity for anyone to grow and succeed. When the American Dream is just a dream, the fate of platforms becomes precarious."

"it’s vital for creator platforms to provide paths for upward mobility and democratize opportunities to succeed."

"The middle class in America didn’t just happen naturally, but was born of 20th-century policies that created widespread prosperity: Roosevelt’s New Deal; the Fair Labor Standards Act, which established the minimum wage, overtime pay, and prohibition of employment of minors; a rise in unionism; the passage of the GI Bill; and the creation of the Federal Housing Administration."

"1. Focus on content types with lower replay value."

"categories with high replay value — like music and game platforms — are most susceptible to concentration among a few mega-hits."

"2. Serve heterogeneity in user preferences & empower niche."

"To create a more equitable creator ecosystem, platforms can direct users to content types where there’s greater appeal in experiencing a wide array of content."

"When various segments of users have different preferences and opinions on quality, there’s a greater opportunity for a diverse array of creators to succeed."

"3. Recommend content algorithmically with an element of randomness."

"when algorithms do the searching for users, there are more opportunities for niches to thrive."

"bringing a diversity of videos into your For You feed gives you additional opportunities to stumble upon new content categories, discover new creators, and experience new perspectives and ideas as you scroll through your feed."

"4. Facilitate collabs and community."

"For starters, while many grassroots communities of creators are already springing up, platforms can do more to enable creators to connect with one another for emotional support, collaboration, and education."

"5. Provide capital investment to up-and-coming creators."

"Some creator verticals require upfront capital investment or capital to unlock the next level of growth, and could benefit from funding in order to lower the barriers to entry."

"6. Decouple creator payouts from audience demographic."

"Deliberately designing systems that don’t just financially reward more affluent creators is important because the playing field for content creation is already uneven."

"7. Allow creators to capitalize on superfans."

"Customers are willing to spend more to gain closer access to a creator vs. showing passive support through a subscription."

"8. Create passive (or almost-passive) income opportunities for creators."

"When income is incremental, creators are able to dedicate time to other sources of earnings and create a portfolio of various income streams."

"9. Offer a form of Universal Creative Income (UCI)."

"Freshbooks’ 2019 Self-Employment in America Report revealed that the top barriers to self-employment were: “worry about inconsistent income” (35%), “don’t have cash to invest” (28%), and “worry about earning less” (27%)."

"10. Provide creator education and training."

"Rapid technological progress has led to a wage premium for skilled workers, while low-skill workers struggle to even find a job given increasing offshoring and automation."

"With the availability of various substitutes and a loyal audience base, creator platforms do have to cater to top creators in order to incentivize them to stay — a dynamic that predisposes platforms toward inequality."

"The challenge is to balance the leverage that top creators have — and rightly spotlighting top talent — with lifting up newcomers."

"Societies and platforms flourish when there is a path for everyone to have upward mobility, achieve financial security, and learn and grow."

"“One of the exciting things about the internet is that anyone with a PC and a modem can publish whatever content they create,”"

"“For the internet to thrive, content providers must be paid for their work,”"

"“The long-term prospects are good, but I expect a lot of disappointment in the short-term.”"

"But while Gates’ prediction that there was money to be made online through content has proven true, much of that money has bypassed the creators that produce the content, landing instead in the pockets of the platforms that aggregate it."

"Without native monetization methods built into the web2 internet, the predominant business models were opaque, advertising-based, and dependent on closed-garden networks, which gave an outsized advantage to platforms."

"At the heart of the story of how the internet broke the media business model is the simple fact that the internet was not built to facilitate the flow of money."

"Payments weren’t built into the internet’s infrastructure—it was considered too risky. Marc Andreessen called this “the original sin of the internet.”"

"The lack of payment infrastructure is the reason why so much of the internet is monetized via advertising. Rather than requiring users to pull out a credit card and type their information into a website, users could be monetized frictionlessly and indirectly, paying not with their money but with a different asset: their attention."

"Ben Thompson of Stratechery has written extensively about how the platforms, which he calls “aggregators,” have won the battle for consumer attention and achieve outsized revenue—and outsized power—by aggregating demand."

"In fact, Google and Facebook alone accounted for more than half of the digital ad revenue generated in 2020."

"The business model of advertising has profoundly shaped how platforms design their products."

"Data about user preferences and behavior is the platforms’ most valuable asset, so they close off their ecosystems and lock users into their networks to amass the largest corpus of proprietary data."

"The biggest impact of the web2 internet may be the creators who don’t exist and the creations that were never made because they have no viable business model."

"collectively known as web3—is all about tilting the scales of power and ownership back toward creators and users."

"By introducing digital scarcity and restoring pricing power to creators"

"By making supporting creators an act of investment, not just altruism"

"By introducing new programmable economic models that spread wealth across the creator landscape"

"Most importantly, by creating pathways for creators to own not just the content they produce, but the platforms themselves"

"Scarcity gets a bad rap, but it is about more than just lack of consumer choice: it’s about producer power—in this case, the ability of creators to derive meaningful income from their creations."

"That lack of scarcity leads to issues with creators’ content being illegally reproduced and distributed -- undermining attempts at direct monetization."

"One reason NFTs (non-fungible tokens) are exciting as a technology is that they give creators the ability to regain control over their own content and re-introduce scarcity dynamics that contribute to monetization."

"Excitingly, the introduction of scarcity through NFTs doesn’t mean that access to the underlying media is limited, as it would be with paywalls or paid digital downloads."

"This represents a move away from the traditional donation model—in which users pay to benefit the creator—to a value model, in which users are willing to pay more for something that benefits themselves."

"Web3 takes this idea to the next level, because all tokens are investments that not only fund the creator, but also could benefit the holder if the value appreciates."

"Another benefit beyond patronage and investment is membership to a like-minded group of individuals. Many successful crowdfunds and NFT sales in the crypto space have been driven by users’ desire to belong to a community, which are gated by ownership of tokens."

"Importantly, all of these users—by virtue of becoming owners of an asset that is aligned with the creator’s success—have an incentive to help amplify the creator’s work."

"A truth of the creator economy is that creation is often a collaborative act. YouTube creators star in each others’ videos."

"Unfortunately, web2 systems are not set up to reward or track this collaborativity."

"In the winner-take-all world of algorithmic platforms, too often the value only flows to the creators that go viral, leaving out everyone else involved in the creation of the work."

"In web3, the promise of tokenization means that it’s possible to build in royalties such that the entire chain of attribution is able to profit from a collaborative work."

"The famous meme GIF is linked to the address of the NFT so when someone shares the original NFT in their article, they can pull the on-chain address."

"This is powerful for memes because it allows them to maintain attribution and context in every platform."

"We’ve argued in this essay that a root cause of inequality in the creator landscape is the outsized control that platforms exert over creators and their work through the ownership of the means of production and distribution of content."

"DAOs (decentralized autonomous organizations) and other mechanisms of collective ownership create a pathway to disrupt the centralized hold that the platforms have over the creator landscape by making it possible for creators to work collaboratively without an external mediator dictating the terms of engagement."

"The promise of DAOs is alignment of incentives through stakeholder primacy and a removal of the need to extract value. The result: a democratized, disintermediated content landscape where creators have control over their work, how it’s distributed—and how it’s valued."

"Beyond DAOs, the inherent interoperability of web3 makes platform lock-in likely to be a much less pernicious problem than it is in web2."

"In the past, I’ve called ownership the original system condition from which all else flows."

"When historians write the story of the rise of the Creator Economy, there are two moments, ten years apart, that are guaranteed to appear."

"The first, in Spring 2007, is when YouTube started sharing advertising revenue with creators—a decision that arguably laid the foundation for the “Creator Economy” as we know it today."

"The second, in Spring 2017, is when the cracks in that foundation became impossible to ignore, and questions about the legitimacy of the platform economy started to emerge."

"Spring 2017 marks what is now popularly known among creators as “Adpocalypse.”"

"a collective of individuals balks at the policies that govern them, and demands better terms from the powers that set those policies—that’s not an accident."

"What is legitimacy, and where does it come from?"

"Legitimacy is one of those things, like air quality, that we often don’t think about until something seems off."

"German sociologist Max Weber theorized three basic sources that legitimacy can come from:"

"Traditional legitimacy—essentially, rule by status quo. “Follow me, because it’s always been done this way.”"

"Charismatic legitimacy—in other words, rule by cult of personality. “Follow me, because I’m charming and compelling.”"

"Rational-legal legitimacy— in other words, rule by rationality. “Follow me, because the system of rules and laws I’ve built are clear and objectively make society run better.”"

"Ultimately, legitimacy derives from trust: trust that the governing order is just, trust that agents establishing and enforcing that order are doing so in the interest of the greater good."

"Legitimacy crises happen when that trust is eroded—when the governed no longer believe that those in power are exercising that power with the collective good in mind."

"Knowing how the platforms gained that legitimacy—and how they lost it—is important to understanding what will need to happen in order for the crisis to be resolved."

"the platforms have sought to build their legitimacy through rational-legal means—legitimacy through a system of rules and laws that everyone understands and agrees to."

"But over time, the faults in the social contract between platforms and creators started to show. Policy changes like those implemented during Adpocalypse revealed the extent to which the platforms’ policies and practices are designed to protect and advance the interests of the platform—regardless of their impact on creators."

"Today, the legitimacy of platforms rests, to a large degree, on a traditional justification—arguably the most fragile of the three, and the most susceptible to misuse."

"How the legitimacy crisis in the creator economy ends"

"There are two ways that a legitimacy crisis can resolve itself: either the regime re-establishes legitimacy by realigning their rule with the interests and norms of the community (as factories in the Industrial era did by instituting fairer work policies)"

"or, the system is overthrown, and a new one is put in place that better aligns the values and incentives between people and the nexus of power."

"The platforms have made efforts to regain legitimacy with creators via the first route, by increasing the variety of monetization avenues available through their platforms."

"But these efforts at realignment reveal the extent to which the platforms are either unable or unwilling to truly change the terms of their relationship with creators."

"the emergence of genuine, credible challengers to the platforms that offer a more democratic, decentralized alternative to the platform economy as it is currently constructed."

"One of the most significant sources of conflict in the current platform economy is the way the data is controlled and mediated."

"An important step to realigning the social contract in the platform economy will be to change this dynamic, and give creators the ability to own and transfer the data associated with their business."

"Next-generation platforms have already begun shifting to more data-portable models."

"Participatory decision-making and cooperative business models"

"In a platform economy that was truly built to empower creators, the creators would own the platforms themselves."

"crypto tokens represent one of the most promising innovations for enabling ownership to be distributed and transferred on the internet as easily as information."

"The platform economy as it is currently constituted—highly centralized, highly mediated, with critical decisions made by a select few—risks replicating the same problems that have led to widespread burnout, financial precarity, and erosion of workers’ rights in the traditional economy."

"But just as the gig economy mode of work brought about negative consequences, strong parallels are emerging between the gig economy and creator economy, rooted in the commoditization of work and erosion of worker leverage."

"there is an immense power imbalance between platforms and creators, who are reliant on platforms for distribution."

"But unless we radically change the foundation of the creator economy—how creators find and connect to a community in the first place—these solutions are incremental at best, and don’t create a fundamental unlock for the issues plaguing the current creator economy."

"As we’ve traveled up the adoption S-curve, social media platforms have shifted from supporting creator individuality to commoditizing creators in order to maintain their grasp on user attention, a necessary ingredient for advertising-based business models."

"Today, with the shift to platform-mediated work, capital is evolving once more, to ownership of data that enables productivity."

"the creator economy is marked by the rise of a small number of firms that have accumulated capital and effectively control the means of production and distribution."

"While online platforms have unlocked the traditional gatekeepers of the creative world, they also serve as the access chokepoints of a new type of capital. The dominant centralized creator platforms own the data, social graphs, and end user relationships—all of which creators need in order to access audiences and income."

"Furthermore, in the majority of cases, this type of capital cannot be easily ported over to external, creator-owned properties."

"Parallel problems in the gig and creator economies"

"Over-supply and competition between creators"

"A unique element that impedes organization and activism among creators is the intrinsic motivation behind online creative work: creating content often has the connotation of being a hobby or labor of love, which causes many new aspiring creators to join platforms and start creating content for free, without any expectation of compensation, benefits, or protections. This makes creative labor uniquely at risk of being undervalued and exploited."

"Exploitation of creator labor"

"creators are effectively large-scale unpaid workforces, uploading massive amounts of content that platforms have converted into billions of dollars of revenue and trillions of dollars of equity value."

"Insecurity and volatility"

"Underscoring this job insecurity is a black-box algorithm that drives most social media discovery feeds: product design can change at a moment’s notice to favor different types of content, diverting potential prospective followers elsewhere. This insecurity and volatility is a direct contributor to creator burnout."

"De-platforming—whether by a platform or by the state—means that creators can easily lose access to their audiences and past creations."

"Intermediation and taxation"

"How do we build a healthier creator economy?"

"1. Ownership and portability"

"But we can go even further in enabling creators and users to control their own destiny: software itself can become community-owned and operated."

"Ownership comes in different forms: creators are increasingly prioritizing owning a neutral channel of communication with their audiences (via email lists, RSS feed subscribers) and owning the direct monetization relationship with end users (Stripe account)."

"On content itself: while most Web2 platforms don’t claim ownership of users’ content, they grant the platform the right to use, distribute, and modify their work."

"2. Credibly neutral creator mechanisms"

"The four elements of credible neutrality are: (1) Don’t write specific people or specific outcomes into the mechanism, (2) Open source and publicly verifiable execution, (3) Keep it simple, and (4) Don’t change it too often."

"In contrast, the Mirror $WRITE RACE is a weekly open voting process in which the existing users of Mirror, a community-owned and operated publishing platform, decide on which new members to induct."

"3. Creator-friendly business models"

"Offering more direct monetization models (where users pay creators) can encourage creators to align their content with what end users value, versus creating content that maximizes watch time or virality."

"Other monetization models can foster a creator middle class, for instance, allowing creators to capitalize on superfans to capture more of the area underneath their demand curve, or to earn more passive income (e.g. “create now, earn later,”), thus reducing the active effort needed to maintain financial success and mitigating creator burnout."

"turning stakeholders into shareholders, as in creator- and user-owned platforms, can better align the interests of platforms with creators. Ownership can confer both economic and governance rights, meaning that creators and users decide on product strategy, leadership, and what to do with profits."

"4. Creator interdependence and solidarity"

"Creator DAOs (decentralized autonomous organizations) are a way to turn a group of people with a shared mission (e.g. creating media about a certain topic) into a decentralized army with a treasury and governance tools that harness members’ collective intelligence."

"In contrast to today’s creator funds offered by social media platforms, the eligibility for funding could be based on independently verifiable data since all user metrics are on-chain."

"How can platforms be designed to mitigate creator anxiety and insecurity?"

"What channels could exist to institutionalize creator voice?"

"One common desire among creators is for more transparency on the part of platforms about how the discovery algorithm works and updates to how it is changing."

"What forms of online collective action could emerge?"

"How does discovery and distribution work in a post-social media platform world?"

"Platforms today are double-edged swords for creators: creators rely on them to grow their audience, but also want to be able to reduce their dependence on them over time."

"“In the digital world, user rights are civic rights, and creator rights are worker rights.”"

"Furthermore, the new social network had to create upward mobility for all users, to “make sure there’s a middle class coming up.”"

"On platforms, less wealth concentration means lessening the risk that a would-be competitor could poach top creators and threaten the entire business."

"A 1981 paper by Sherwin Rosen, an economist at the University of Chicago, offers a prescient explanation of how the “superstar phenomenon” would become more pronounced as a result of technology."

"What are some platform design decisions that can help make success attainable by many?"

"This suggests that categories with high replay value — like music and game platforms — are most susceptible to concentration among a few mega-hits."

"platforms can direct users to content types where there’s greater appeal in experiencing a wide array of content."

"What are the opportunities for startups? For starters, while many grassroots communities of creators are already springing up, platforms can do more to enable creators to connect with one another for emotional support, collaboration, and education."

"On TikTok, Creator Fund payouts are driven by engagement and views; in contrast, YouTube — which pays creators 55% of ad revenue shown on their videos — incentivizes creators to make content for an affluent, advertiser-friendly audience."

"Substack’s Bridge mentorship program is a two-month program that pairs together emerging and established Substack writers."

"The program promises that mentees will “get help with their editorial strategy and business; and sharpen their creative skills around writing style, asking for feedback, and positioning their value.”"

"But for content platforms, the move to digital content hasn’t been correlated with a burgeoning long tail:"

"For platforms that enable community interaction, it’s helpful to measure activity cohorts: ideally, users become more active (and derive more value from the community) when there are more fans to engage with."

"Community-Related Metrics"

"Success Metrics"

"Success metrics are a measure of whether creators are obtaining value from a platform. For Passion Economy companies, that’s tied to earning revenue."

"1. Conversion of free fans to supporters and subscribers"

"2. Total creators with sales (cumulative and in a given time frame)"

"Total cumulative creators with sales is a measure of overall platform health"

"3. Creators who have reached a certain revenue threshold"

"Patreon has a KPI called “1K creators,” or creators who are making at least $1,000 per month from patrons. This is also a success metric that Amazon has used for sellers on its third-party marketplace."

"Revenue Metrics"

"These metrics help startups understand the volume and predictability of user demand for whatever creators are selling."

"4. Gross Transaction Value or Gross Subscription Value"

"GTV can also be a driver of revenue if the business model charges a payments processing fee or other take rate"

"For example, Shopify’s major source of profitability isn’t SaaS, but payments revenue through Shopify Payments."

"5. Monthly Recurring Revenue (MRR) and Annual Recurring Revenue (ARR)"

"6. Average selling price (ASP)"

"7. Share and sources of earnings"

"The nature of the Passion Economy today is that platforms—and thus creator earnings—are fragmented."

"In other words, how indispensable is your platform in supporting the creator’s business?"

"8. Revenue retention (creators & audience)"

"Engagement Metrics"

"9. Fan engagement rate"

"engagement is a leading indicator for whether users have high propensity to convert to purchase—as well as whether creators will stick around."

"10. Loyalty and retention of fans"

"11. Creator retention and churn"

"The next step is to dig into reasons for churning."

"Growth Metrics"

"12. The Flywheel: Percentage of fans that become creators, creators bringing new creators, fans bringing new fans"

"Successful creator platforms often have a powerful built-in growth engine. This can take the form of fans finding out about the platform by being a customer first, then signing up as a creator."

"13. Creator affinity and value"

"This metric doesn’t measure health on your platform itself, but can be an important signal in identifying which creators to target and onboard to your platform"

"14. Acquisition costs and channels for creators and users"

"For creator businesses, the first few hundred creators are often acquired through doing things that don’t scale, like going to conferences or meetups. Later, the creator might layer on other acquisition channels, such as paid advertising, content marketing, and affiliate marketing."

"For user acquisition: some platforms—marketplaces, in particular—take responsibility for demand-side acquisition, whereas many creator SaaS tools require the creators to develop their own audiences."

"Social features enhance stickiness and can help users get more value out of their purchases by enabling discussion and connection with like-minded individuals."

"15. Intra-audience interactions"

"How much are audience members interacting with each other, in addition to the paid content? There’s no one-size-fits-all way to measure it, but examples of metrics to capture this include engagement rates (commenting, liking, friend-ing) with other users, ratio of content contributed by the community vs. the creator themselves, etc."

"16. Network effects"

"For marketplaces that enable the discovery of new creators, it’s useful to measure the percentage of activity or transactions originating from within the network itself, as opposed to external sources."

"The power user curve also suggests the presence of network effects."

"In the gaming world, whales often lord their big spending habits over non-spenders, thus providing an aspirational target for everyone else."

"I believe that creators need to amass only 100 True Fans—not 1,000—paying them $1,000 a year, not $100."

"A creator can cultivate a large, free audience on horizontal social platforms or through an email list."

"This strategy is closely related to the concept of “whales” in gaming, in which 1 to 2 percent of users drive 80 percent of gaming companies’ revenue"

"There is a substantive difference between monetizing through 1,000 True Fans (at $100 a year) and 100 True Fans (at $1,000 a year). Whereas a creator can earn $100 a year from a fan via patronage or donations, collecting $1,000 a year per fan requires a wholly different product."

"These fans expect to derive meaningful value and purpose from the product."

"The recipe, then, is to go niche and to tap into users’ desire for results."

"Premium content and community that has no close substitutes"

"Delivering tangible value and results"

"Accountability"

"Access, recognition and status"

"There are also big, growing businesses in China, such as Bixin, Taobao, and Heizhu Esports (from Netease), in which people pay creators to play video games with them."

"More broadly, products can be designed in such a way that super-fans receive social affirmation from “normal” fans, triggering a positively reinforcing network effect that increases the value of super-fans, beyond the monetary spend."

"The creator economy is 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."

"Creators that have larger, more diffuse audiences with weaker allegiance or engagement are likely better off monetizing through sponsorships or branded products."

"For many, that path will be more lucrative—and require less heavy lifting—than designing the sort of high-value, personalized program 100 True Fans demand."

"These stories are indicative of a larger trend: call it the “creator stack” or the “enterprization of consumer.”"

"The Evolution of The Passion Economy"

"Monetizing Individuality"

"They’re accessible to everyone, not only existing businesses and professionals"

"They focus on digital products and virtual services"

"new creator platforms are focused on digital products."

"Marketplaces bring value for creators looking to be discovered and attract customers over time."

"SaaS tools often make sense for more established creators who already have a customer base."

"In response to this dynamic, many startups are building SaaS platforms that aim to poach large creators from existing marketplaces."