The White House is briefing TikTokers about the war in Ukraine. A Twitch streamer’s PS5 giveaway sparks a bonafide riot. A 25-year-old YouTuber from North Carolina is one of Time Magazine’s 100 most influential people in the world.
If you underestimate the power of internet personalities, you’re not paying attention.
In Silicon Valley, “creator economy” used to be nearly as hot a buzzword as “AI” is right now. But even as content creators remain at the forefront of culture, the numbers behind venture capital investments tell a different story: Last year, the amount of money invested in creator economy companies dropped around 68% from the first to third quarter.
But creator economy investors remain unfazed by what may seem like a steep decline. Several investors told TechCrunch+ that they knew that the entertainment industry would weather some twists and turns as the world exits pandemic-era lockdowns and that trends in venture can be cyclical. Some investors even said that the creator economy has yet to reach full maturity.
To learn more about the state of the creator economy industry and how investors are thinking, we surveyed seven VCs about where the industry is headed, the rise of short-form video, the shifting role of influencer marketing, and what the launch of new platforms portends.
We spoke with:
- Brian Harwitt, partner, Coventure
- Sasha Kaletsky, co-founder and managing partner, Creator Ventures
- Julia Maltby, principal, Flybridge
- Josh Constine, venture partner, SignalFire
- Katelin Holloway, founding partner, 776
- Ali Hamed, co-founder and general partner, Crossbeam Venture Partners
- Sima Gandhi, founder of Creative Juice; investor and advisor at G3
Brian Harwitt, partner, Coventure
Is the accelerated launch of new Twitter competitors a boon or an impediment to creator success?
Competition is good for creators since the platforms will have to compete for the creators’ time, which is a limited resource. To attract and keep creators, platforms will have to continue to offer monetization opportunities, which will spur potential bidding wars — as we saw with Kick and Twitch.
The creator economy has seen a slowdown in venture funding over the last few years. Did you anticipate this, and how are you preparing your portfolio companies to navigate a crowded market with less available capital?
The growth in the creator space was fueled in two parts: by COVID and the boom in e-commerce (the primary advertiser in the creator economy). People have largely returned to their ordinary lives and e-commerce has reverted to its usual pace, so the slower growth of the creator space is not surprising.
Despite this, we still expect significant growth over the next few years, and believe the market has yet to reach maturity. The best companies still have access to capital, while slower-growing businesses are preserving the cash they have.
Many VCs backed long-tail creator businesses or ones with a web3 focus, which have largely struggled to gain traction, so their attention has shifted to other areas such as AI.
What do you see as differentiated business models in this space given the intense competition?
Differentiated business models are ones that can either service the largest creators or service the long-tail with minimal human touch required.
What kinds of creator economy companies are you most excited to invest in right now?
We are excited about companies that are providing access to capital or some form of predictable monetization. We anticipate that predictable monetization and monetization infrastructure will continue to make the creator economy more investable for debt and equity investors alike.
Will the economics of the digital economy be better for creators and creator-focused startups in the back half of 2023 than the first was? How will 2024 compare to 2023?
A rising tide raises all ships, so what’s good for the creator is good for the creator-focused startup. With all of the changes in the last 12 months, many creators are just catching their breath.
This year continues to be a challenging one for the ecosystem, as brands have pulled back ad budgets, capital markets have frozen and many fear a slowing economy. Looking toward 2024, we will hopefully see a reversal in those three trends and allow for a more confident creator economy.
Social platforms have yet to figure out how to share ad revenue from short-form video. Where do you see platform-creator economics shaking out in the next few quarters?
YouTube’s 55% / 45% model is a good paradigm for the platforms to mirror, but ultimately, the economic split will depend on competition and scale.
The introduction of Kick has forced Twitch’s hand to improve its payouts, so the competitiveness of platforms will hopefully be a benefit to the creators as they continue to seek the best monetization opportunities.
How can companies protect their creators in the event that they might shut down?
It depends on the company and whether or not they are genuinely creator-first. But companies interested in protecting creators are likely to merge or sell rather than completely go under, as this would create a better outcome for their investors and customers.
How is an uneven economy affecting consumer spend on creator products?
Creator products is a nascent category, and there is likely some pent-up demand to purchase their products, at least in the short-term. Creators who offer lower average order value (AOV) products will likely see maintained demand, while higher AOV items may see a slowdown.
Consumers are almost through their excess savings from COVID, so the next six months will be telling for the state of consumer demand.
Do you think influencer marketing is becoming more or less powerful? How does this stack up against traditional avenues of marketing?
Micro influencers have the highest ROI [return on investment] for advertisers but, obviously, the least amount of scale. So CMOs and ad buyers will be significantly more ROI-focused as they approach creators and influencer campaigns.
What trends in the creator economy do you think are being overlooked?
Access to capital and predictable monetization. These are the underpinnings of a stable and mature industry.
Many social platforms have developed creator programs over the last several years. What are the different metrics you look at to gauge the success of a creator program? Which one is leading the pack?
Predictability and consistency of monetization are the most important.
TikTok is an interesting case study, because it launched a monetization platform for its creators, but the viewership and the revenue per thousand impressions (RPM) vary widely from video to video, meaning that a creator can predict how much money they will make each month even if they produce 10 videos a month.
Sasha Kaletsky, co-founder and managing partner, Creator Ventures
Is the accelerated launch of new Twitter competitors a boon or an impediment to creator success?
Despite its pervasiveness among VCs and other professional wordsmiths, Twitter is pretty much irrelevant to most creators. Word-based platforms are difficult to monetize (for both creators and platforms . . . just ask Twitter creditors), so Twitter and the like work best as a tool to amplify messages rather than make money or truly engage audiences.
So basically, nobody really cares that much about new Twitter competitors.
What kinds of creator economy companies are you most excited to invest in right now?
Venture capitalists investing in the creator economy can find themselves swimming in fool’s gold; it’s critical to be highly selective about which business models work and which don’t.
There are three primary spaces that we consider investable and have invested in:
Creative software platforms: They are products that creators enjoy using, are happy to pay for, and tell their audience about.
Influencer marketing platforms: They represent the only consistent way for the majority of creators to monetize, and brand ACVs can be extremely high.
AI tools: This is such a fast-moving space, and the dislocation it will cause will certainly create opportunities. We are also conscious that in some cases, the hype has overtaken the opportunity at this time.
We have been skeptical about the vast majority of creator tools outside of this, so we are generally less excited about tools that help creators with their workflow, financing tools, audience engagement, and brand-building.
All of these are alluring at first, but they suffer from the same three problems: monetizing, retaining and acquiring creators.
Social platforms have yet to figure out how to share ad revenue from short-form video. Where do you see platform-creator economics shaking out in the next few quarters?
YouTube used to be a monetization paradise for creators, since they had tremendous leverage over the platform. Users came to YouTube to watch them, and long-form videos meant the user time spent (and ads watched) depended on the quality of each creator’s video.
With TikTok, Shorts and Reels, creators have no such leverage. Users come to watch the platform, and each creator making a short clip has a smaller individual role to play. Structurally, this should make Shorts much harder for creators to monetize.
That’s been the case so far, but let’s see how that plays out long-term as competition among platforms intensifies.
Do you think influencer marketing is becoming more or less powerful? How does this stack up against traditional avenues of marketing?
It is becoming far more powerful and prevalent. Influencer marketing budgets used to be carved out of other marketing lines. Now it often represents a line item of its own. Case studies of brands seeing a dramatic positive impact from influencer marketing are starting to percolate among marketers, and most marketers are taking it seriously now.
Reddit launched a program earlier this year that allows creators to get paid for making blockchain-based collectible avatars. Do you think that platforms should still be leveraging crypto to get creators paid? Which use cases of blockchain in the creator economy space excite you?
Crypto in the creator economy is a total red herring. It is a VC trend we have never been able to understand. Its major advantage is to make assets liquid. . . . Why on earth would a creator want that? It means their audience can lose money on them, which is the nightmare scenario for people whose entire purpose is to make their audience happy.
It’s like trying to open up a casino in Disneyland! We entirely avoided the intersection of crypto and the creator economy, and think even if crypto has another bull run, we will not touch anything that tries to engage traditional creators. Maybe we’re missing something, but so be it; we are happy to leave crypto to the crypto funds.
Julia Maltby, principal, Flybridge
How can creator economy companies protect their creators in the event that they might shut down?
Unfortunately, many creator economy companies funded in the last boom are unlikely to find scalable business models and will be forced to wind down operations. Platforms should be honest about the state of their businesses with creators.
This is especially true for platforms on which creators host and manage their followers and fans. Migrating these communities elsewhere will take careful coordination — platforms owe it to creators, the backbone of their businesses, and should provide the time to do so.
Do you think influencer marketing is becoming more or less powerful? How does this stack up against traditional avenues of marketing?
Influencer marketing is still incredibly powerful in driving consumer purchasing decisions. However, more and more of this content, which many consumers still believe to be organic, is carefully curated by corporations.
The most obvious and topical example of this is Barbie’s masterful utilization of influencer marketing to drive merchandise and ticket sales. In addition to carefully selecting influencers to promote the movie — with distinct messaging and followers — Barbie also leveraged dozens of corporate partnerships to tap into the communities of other brands.
All this is to say: Influencer marketing is alive and well; it’s just incredibly regimented and deliberate.
How is the uneven economy affecting consumer spend on creator products?
For creators with highly engaged and loyal communities, we haven’t seen a big drop in consumer spend on creator products.
Popchew, for example, provides the infrastructure for creators to launch national food brands, and has seen impressive growth and loyalty over the last year. Importantly, Popchew creators sell food, which may be less subject to spending dips in more discretionary categories.
What kinds of creator economy companies are you most excited to invest in right now?
We’re excited by the intersection of the creator economy and AI (shocker). While there are obviously tons of use cases for using AI to generate content, we’re also seeing AI applications utilizing user engagement data to drive actionable campaign insights and recommendations, as an example.
Josh Constine, venture partner, SignalFire
Is the accelerated launch of new Twitter competitors a boon or an impediment to creator success?
Twitter alternatives are a boon to creators, but also an additional source of work, as new platforms offer chances for rapid follower growth before people fill up their feeds. But winning that early bump requires overinvesting time in great content tuned for each app, even if they might fizzle out. So, it may temporarily increase creator workload as they wait to see which will succeed.
The creator economy has seen a slowdown in venture funding over the last few years. Did you anticipate this, and how are you preparing your portfolio companies to navigate a crowded market with less available capital?
We anticipated a slowdown as the pandemic subsided. Social apps had to pay back the quarantine user loan I wrote about, so we advised our companies to stock up on funding first [and] stay cautious with headcount, and [we] built a series of growth mastery webinars and playbooks to help them build capital-efficient growth strategies instead of blowing money on ads.
What do you see as differentiated business models in this space given the intense competition?
Creators aren’t sophisticated enterprise software buyers, nor do they have software integration teams. Creator startups win when they take a percentage of fan spend, so they only make money when creators do.
For example, Truffle doesn’t charge subscription fees for its initial wedge products, but earns money in other ways. And Karat provides creators with zero-fee, zero-interest credit cards, and then sells bookkeeping services.
What kinds of creator economy companies are you most excited to invest in right now?
I’m looking for startups using AI to help creators scale their relationships with fans. Instead of having to ignore the majority of their comments and DMs, I want to see tools that help creators reply more often while integrating fan feedback into their creative process. That feedback loop is what makes creators different from distant celebrities.
How can creator economy companies protect their creators in the event they shut down?
Any startup that shuts down should try to give users a heads-up as early as possible, allow data downloads, and ideally, the ability to transition paid subscriptions to another platform. They should also keep the archive of user-generated content publicly accessible for as long as possible.
How is an uneven economy affecting consumer spend on creator products?
As the tough economy discourages more expensive consumer activities and people spend more time at home, shelling out to connect more intimately with their favorite creators can be a thrifty form of entertainment. We’ve also seen the continued resilience of creator merchandise, as fans look to represent their online interests IRL.
Do you think influencer marketing is becoming more or less powerful? How does this stack up against traditional avenues of marketing?
Influencer marketing is going to become more important because of:
- Weakened ad targeting due to new privacy regulations.
- The shift to more silly meme-focused marketing.
- The ongoing rise of micro-influencers that deeply appeal to niche demographics.
- The increasing realization that one-size-fits-none celebrities have less power to shape buying behavior.
- The SAG-AFTRA strike blocking promotional tie-ins with traditional celebrities.
Fans want recommendations from creators they trust, not commercials.
What trends in the creator economy do you think are being overlooked?
Game development will be the next big creator space. We’ve been on a steady march toward vividness in user-generated content, from text to photo, to video to live, and now to gaming.
Katelin Holloway, founding partner, 776
Is the accelerated launch of new Twitter competitors a boon or an impediment to creator success?
With all of the obvious potential downsides to a fragmented market, I’d like to believe that there is massive opportunity here for creators. In the most optimistic view, new platforms diversify the audience and revenue streams. There is a wave of fresh, exciting social media platforms blossoming in our digital landscape.
For creators, this isn’t just about expanding their horizons, but also about weaving a safety net of diversity. If one platform decides to shake up the rules, tweak algorithms, or flip payment systems in a way that doesn’t quite align with creators — no sweat.
That said, more platforms equate to more rivalry, both in the realm of the platforms themselves and among the creators who rely on them. Competition can be a fierce motivator, but let’s not ignore the flip side: The landscape is shifting, and with it, the rules of engagement. Standing out is no longer an option; it’s a necessity.
At the end of the day, it all comes down to the nitty-gritty of each platform. The magic, though, lies in how creators respond to the twists and turns of these platforms, how they embrace the change and make it work in their favor.
The creator economy has seen a slowdown in venture funding over the last few years. Did you anticipate this, and how are you preparing your portfolio companies to navigate a crowded market with less available capital?
Trends in venture funding are often cyclical. The cooldown in the current funding scene for the creator economy isn’t exactly a surprise. But even when the funding tempo slows, standout products can still court substantial capital.
At the end of the day, startups that can demonstrate high-quality, differentiated products with strong user value, growth potential and financial viability will continue to attract investment, regardless of broader funding trends.
Our advice to portfolio companies is fairly standard:
- Focus on unit economics.
- Achieve profitability sooner.
- Diversify revenue streams.
- Keep a strategically lean operational structure.
What do you see as differentiated business models in the creator economy space given the intense competition?
There are a few business models we’ve been attracted to that are proving to be very successful within our portfolio:
- B2B services for creators: This could include analytics tools, tools for managing fan relationships, or services that help creators with legal, accounting, or other business issues.
- Premium fan experiences: Creating unique, high-touch experiences for superfans can be a powerful business model. These could include virtual meet-and-greets, personal shout-outs, exclusive content, and more.
- Education and courses: Creators with expertise in specific areas can develop and sell courses or offer coaching/consulting services. This model can provide significant income, especially if creators can scale their offerings using online course platforms.
Other models I think are going to be standouts in this economy include creator co-ops or collectives, decentralized platforms, and creator-led product lines.
What kinds of creator economy companies are you most excited to invest in right now?
We’ve prioritized investments in services that empower creators to better manage their personal brand. We believe there is enough space for any platform that can successfully cater to creators who specialize in certain types of content or have a particularly passionate community.
Will the economics of the digital economy be better for creators and creator-focused startups in the back half of 2023 than the first was? How will 2024 compare to 2023?
Absolutely. Twitter’s (X’s) move earlier this month to share ad revenue with verified creators to keep them on the platform is a massive indicator that the creator economy is here to stay. With X aiming to become the best platform for creators to earn a living, every other platform has real motivation to step up their game. I also believe that consumers will continue to value and pay for personalized, independent (read: authentic) content, greatly benefiting the creator economy.
Social platforms have yet to figure out how to share ad revenue from short-form video. Where do you see platform-creator economics shaking out in the next few quarters?
Competition amongst platforms will fuel this race to serve, attract and retain creators. In turn, this could drive platforms to offer better economic terms.
Trends we’re seeing beyond simple ad revenue sharing include direct monetization features (subscriptions, tipping, paid events, etc); brand partnerships; and improved analytics (tools to help creators understand their audience and optimize content).
Any platform that can sort out how to best support these features or build these considerations into their economics is sure to capture the largest content creators in the market.
How can creator economy companies protect their creators in the event they shut down?
One trend we’re seeing across the industry as a whole is an increase in mergers and acquisitions. It’s no different for businesses in the creator economy. I think it’s especially important for creator economy companies to be mindful of the impact on their users in the event of an acquisition or wind down.
To start, transparent communication is key. Keep creators informed about the company’s outlook. If there’s a risk of shutting down, let them know as soon as possible so they can start planning for the transition.
Next is data ownership and portability. Ensure that creators own the rights to their content and have a way to export all of their data, including content, followers and interaction history. This can help them transition more easily to another platform.
Lastly, education and support resources for creators. This might include guides on how to transfer their content to another platform, or how to communicate the change to their audience. The goal should always be to minimize the impact on creators as much as possible and support them in moving forward.
How is the uneven economy affecting consumer spend on creator products?
The economic climate absolutely affects how consumers engage with the creator economy. The more financially secure might indulge in supporting creators and enjoying premium experiences. Those facing economic challenges might tighten their belts, lean toward content that is free, supporting creators with views and likes versus cash.
The type of content consumed may also shift depending on how the economy is impacting folks. Consumers may be more interested in educational content that could help them learn new skills, improve their job prospects, or navigate financial challenges.
Regardless of the economy’s temperament, articulating the worth of a creator’s contributions remains crucial, and people crave authenticity. I still believe that there is much to be learned here.
Do you think influencer marketing is becoming more or less powerful? How does this stack up against traditional avenues of marketing?
Consumers crave authenticity and demand trust. When you’re selling something, it’s all about reaching the right people in the right way. Influencers have their own unique niches and demographics they cater to, giving brands a direct line into their target audiences. Collaborating with influencers can do wonders for brand awareness, too.
I’m not saying traditional marketing is dead. Traditional marketing excels in mass awareness, established platforms, B2B marketing, and non-visual products. Influencer marketing shines in trust, authenticity, and engaging specific audiences. Ultimately, the effectiveness of any marketing strategy depends on the goals, target audience and nature of the product or service being promoted.
The reality is that influencer marketing is now a vital part of any marketing strategy.
What trends in the creator economy do you think are being overlooked?
The mental health of creators: Being a creator can be a stressful job, with pressure to constantly produce new content, handle negative comments and manage an online persona. As awareness of mental health issues grows, the industry desperately needs to find ways to better support creators’ well-being.
The role of AI: AI and machine learning can help creators with editing, content recommendations, and analyzing audience engagement. They can also create new forms of content, like AI-generated art, music or text. Creators that embrace new technologies can produce more content with less effort, increasing their ability to create sustainable revenue streams.
Many social platforms have developed creator programs over the last several years. What are the different metrics you look at to gauge the success of a creator program? Which one is leading the pack?
Creator program success metrics:
- Creator retention and satisfaction: How successful is the platform in retaining its creators? A stellar program should offer enough incentives and support for creators to stay and continue producing content. Are creators happy with the program? Surveys or qualitative feedback can provide insights into how creators feel about the support they’re receiving, the platform’s policies, and the opportunities for monetization.
- Earnings: Monetary benefits are crucial for creators. What are the average earnings for creators in the program? What percentage of creators earn a significant income?
- Growth: How fast is the program growing? This can be measured in terms of the number of creators joining the program, the amount of content being produced, or the audience that the program is able to reach.
- Audience engagement: Yep, the old standards — likes, comments, shares, viewing time, and other interaction metrics.
There seems to be a renewed race to capture creators and influencers in the market right now. YouTube’s Partner Program was historically the gold standard for creators because of the comprehensive program (different ways to earn money, educational resources, and a massive audience with a wily algorithm), but TikTok has demolished it in recent years.
With X and Instagram both making big moves to unseat YouTube now, I’m curious to see how the back half of 2023 shakes out!
Reddit launched a program earlier this year that allows creators to get paid for making blockchain-based collectible avatars. Do you think that platforms should still be leveraging crypto to get creators paid? Which use cases of blockchain in the space excite you?
Y’all know I’m a blockchain bull and I think the adoption of this technology in the creator economy can be a massive win. Reddit’s proven this theory, but what will make it work more broadly? Direct payments, fair compensation through transparency, tokenization, copyright protection, and global reach. Are we there yet? Not fully. We have a lot of work to do across the board with regard to regulation, scalability, education and simple UX/UI hurdles. But I remain long on blockchain technology being a core part of our experiences online.
The products and platforms that invest in this tech now to build user-friendly interfaces will likely garner long-term retention of top creators.
Ali Hamed, co-founder and general partner, Crossbeam
Is the accelerated launch of new Twitter competitors a boon or an impediment to creator success?
It’s already difficult for creators to build an audience that’s big and sticky enough to be monetized. While owning more channels will be good for the long tail, the long tail doesn’t make enough money for creators to turn professional or produce professional content.
All in all, there will be too many channels, too much noise, and more content of lower quality.
The creator economy has seen a slowdown in venture funding over the last few years. Did you anticipate this, and how are you preparing your portfolio companies to navigate a crowded market with less available capital?
The creator economy has always been mostly YouTube. YouTube is the top platform for creators to monetize, build a consistent audience, and enable catalog value through viewership of past content. This is all relative, but until these get better in a meaningful way, the creator economy is still mostly YouTube.
We don’t think the creator economy is as small as most people think it is now, and we didn’t think it was as big as most people thought then. It’s an interesting space where some companies are worth funding, but it’s also not the only market that exists, or an infinite market like some people made it out to be.
What do you see as differentiated business models in this space given the intense competition?
A lot of it is based on the platform. You have to service the biggest creators who have enough economics to become meaningful customers, and they need to be served on the platforms where they are able to monetize.
We’re also focused on creators whose audience is “bought in.” The bar to becoming a follower of someone on TikTok is really low. The bar to watch someone’s entire 20-minute YouTube video is higher. And the bar to pay for someone’s newsletter is even higher.
We are looking for audiences that have skin in the game and didn’t just passively click a follow button.
What kinds of creator economy companies are you most excited to invest in right now?
Anything that helps creators better monetize their recognition, focuses on creators who are producing quality content, and has a level of differentiation.
Will the economics of the digital economy be better for creators and creator-focused startups in the back half of 2023 than the first? How will 2024 compare to 2023?
We are in a wave where social media is no longer social. The content we watch is not posted by our friends, but by professionals. This is leading to a decay of network effects in which barriers to entry are dying, making it easier than ever to create new platforms.
The more platform competition, the more the platforms will have to give economics to creators and capture less value. It will probably get better over time.
The question is: Will venture money overfund or underfund the space as it grows?
Social platforms have yet to figure out how to share ad revenue from short-form video. Where do you see platform-creator economics shaking out in the next few quarters?
Short-form video will be for audience building. Long-form, paid, subscriptions and alternative forms of monetization like events or selling products online will be the actual monetization tools.
How can creator economy companies protect their creators in the event they shut down?
Creator economy platforms are like governments. They have rules, regulations and moral values. The best thing a government can do is be predictable and rational. That’s also the best platforms can do.
How is the uneven economy affecting consumer spend on creator products?
Not sure yet, but it will either be a cheaper, alternative form of entertainment, or limit discretionary spending on limited edition items. My hunch is, it won’t have a huge impact because it’s already a cheaper form of entertainment than movies, or IRL entertainment, sadly.
Do you think influencer marketing is becoming more or less powerful? How does this stack up against traditional avenues of marketing?
Less, because people are used to it. Every ad platform is only as good as it is new. That might be an exaggeration, but I can’t think of an ad platform that became more engaging over time.
What trends in the creator economy do you think are being overlooked?
Creators as media companies and all the services those broader media companies need.
Many social platforms have developed creator programs over the last several years. What are the different metrics you look at to gauge the success of a creator program? Which one is leading the pack?
Can programs identify creators that have true fans, where they’d show up just for that one creator? I’ve always loved how cable networks or streaming networks think about bundling. Just like Spotify got certain podcasters to go exclusive, platforms that have creators who rely on the platform have stickiness.
Sima Gandhi, founder of Creative Juice, and investor and advisor at G3
Is the accelerated launch of new Twitter competitors a boon or an impediment to creator success?
New platforms enable more distribution opportunities for creators, which is a good thing. At the same time, it’s only a boon if creators can monetize the content they’re producing.
YouTube continues to be a leader in how they think about revenue-sharing with their content creators, and I’d like to see more platforms adopt clear revenue-sharing policies that look more like a partnership, with more equal sharing of revenue.
The creator economy has seen a slowdown in venture funding over the last few years. Did you anticipate this, and how are you preparing your portfolio companies to navigate a crowded market with less available capital?
It’s critical for companies to “read the market” and right now, the market values efficient growth and doing more with less instead of maximum growth with easy capital. Companies need to quickly adjust to this reality while looking ahead and getting ready to adjust to the metrics they’ll need to hit in the future.
What do you see as differentiated business models in this space given the intense competition?
Many creator companies are focused on services, but there aren’t many building tech and infrastructure. The companies that will thrive will have strong tech teams building unique products that don’t necessarily rely on services revenue (e.g., taking cuts from creator brand deals).
Companies also must bring together the business and creative sides of creating. Today, too many companies are focused on one or the other.
What kinds of creator economy companies are you most excited to invest in right now?
I’m most interested in companies that are building tech instead of services-oriented companies that scale by adding more people.
Will the economics of the digital economy be better for creators and creator-focused startups in the back half of 2023 than the first was? How will 2024 compare to 2023?
It depends on the broader macro economy. As more and more creators meaningfully monetize, whether part- or full-time, interest in the market will heat up.
A growing appreciation for the scale of the monetizing creator economy along with macroeconomic upswings will hopefully turn things around.
Social platforms have yet to figure out how to share ad revenue from short-form video. Where do you see platform-creator economics shaking out in the next few quarters?
YouTube remains one of the leading platforms with its 45/55 revenue share split. An even split should be a standard for all platforms, because creators and platforms are in an equal partnership. They need each other, and they both benefit.
Creators are paying nearly 50% of the money they earn in exchange for distribution rights, tech support, content moderation, etc. It’s only fair that platforms pay 50% of what they’re earning off creators’ content.
Another big opportunity is how to add economic accountability on the platforms for when they don’t deliver on their end of the partnership. Platforms should make creators whole for losses that occur due to platform glitches, errors in policies or other issues that are not caused by the creator.
How can creator economy companies protect their creators in the event they shut down?
There are multiple ways of safeguarding, including appropriate notice, referral partners, strategic partnerships, and acquisitions.
How is the uneven economy affecting consumer spending on creator products?
Spending on creator products will likely follow broader consumer spending trends. One of the biggest opportunities is to help consumers find creator products.
I’m still waiting for a company to make search better so that people can “best” the algorithm in finding content and product that is best for them instead of content that’s best at gaming the algorithm.
Do you think influencer marketing is becoming more or less powerful? How does this stack up against traditional avenues of marketing?
Definitely more. Along with the decline in linear television and traditional publications, digital marketing and ads continue to grow. The reality is, the next generation of consumers inform themselves differently, and influencer marketing is a critical piece of driving awareness and spending.
What trends in the creator economy do you think are being overlooked?
Creators are the best example of solopreneurs: people who work for themselves. Most people think of creators as “all or nothing,” but the reality is that many people are part-time creators who can meaningfully monetize.
The median household income in the U.S. is about $70,000, so even earning $10,000 is a 15% bump in annual income. That’s huge! There’s a massive opportunity to give creators and solopreneurs the business tools they need to ensure they’re capturing the value from their side businesses.
Many social platforms have developed creator programs over the last several years. What are the different metrics you look at to gauge the success of a creator program? Which one is leading the pack?
It’s not always easy to tell from the outside, but I look at which programs last longer. I also look at the sustainability of the revenue provided and the transparency of the terms.
Ideally, creators know what they need to do to monetize and they have an approximation of what they can earn. YouTube continues to lead the pack, because it has a lasting and sustainable creator program, and while there’s more it can do for accountability and helping creators understand they are businesses, I appreciate the “partnership” mindset and the sustainable approach YouTube has adopted.