July 1, 2022

Where the Creator Economy Goes From Here

It has been a lot of fun for creators over the past couple of years. Whether it’s people like me who have launched solidly lucrative subscription/advertising newsletters, people building podcasts, or the proliferation of new YouTube content, the times have been good. A big reason so many creators have seen success is that the ad markets were flush. Like, really flush.

I’ve heard stories of creators getting $1 million to advertise in a brand new podcast. Other creators were getting six-figure contracts for their podcasts when they were getting under 2,000 downloads per episode. And it’s not like these creators were playing in ultra-niche b2b topics; they were generalists. Advertisers didn’t care because they had so much money to play with; everything was worth taking a chance on.

But those times are behind us. Every single media company has started to think about what happens if we go into a recession. Certain categories of advertising could see their budgets could get cut. Every other day, we hear about companies letting people go. The Fed is fighting to get inflation under control. So what happens to creators if we go into a recession?

This is compounded by the fact that creator burnout remains a very big thing. Showing up daily to write or record can be exhausting if it’s your full-time job. I do it twice a week, and I find myself staring at a blank page more often than I’d like to. The burnout is real.

So, what we’ve got are very burnt-out creators who might have had easy money flowing their way suddenly seeing a large amount of money get cut off. In September, the New York Times wrote about creator burnout:

According to a recent report by the venture firm SignalFire, more than 50 million people consider themselves creators (also known as influencers), and the industry is the fastest-growing small-business segment, thanks in part to a year where life migrated online and many found themselves stuck at home or out of work. Throughout 2020, social media minted a new generation of young stars.

Now, however, many of them say they have reached a breaking point. In March, Charli D’Amelio, TikTok’s biggest star with more than 117 million followers, said that she had “lost the passion” for posting content. Last month, Spencewuah, a 19-year-old TikTok star with nearly 10 million followers, announced he’d be stepping back from the platform after a spat with BTS fans.

Imagine being the biggest star on TikTok and losing your passion. Now imagine if you were just an average creator—one of the 50 million—who is not flush in resources. You grind day after day and what do you have to show for it?

Here are some statistics from Linktree’s 2022 Creator Report, a survey of more than 9,500 creators:

  • 12% of full-time creators make greater than $50k
  • 68% of part-time creators make less than $1k
  • 13% of full-time creators say they’re extremely/consistently stressed with another 30%+ saying they are somewhat stressed

88% of full-time creators make less than $50,000 a year. But this isn’t surprising. There are always fewer people up top making much more money. And with so many of them already stressed and ad budgets likely to get cut, I think the next year or so is going to be a very tough time for these creators.

So, what happens?

I am not going to sit here and say that I believe the creator economy is over. I am part of the creator economy. But it’s not sustainable. Sure, most creators could push for it when the money was great. But like most things that blew up during the pandemic, we’re reverting to the mean. Some creators will stick around, but most of them are done for.

I’ve long felt that media companies have a role to play here and there are obviously some that are trying. These are mini-media startups and they could certainly fit in as a product in your audience funnel.

But what creators need are two things. First, they need a soft landing. And two, they need resources to help support a lot of the “work” that goes into running a media business. You know, all the stuff I write about here (see, all of this does actually matter). Let me start with that first one.

If I wanted to shut down AMO (which I have zero interest in doing), I’d have money to distribute to people. If you pay monthly, cool, I’d turn off the subscriptions and you’d not be billed again. But a lot of you paid for an annual subscription. What if you have nine months left? I’d have to refund you. That’s complicated for a lot of people who might depend on that money (remember the statistics above).

So, one thing a media company can do is help provide a soft landing. If you’re going to buy the asset and change the monetization, ensure that the people who paid get their money back. It can be part of the acquisition price, but it’ll help make things easier for that creator. This is obviously not an issue if you have no plans to change the business model.

This is exactly what Skift has done with The Daily Lodging Report. In 2021, Skift bought this, paying somewhere in the 6 figures range, according to They Got Acquired. According to an article on the site:

One of those new subscribers was Rafat Ali, founder of travel industry platform Skift, which provides information and intelligence about the future of travel. Woinski noticed, and he had an inkling Ali might be checking out the newsletter for a possible acquisition. So Woinski wasn’t surprised when Ali approached them. Impressed with what Skift was building, the couple met Ali and a few of the company’s other executives. While the pandemic put the brakes on a sale, the two sides kept in touch.

Talks resumed in 2021, and it wasn’t long, Woinski said, before the two reached a deal. At the time of sale, TDLR had revenue of under $1 million from nearly 2,600 subscribers (from both regions), though Woinski believes the actual number of readers was much higher. “We have a large corporate subscription base, and many of those we send to one email address and the customer distributes internally to their departments or company wide. I actually believe the readership is more than 5,000,” Woinski explained.

This makes a lot of sense. The Daily Lodging Report was a subscription newsletter without the infrastructure most media companies have. Skift came along and could give it all the infrastructure. Plus, it has a large travel audience, many of whom likely find the newsletter helpful. It brings the audience and operations; the founders continue to create the newsletter. Everyone wins.

There are so many newsletters out there exactly like this. They’re doing it all on their own, but bringing them in-house would be a great way to own a proven product and give it the resources it needs to grow.

But that’s still only an option for the one percent of creators. What happens to the rest of them? They’ll just disappear. The internet is full of dead projects. I have many of them myself. With how easy it is to launch, is it any wonder it’s just as easy to stop?

During the pandemic, many liked to say that the future was the creator economy and that media companies would soon disappear. There were many who said that creators had all the power. They were wrong. Some creators have power, but they always have. Just look at cable TV anchors. The truth is, building a media product is hard. Doing it on your own is even harder. So, while some will thrive, most will not.

The future of media looks like what it is today. You build great content, you grow an audience with that content, and you monetize that audience either directly or indirectly. What some seemed to forget is that at all media companies, those are three different teams doing that.

Thanks for reading today’s newsletter. If you have thoughts, hit reply or join the AMO Slack. I won’t be publishing on Tuesday since most of the United States will be slow to respond after the 4th of July. But I’ll be back on Friday. Have a great week and see you soon!

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