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The Creator Economy Needs a Middle Class
by
Rosie Sherry
https://li.substack.com/p/building-the-middle-class-of-the
The only real path that I see to a creator middle class is to get people to start paying trivial amounts for content.
Subscriptions aren't going to get there. People cannot afford 100+ subscriptions a month and so the majority of that money is still going to float to the top.
Ads are largely going backwards in revenue and the 3rd party cookie apocalypse is coming next year.
2% of people made minimum wage on patreon last year.
The only way to get there is to have a very large number of people pay a very small amount ($0.01-0.25) instead of trying to get a very small number of people to pay a modest amount ($2-5).
We have to normalize the idea of everyone paying for content. Just paying a very small amount that is easily affordable for everyone. Then everyone can access all of their monthly content for like $10 and creators make $10/1000 for every $0.01. That scales to $1000 for 10k users paying $0.10. At one post per week, that is $52k a year with just 10k followers. That is a living.
People are more privacy conscious now. Ad blockers are growing by huge amounts. People are also willing to pay for content. Subscription numbers have been going up. So we know that people will pay for content.
Now is the time to change the internet. Ditch the fake free and have everyone contribute a tiny amount so that more than 1% of creators can succeed.
love this in spirit. where it becomes reductive is in its underestimation of the complexity and variety of formats and distribution.
what does $0.01-$0.25 mean in terms of video? are creators incentivized at views? watch time? how do diff incentive structures become gameable by creators?
from the consumer perspective, are payments made before seeing content? what if I would normally have scrolled past something that's uninteresting and now I'm getting charged? and if people must choose to pay to see content, how does that additional friction change the time they spend on content consumption?
there are tons more questions, the devil is in the details.
It is a spectrum. Just like we have today with larger payments. There are required subscriptions (NY Times), optional subscriptions (substack, patreon), pure tips/donations, and tips/donations + premium content.
Right now, only about 1-5% of users pay, whether it is subscriptions or donations. That simply isn't enough. We need to get rid of the idea that all content should be free. It simply isn't enough to sustain most businesses or creators.
There is no expectation that 100% will ever pay, but then the vast majority don't consume 100% of the content from a single source. We need to move to a pay for what you use model. Whether it is pay-per-content or microtipping or a combination. It isn't something that will happen overnight, but it needs to start somewhere and spread.
As you noted, systems need to be flexible. Micropayments are what I do at CentiPenny. While developing it, I have tried to keep in mind that there isn't a one size fits all approach to it. My paywall can be called on page load or programmatically, such as after 30 seconds into a video or when the user clicks a button to continue reading after the first paragraph or two. My tipping widget can be fully customized by businesses or they can call the tipping modal directly from their own controls and skip the widget entirely.
As a payment processor, it is my job to provide the toolbox, but it is up to businesses to use that to build what works best for their business needs and customers. It is a matter of convincing businesses and creators that there is a lot of money to be made in monetizing the other 95-99%, even if it is just $0.01 at a time. The more options that you give users to give you money, the better the chances that at least one of those options will suit the user.
100%. no argument that there is a there there. the "how" it would work is critical but sequentially less urgent than seeding a "why" that sticks. you allude to this with your last paragraph, the "why" is where we should pay attention.
let's just say I've worked at several of the biggest content platforms in the world, and there is very little reason for aggregation networks to incent viewers away from an ad supported model. so they won't figure out the "why". in fact, when a service launches a "premium" package that includes ads-free benefits, it is taking away from the value to advertisers who spend on the platform --> if your platform's most able-to-pay customers opt of the ads and become unreachable by brands, their conversion goes down. they can no longer hit goals of driving awareness, consideration, and purchase.
therefore, a start up will need to figure out the "why" for consumers. who's it gonna be, what will the model look like, and how much capital will need to be thrown at the problem before it is solved at scale? no one knows :)
In most content areas, the ad model has been a dismal failure for 25 years for everyone except the ad companies. The publishing industry is in shambles.
Few creators are going to go full paywall, but even if they do, pay-per-view will crush ad revenues every time. $0.01 = $10/1000 users. There aren't any ad networks that pay that much and certainly none that would match the $50/1000 at $0.05.
When you are talking tips/donations, creators can continue to use ads.
Platforms are either self funding and vendor locked (social media) or they are funded by creators paying to use them (blogging platforms, etc). They can be incentivized to help creators by integrating access to 3rd party platforms with rev share and referral programs.
The big why for consumers is that they get better content. How many creators only put out new content once per week or month because they have regular jobs that pay the bills because all they only earn "beer money" from their content? How much more content could they put out if that side hustle paid the bills or even allowed them to hire people? How much better quality would that content be?
We need to emphasize that! If everyone pays just a little bit, then everyone gets a lot more.
I don't see proof of a consumer's need for better content and a consumer's need for MORE content when most content already never gets seen.
ad-based platforms have grown to take up more than half of people's daily internet usage, and they keep growing.
I do think there's a path where more creators disintermediate themselves, but if every creator disintermediates themselves, the fragmentation of the ecosystem will cause high friction for consumers, and the pendulum to swing back to aggregators once more.
3rd party payment/tipping systems solves some of the fragmentation problems. Some creators already have 2-3 donation options on their sites so that users can pick one. Often those have links that the creators also share on their social media.
3rd party processors can follow the creators around whereas platforms offering payments cannot.
When the floor for payments is $1 or $3 or more, you're not going to get the vast majority of users to contribute. Real fans will, but that is all.
Casual users don't often get $1 in value, much less $3 or $5 and they have no options to give less. In addition, the process for donating is slow and annoying (forms and CC #s).
If creators give them an option to give less in a fast and convenient way, some of those people will. That is money that is being left on the table right now.
We need to update the narrative behind donations online.
I said it better here:
https://www.centipennyblog.com/post/updating-the-online-narrative
recommend doing more research on how tip jar features have failed in the past and why.
you're making a lot of assumptions
The best and most insightful analysis I've seen. The middle class is the huge, submerged iceberg of the creator economy, of which the tech and business press see only the tip.