Imad El Fay, Partner at HBI Investments, explains how the younger generation came up with a new type of economy that works best for them.
Acouple of years ago, [British newspaper] The Sun surveyed 1,000 children, asking them what they wanted to do when they grew up; 34% of them wanted to be YouTubers and another 18% wanted to be bloggers.
This shouldn’t come as a surprise. In the past decade, social media platforms have turned regular people into celebrities, helping them amass a large social following and get rich quickly. Teenagers like Charlie D’amelio (TikTok), Ryan Kaji (Youtube), and Ninja (Fortnite) made millions by monetizing their passions.
Gen Zers, who prioritize fulfillment and flexibility in their professional lives, jumped on this new economic model, looking for innovative ways to make money through content creation. The creator economy was born!
We are still in the early stages of this new economic model and even though things are rapidly changing, the future is exciting. This piece will explore the evolution of the creator economy, looking at how it started, how it’s going, and where it might be heading.
How it started: influencers
In the early days of the creator economy, creators made money through brand and affiliate partnerships by helping introduce products to their audience.
Unfortunately, success in the influencer world disproportionately accrued to people at the top. The 80/20 rule was more like 95/5, as 5% of influencers collected 95% of returns, with long- tail creators barely getting by.
This dynamic pushed influencers to explore new ways to monetize their audience. To do so, many of them took the entrepreneurial route and sold their own products/services/content to their fans directly, capturing a greater share of the upside.
How it’s going: solopreneurs
As the cost and effort required to launch companies dropped with the emergence of plug-and-play platforms and software, creators became more entrepreneurial.
Leveraging Shopify and other e-commerce apps, they built their own brands and products with minimal investments. Huda Kattan, Kylie Jenner, and Jessica Alba built billion-dollar brands in cosmetics and home product categories, leveraging their large audience. Their success encouraged many other creators/influencers to venture into the e-commerce space: Karen Wazen launched her own sunglasses brand, Joelle Mardinian sold her own lenses brand, and Mina Alsheikhly has her own mascara line.
Similarly, the growth of cloud kitchens and food aggregator solutions made it easier for anyone to set up a food brand and deliver ready-made meals to their consumers. As a result, many creators (such as Jessica Kahawaty with Mama Rita) set up delivery-only restaurants and partnered with cloud kitchen solutions to sell food to their followers.
Beyond online retail and food, creators explored other direct-fan-payment platforms allowing them to earn a modest income from their highly-engaged fans:
- Substack helps writers monetize through paid newsletters, with the top 10 authors on Substack collectively making over $15 million per year.
- Teachable helps teachers create and sell courses on any topic. The ten most successful teachers have collectively earned over $100 million.
- Twitch allows gamers to charge subscribers a monthly fee for watching them play a game.
- Cameo and Superpeer are platforms that directly connect influencers with fans in personal videos or through one-on-one chats, enabling influencers to generate income in new ways.
Where we’re heading: individual tokens
Innovation in blockchain and crypto tokens will unlock a completely new layer of the creator economy by making new funding streams avai- lable at earlier stages in the creator’s journey.
Today, individual creators can mint tokens and sell them to their early fans for a specific price, helping these creators raise capital to build their business/dream while retaining more control over their work.
When she started building her company, Huda Kattan had difficulty raising money, even though she was a renowned beauty influencer. Had individualized tokens existed at that time, Huda could have issued 5,000 $HUDA tokens to her superfans at $100 each, granting her $500,000 which she could have used to launch her business.
Ownership over $HUDA tokens would have granted holders the following:
- Dividends - a small share of Huda Beauty’s profits, allowing fans to participate in the eco- nomic upside of the company.
- Capital appreciation - as Huda Beauty grew to become a billion-dollar company, $HUDA tokens would have significantly increased in value, granting the early believers in Huda a great return on their investment.
- Special perks - for example, owning 250 tokens would offer you a quarterly Zoom meeting with Huda.
This is theoretical and full adoption of such a model will take time and require many nuances 1 to be worked out. However, a few platforms are already playing around with the concept:
- BitClout has recently attracted attention by letting customers buy and sell individual-specific coins. There’s an Elon Musk coin, aJustin Bieber coin, a Kim Kardashian coin – all of which trade on the platform.
- Human IPO allows anyone to buy and sell someone’s time, one hour at a time, as if you’re buying a stock in a company. As the person gets more important, his/her time becomes more valuable, generating a return on a fan’s original investment. You can buy shares in Valentine, a data scientist, or Deborah, an MBA candidate at UCLA, hoping that as they become successful, their time value increases.
It remains to be seen where the creator economy is headed. But one thing is for sure.: it’s a great time to be a creator as new tools are becoming available every day to allow creators to develop and share content with their fans.
