How legacy media outlets can collaborate with the Creator Economy
Creators are generating revenue that in the pre-internet age would have gone to newspapers, magazines, and TV networks.
Welcome! I'm Simon Owens and this is my media industry newsletter. You can subscribe by clicking on this handy little button:
As someone who writes for a living about the media industry, I’m constantly astonished by how much of the discussion about the various media sectors is siloed. For instance, it’s still common to read articles about the late night talk show wars that focus entirely on TV Nielsen ratings and don’t mention once that these shows have massive distribution on YouTube and other platforms.
The same can be said for the Creator Economy, which is almost always treated as something completely separate from traditional media. Never mind that creators are competing with media companies on everything from advertising spend to subscriptions, they’re still treated as these strange curiosities, as if hundreds of millions — if not billions — of consumers aren’t relying on them heavily for their entertainment and news. Publishers love to point to Meta and Google as the villains that took away their ad dollars, but creators are collectively pulling down tens of billions of dollars in sponsorships and advertising — money that in the pre-internet age would have gone to newspapers, magazines, and TV networks.
Anyway, the reason I bring this up is because I was recently invited to Portugal to speak at the FIPP World Media Congress, an annual conference organized by a consortium of magazine publishers. The title of my talk was “Creators: A threat or opportunity to big media?” and it ended up being a discussion between me and a journalist named Charlotte Ricca.
Charlotte was gracious enough to provide me with her questions in advance, and to prepare for the discussion I typed up all my answers — not because I planned to read them out, but because I thought the act of doing so would help me commit my talking points to memory.
I thought the talk went extremely well, and while I don’t have the video to share with you, I do have the answers I typed out. And given how much they align with a lot of the themes I write about in this very newsletter, I’ve decided to publish them here.
Below are Charlotte’s questions followed by my answers:
The general narrative around the Creator Economy is that it’s a threat to legacy media. Is this justified?
I don’t think it’s a threat, but I do think the traditional media underestimates the Creator Economy. You hear publishers talk about platforms like Facebook and Google as if they’re these bogeymen that are siphoning away ad dollars, but there are tens of billions of dollars in sponsorships going to creators. YouTube alone is paying out over $20 billion in revenue share to its creators, and they’re likely selling billions of dollars of sponsorships on top of that. Indie newsletters and podcasts are getting better and better at selling ads. There are lots of bootstrapped media companies that are getting great at ecommerce.
On the subscription side, Substack alone is now overseeing 3 million paid subscribers. Patreon is paying $1 billion a year in subscription revenue to creators. The Creator Economy is competing with the media for both attention and revenue. It’s time to stop thinking of it as a separate industry.
As an independent creator yourself, what do you think are the main drivers behind the Creator Economy?
I think the two biggest drivers are creative independence and unlimited financial upside. There are a lot of entrepreneurial journalists out there who have built their own personal brands and recognize that they’re undervalued in their traditional media jobs and that they can take home 100% of the revenue they generate if they either go it alone or partner up with other like-minded journalists.
You have been creating your own content since you wrote your first blog post in 2003 at college. But it wasn’t until 2020 that you decided to monetize your content. Why did you wait that long?
When I started out, the monetization tools just weren’t there. Back in 2005, there wasn’t a great way to take in recurring subscriptions, and the ad market was still small. The only bloggers that were able to make a full time living achieved massive scale — sites like BoingBoing and Talking Points Memo and Gawker. If you were a blogger with a small but devoted audience, you could only really generate side income. Since then, we’ve seen the rise of influencer marketing on the ad side and then tools like Substack and Patreon, so it’s a lot easier to monetize a small, devoted audience.
What have you learned during the past four years about the Creator Economy?
That we’re still just in the early stages of its growth. In 10 years, the term “Creator Economy” will seem anachronistic, just like the term “blogger” feels a little anachronistic. It’ll just be considered the media. There’s an entire generation now that when they think of TV, they think of YouTube. In fact, YouTube is now the #1 streaming service on television, beating out Netflix and every other company except Disney.
What is the toughest part of being an independent creator?
You have to run every aspect of your business, including the content creation, the marketing, and the revenue generation. While there’s technically unlimited financial upside, it can take years before you’re making even a living wage. Not everyone has the privilege to wait that long to make a full time income.
How can legacy media help? What are examples of successful relationships between traditional media orgs and creators?
I think the legacy media can help creators with every aspect of their business. It requires media companies to stop thinking of content creators as employees and more like partners. Think of how the book and music industries deal with talent — they help with the marketing, upfront advances, and production, but the artists still have some ownership over their content and there’s a defined revenue share. I think there are lots of opportunities on that front.
In terms of examples, one of the earliest was the Forbes Contributor Network. They went out and found a bunch of influencers in the business community and started paying them a monthly stipend + a defined revenue share based on traffic. This allowed Forbes to scale up very quickly and it was one of the first legacy media companies to have its online revenue surpass print.
We’re seeing more and more experimental media models. Vox Media is partnering with star podcasters to help with production and ad sales so they can just focus on the content creation. ESPN just signed an $85 million deal with a YouTuber named Pat McAfee to license his show for broadcast.
Then there are new companies launching with hybrid models. One example is Puck. It was started by some Vanity Fair alums, and they only recruit star journalists who have already-existing audiences. The journalists are paid a salary and benefits, but they also get equity in the company and bonuses based on subscription conversions. Puck gives them editorial and production support and helps with the marketing. All the incentives are aligned really well so that everyone is working together to help grow the company.
How can legacy media benefit from this relationship? What are the opportunities?
The biggest threat to media companies is that their star journalists will leave them just when they reach maximum value. If a media outlet creates better financial incentives for its talent, the journalists will instead stay at the company and work to help grow it.
There’s lots of talk about AI at [this conference]. How is the Creator Economy being affected by this?
Everything’s at the experimental stage and creators are at the forefront of experimenting with AI, partly because they’re not held to the same standards as traditional media. But I think most of the AI tools they’re using are just helping at the margins. I haven’t seen many examples of a creator’s business being radically transformed by AI.
One thing I wonder about is how creators will be affected by all the licensing deals. Axel Springer has the clout to negotiate a license with Open AI, but what about an individual Substack writer? If their writing is being used to train the AI, then why don’t they deserve compensation as well? Will the AI companies just run roughshod over creators just because they don’t have the resources to sue?
Does the Creator Economy offer an alternative to AI for legacy media? — i.e. real humans creating real content, which audiences are hungry for?
I just don’t think AI will replace human content creators anytime soon. Whatever benefits AI offers to media companies, it’ll be at the margins.
Does big media offer access to AI tech that independent creators need?
From what I can tell, most of the AI tech that creators use is either free or at a very low subscription cost. I’m not sure that there are any enterprise level AI tools that creators are salivating over.
The most valuable enterprise AI tech are dynamic paywalls like Sophi that predict when a reader is most likely to convert into a paid subscriber. There are also programmatic ad tools that utilize machine learning to optimize ads. Perhaps creators would benefit from access to these tools.
Bringing us back the question of this session: are creators a threat or opportunity to big media?
I think there’s a huge opportunity for media companies. Think of the movie Moneyball. Media companies have the ability to go into the Creator Economy and find content creators who’ve already proven that they can build audiences. It’s incredibly easy to identify creators that are still on their way up and partner with them to help bring their businesses to the next level. Media companies need to start thinking of themselves as talent agencies. With the right incentive alignment, both sides can benefit in a huge way.
great piece Simon...would love to have you come talk to some creator economy students at Lehigh sometime in the next academic year