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Getting Creators Paid is the Next Big Thing in Media

It’s Time to Democratize the “Economy” in “Creator Economy”

4 min readAug 17, 2020

Starting April 2025, all full posts, including archived posts, will be available on my Substack, The Mediator.

Image by Mohamed Hassan from Pixabay

There are a lot of forces buffeting traditional media businesses (newspapers, magazines, radio, music labels, TV networks and film and TV studios). Most of these forces stem from digitization. It reduced the cost to distribute information goods to almost zero, greatly lowered barriers to entry and ushered in a flood of new entrants willing to operate at lower margins. But that’s not news. It’s been happening for 20 years.

In a recent essay I argued that a more subtle factor pressuring traditional media businesses, and one that many seasoned media executives have trouble grasping, is that the consumer definition of content quality is changing. This happens in a lot of disrupted businesses. New entrants not only compete on the traditional dimensions of quality, but also introduce new ones. Usually the incumbents dismiss these new attributes as irrelevant. But if consumers find them important, it changes how they define “quality.” The traditional markers of content quality, like big name directors, showrunners or producers; big name actors, writers and musicians; and the catch-all bucket of “high-production value” — all of which have high barriers to entry — are now competing with attributes like authenticity, virality, relatability, accessibility, relevance to one’s community or niche interests and more –which have much lower barriers to entry. That’s not to say that people no longer swap recommendations for hit TV shows, go see the biggest movies (when one could do that) or add the latest Top 40 hit to their playlists. They just do these things less than they used to.

As described in that essay, due to this evolving definition of quality, the shape of media consumption is changing. Big hits still matter, but there are fewer of them; the mediocre “middle” is going away; and the “tail” of user-generated (UGC) and low-cost professionally produced content is getting ever bigger. It does not bode well for the future profitability of traditional media businesses.

The mirror image of the shift in value away from traditional media businesses is the shift in value towards the tail, or what is often referred to as the “creator economy.”

The obvious follow up question is whether this dislocation presents any opportunities. It does. The mirror image of the shift in value away from traditional media businesses is the shift in value towards the tail, or what is often referred to as the “creator economy.” The main problem with the creator economy historically is that the aggregators make all the money, not the creators. But as more platforms and tools providers compete to attract talent, that’s untenable. In this essay I lay out why there is no end in sight to the growth of the creator economy and why enabling millions of creators to make a living wage — the democratization of the “economy” part of “creator economy” — is one of the biggest opportunities in media today.

Tl;dr:

  • By conservative estimates, more than 10% of U.S. working adults are already engaged in the creator economy.
  • It is not a fad, it is a structural shift, and it has numerous tailwinds behind it. These include the prevalence of the creator economy among younger demos; the normalization of independent work, which has been accelerated by the pandemic; growing consumer demand for “authentic” content; and, most important, an explosion of new enabling tools, platforms and monetization models.
  • Historically, the creator economy has been undermonetized by ad-supported platforms because “free” is not the market clearing price and, relatedly, there is growing evidence of consumer willingness to pay.
  • The solution is price discrimination (or “versioning”) models that enable creators to extract consumer surplus by offering multiple tiers of content and perks for different prices.
  • Near term, expect rising competition among platforms and tools providers to get creators paid and help them run their businesses more effectively.
  • Longer term, micropayments seem like a logical way to extract even more consumer surplus, but it is unclear if they will ever achieve scale. Another trend to watch is the evolution of new financing models in the creator economy, including debt financing and the “equitization” of celebrity (aka social money).
  • In a struggling media industry, it’s one of the biggest opportunities for the companies that can figure it out.

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Doug Shapiro
Doug Shapiro

Written by Doug Shapiro

Looking for the frontier. Writes The Mediator: (https://bit.ly/3R0z7vq). Site: dougshapiro.media. Ind. Consultant; Sr Advisor BCG; X: TWX; Wall Street analyst

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