Passion Economy News #3: TikTok’s Creator Fund, Amazon Explore, The Edtech Explosion, and More
Read to the end for why Warner Music Group paid $85m for a meme-making company
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Welcome to Issue #3 of the Means of Creation weekly news roundup where we break down the latest news on the passion economy, including the happenings related to platforms, creators, startups, and trends. Last week’s most clicked link was SignalFire’s Creator Economy market map.
Our first month of the Weekly News Roundup will be a free beta; the goal being to make this the most helpful resource for founders, investors and creators in the passion economy. We’re looking for your feedback to make this happen! (form also linked at the bottom).
Stuff We Published
This week, we published our latest episode of Means of Creation with Ankur Nagpal, CEO of Teachable! Teachable is an online platform that enables anyone to sell courses online. They’ve generated over $500 million in sales for instructors and have transferred knowledge to over 30 million students.
Find it as a podcast on Apple Podcasts, Spotify, Overcast, Breaker or wherever you listen to podcasts, or as a video on YouTube here. As always, you can view more episodes and subscribe to the Means of Creation YouTube Channel.
Top of Mind
‘CENTRALIZED’ VS. ‘FREE MARKET’ CREATOR MONETIZATION
The Radical Egalitarianism of TikTok's Creator Fund Matters // Hank Green, Pay Attention
Hank Green recently published this piece describing how creator monetization creates interesting incentives for the platform, creator and audience. Oftentimes the monetization method pushes creators to congregate around the same style or aesthetic, thus influencing the entire platform’s vibe and audience experience.
As a specific example, Hank discussed the differences between TikTok’s Creator Fund and other ad-based monetization methods. TikTok’s Creator Fund was first announced in July 2020 as a pool of $200 million that gets paid to US-based creators. The payouts are based on views, engagement, and region--an egalitarian monetization method that treats every viewer as equal. This is in contrast to ad-driven platforms like YouTube where creators with more affluent audiences earn more, because their ads can command a higher CPM:
“..the amount of money we make from YouTube is a function of the amount of money we make for YouTube. [..] I know that not every view is created equal.”
“The majority of YouTube ads are auctioned off to potential buyers, and those buyers are interested in reaching specific people. So if you make content about personal finance for affluent 30-somethings, there’s a lot more competition for your audience than if you’re making content for teenagers.”
The essay was written after a conversation with Li Jin, who also explored this topic. Li detailed how the user perception of Instagram as polished, aspirational, and curated stems in part from creators’ incentives to earn income through affiliate purchases and brand sponsorships. This orientation around commerce necessitates creating the feeling among the audience that what they have already is not sufficient.
Unlike YouTube or Instagram, TikTok’s Creator Fund pays out creators based on content engagement. This prioritizes users’ attention instead of a specific dollar amount that their content has earned for the platform.
“The money was in a big pot, and it’s getting spread around not based on who is responsible for making it, but by who is responsible for engagement,” Hank writes.
TikTok’s monetization mechanism isn’t without critics and the platform has come under fire for being opaque or reducing the reach of creators who are participants in the Creator Fund. Some reports stating the fund is paying out just 2-4 cents per 1,000 views.
The most important takeaway is that the creator monetization model adopted by a particular platform fundamentally changes the content created by users. While platforms like YouTube and Instagram incentivize polished, professionally produced content that caters to audiences with purchasing power, TikTok prioritizes engaging, relatable, user-generated content that values every viewer equally.
From a founder perspective, it is crucial for platforms to choose a monetization model based on the type of content they wish to incentivize.
How Much Money Are Creators Making On TikTok's $1 Billion Creator Fund? // Geoff Weiss, Tubefilter
AMAZON — SERIAL INTEGRATOR
Amazon launches a virtual tours and experience platform, Amazon Explore // Sarah Perez, Techcrunch
Amazon’s macro-level play has been clear for a while now — integrate different parts of the platform ecosystem by bringing them in-house and optimizing them for efficiency.
In 2015, Amazon made an integrative move by unveiling Launchpad — a platform that helped startups to “launch, market and distribute” their physical products. It combined the value propositions offered by Product Hunt, Shopify, and Fulfilled by Amazon; through a consolidated, one-stop-shop for a range of micro-entrepreneurial needs. Launchpad was positioned as a platform that empowered lean, independent, micro-enterprises that form a substantial part of the growing passion economy.
Launchpad was just an indication of things to come. Amazon Explore is the company’s most recent attempt to also start selling experiences (sound familiar?). It’s another move that is a part of the company’s ambitious plans to use it’s broad internet-footprint to explore avenues beyond selling products; eating into bigger parts of your disposable income.
With Amazon Explore, the corporate scripting is slightly different. Amazon wants to financially empower local business owners, guides, and the artistic community to share their expertise through an interactive medium, by helping them earn additional income. Through ‘shopping-enabled’ experiences, consumers can directly make purchases and have locally crafted items directly delivered to them through Amazon.
Amazon is set to become a very powerful gatekeeper; a role the company has handled contentiously in the past; as illustrated in last month’s congressional hearings. Anti-competitive control over large parts of the supply chain by a single stakeholder inevitably entails unilateral arbitrariness.
PANDEMIC-INDUCED EDTECH EXPLOSION
Vancouver online course platform Thinkific raises $22-million on pandemic-fueled growth spurt // Sean Silcoff, The Globe And Mail
Thinkific, a Vancouver based course-hosting platform, raised $22 million spurred by growth it has experienced in the last few months. The financing is a tangible example of the broader growth in EdTech since the pandemic began and venture capital appetite for companies in the sector.
Last week, we spoke to Ankur Nagpal, CEO of Teachable, about the future of education. The democratization of EdTech has not only led to superstar educators earning tens of millions of dollars from their courses, but also a thriving long-tail of course creators serving niche audience interests (such as hand lettering or bread making). The pandemic has forced the education sector to innovate and has made students reassess the value of a university degree in a remote world. Covid-accelerated growth in online education could indicate that these creator-led options represent low-end disruption: while online courses can go for thousands of dollars, they are still inexpensive compared to traditional degrees and IRL courses that cost tens of thousands of dollars. Due to Covid-related employment struggles, many of these course creators are especially motivated to create a course and generate sales. And lastly, during economic downturns, higher ed enrollments typically increase as workers seek to gain additional skills to bolster their job prospects.
The pandemic has also led to a redistribution of educational spending across stakeholders other than the traditional, incumbent universities. This has triggered a looming economic domino effect on college towns in particular: some local economies are struggling as their largest source of activity is changing.
Digital Marketplace The Lobby Wants To Be "QVC Meets TikTok" // James Hale, Tubefilter
- The Lobby is a new platform that leverages short-form video content to recreate the richness of shopping in brick-and-mortar stores. Launched by Lauren Holtz, former Google Shopping product lead, it has a roster of 40 influencers who have been creating content to enable an experience that feels like “going to the mall with your friends.” The big question for The Lobby, as well as for all startups tackling social shopping, is whether this is an opportunity that Facebook/Instagram will win. This week Instagram announced it is expanding its Instagram Shopping service across IGTV and will also test shopping within Reels, its TikTok competitor. Given so much shopping intent is generated on social platforms already, we’ll be interested to see whether another shopping-specific destination can break out.
- Tubefilter, a digital publisher covering the business of digital media and creators, recently introduced a new video series that analyzes the latest developments in the creator ecosystem. The first episode addresses YouTube’s Content ID; while the second talks about TikTok’s Creator Fund. (Interesting side note — Tubefilter is currently using Patreon to fund this project.)
Let's talk about Twitch Soundtrack // Nate Beck, The Pretzel
- Twitch recently launched Soundtrack, a feature that helps partially solve the music licensing problems the platform has been plagued with. Broadcasters now have to give up a piece of screen real-estate so that the artists and songwriters get credited for their work. Nate Beck’s essay for The Pretzel really elucidates the gap between technology and copyright law and how platforms like Twitch use legal loopholes to get away with inadequately compensating artists.
Among Us is behind a huge spike in Discord’s mobile app downloads // Bijan Stephen, The Verge
- Discord has registered a lifetime high for downloads every day since the 5th of September, largely because of the popular game Among Us. The game is termed as an ‘online multiplayer social deduction game’ and was launched in 2018 by developer InnerSloth. Initially unnoticed, it has recently seen a surge in popularity after a number of prominent Brazilian and South Korean gamers live streamed it on Twitch. Sociality is an inherent part of the game: users are required to interact with each other across platforms using the voice chat function. Gamers have found Discord to be the best platform that enables this and it drives up downloads as a result. In fact, the developers had originally announced a sequel to the game, but they subsequently canceled it to focus on the existing version instead.
Why Warner Music Group just paid $85m for a company that makes Instagram memes // Tim Ingham, Music Business Worldwide
- Warner Music Group, one of the three major record labels in the music industry, recently acquired IMGN Media, a content company that creates memes for Snapchat, Instagram and TikTok. Tim Ingham writes about how this acquisition shows traditional incumbents’ recognition of the financial implications of a deeper understanding of popular culture. It reminds us of a story from last week about how Bella Poarch was fabricated to promote music: in 2020, viral memes and videos have real monetary consequences.
Passion Economy Financings:
- lowercase.digital raised $1 million from Google Ventures and BoxGroup. lowercase is building HAGS: an app that lets tens of thousands of high school students digital sign each other’s yearbooks through Snapchat and the team has plans to build it into a social network for high schoolers.
- Obsesh, a video marketplace similar to Cameo but for athletes, raised an undisclosed seed round. Obsesh has some early traction on their platform, having attracted surfer Anthony Walsh (168k Instagram followers), BMX rider Connor Tieulie (81k Instagram followers) and others.
- CurtCo Media received a $3.5 million growth investment from Weston Presidio Capital to expand their podcast studio. CurtCo is a media company founded in 1987, most known for a luxury-lifestyle site called Robb Report. They were previously purchased by Weston Presidio in 2003 and this investment is an attempt to revive the business by capitalizing on the growing popularity of podcasts.
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