The world redesigned: investing in the economy of creators

TThe designer economy, for those unfamiliar with the term, refers to businesses built by independent creators that range from vloggers and photographers to social media influencers to writers and more to monetize themselves, their skills, or their creations. The term also encompasses businesses serving these creators, from content creation tools to analytics platforms.

As we head into the holidays and New Years Resolutions season, some people will be reconsidering their professional lives. The most recent data on voluntary departures from the Bureau of Labor Statistics found that the number of people leaving their jobs is slightly down from the October record of 4.4 million, which represented 2.7% of the labor force. civil, to be at the third highest level. to the record 4.2 million. The past three months have seen the highest level of voluntary departures in the country’s history. It has been dubbed the “big resignation” by Anthony Klotz of Texas A&M University and refers to the cultural shift in which workers re-evaluate their lives and working conditions.

Those in lower paying jobs are no longer willing to accept low wages and / or poor working conditions. For example, in October, the local Seattle carpenters union went on a weeklong strike over wages and terms. White-collar workers are no longer willing to work long hours and deal with high levels of stress, and some are willing to forgo an income in exchange for a simpler, happier life. So far, this is not a global phenomenon and the data does not confirm that it is happening in the US and UK.

This shift comes at a time when we see wages rising at an unusually high rate compared to recent decades for the 80% of the population categorized as “production and non-management employees”, and unit labor costs for the past few decades. all employed people grew at the same rate. fastest pace in the third quarter since the early 1980s at 6.3%. We are also seeing the percentage of the workforce in small businesses, defined as 1 in 49 employees, increasing at a much faster rate than what we have seen after the Great Financial Crisis and in the aftermath of most recessions. .

Part of what can help drive this is the growth of the designer economy and how the tools designed for it reduce the risks, costs, and time it takes to start your own business while also allowing you to have quickly a global presence. The appeal to those who feel underpaid and / or underestimated is important. For example:

  • Substack Editors Earn 90% of Subscription Revenue
  • Twitch partners get half of their subscription fees
  • Patreon creators get paid 88% to 95% of their subscriptions

For those who are nervous about starting from scratch, the channels on YouTube, which is owned by Alphabet (GOOG), with existing subscribers can be purchased for less than a hundred dollars to hundreds of thousands of dollars and more, depending on the income they are already generating. It is also quite easy to buy social media “followers” who are adept enough to evade detection by the social media giants in order to play with their algorithms and display the posts to more people. users, thereby facilitating faster organic growth of subscribers. A substantial follower base for many of these systems means that publications will be exposed to more new eyeballs.

You can reasonably think of this as a social media presence, but the creators are also focused on building their own web pages. This change is fueling the companies that help create and manage such sites, such as Wix.com (WIX), Square space (SQSP), and private company Universe, which just raised an additional $ 30 million in a Series B round.

Sensing the pressure, social media giants are looking to keep influencers on board. For example, Meta-platforms’ (FB) Instagram is partnering with several fashion and beauty designers to launch their own stores on their profiles, giving influencers the opportunity to earn a commission on product recommendations. Others are looking to monetize their offerings. For example, creators have been selling access to their private Discord communities for some time as part of paid subscriptions on Patreon, YouTube, and Twitch. TikTok now offers integration with the Harvest Media music sync licensing platform so artists can deliver music and monitor their track usage on the video app.

But many creators are looking to move beyond videos and sponsored posts to building businesses that don’t rely on daily posts. Few of them reach this level, but those that do offer other opportunities for facilitators. For example, YouTuber Zik Asiagbu runs the Zias channel and has 4.6 million followers. In partnership with the startup Popchew, it will launch a chain of 60 delivery kitchens only called Wing SZN, with the first deliveries scheduled to New York, Los Angeles and Miami. Popchew and Asiabgu split the profits 50/50, with Popchew taking care of most of the logistics of launching a kitchen chain. Meals can be ordered through Popchew’s web app, restaurant brand website, or the usual delivery suspects such as DoorDash (DASH) Where Uber Eats – launched by Uber (UBER). As for how long it took, Asiagbu, who is 29, posted his first YouTube video just five years ago, and his operating costs are well below anything that would be required in more traditional businesses.

The designer world isn’t just about food, makeup, or lifestyle. Rumble, which hosts videos from conservative influencers, recently announced that it intends to go public through a special purpose merger, another SPAC deal, with CF Acquisition Corp VI (CFVI) which will value it at 2.1 billion dollars.

This new generation of emerging creators has grown up with social media, and not only are they not interested in conquering the traditional gatekeepers of media – Hollywood studios or publishing powers – but are instead looking for a way to make a living, or simply to earn money. extra on the side, doing what they are most passionate about. Whether it’s Kudzi Chikumbu’s review of luxury candles, Nashville’s Doug the Pug, or @DumpedWifesRevenge – whatever your thing, there is a place for you and an audience that can be created.

As young private companies like Mighty Networks seek to help creators build their own communities, even big hitters like Microsoft (MSFT) LinkedIn is looking for ways to woo creators and attract talent to their platform. At the end of November, LinkedIn announced the launch of its first class for its Creator Accelerator program. The program is a 10-week incubator that will bring together 100 US-based creators for coaching, networking, and featured advertising opportunities for LinkedIn. Each participant will also receive a grant of $ 15,000 and will include creators such as Natalie Rose of TikTok (2.5 million TikTok followers) or Marcus “Esports” Howard.

Even the mega-hats giant Amazon (AMZN) seeks to develop as an actor in the designer economy through multiple channels. Most obvious is its live game streaming service Twitch, which is a platform for streaming, observing and playing video games while interacting in real time with gamers, game makers and members of the public. As such, it is a social media platform as well as a place for entertainment. The company is also reportedly investing heavily in a new live audio feature that will be similar to Clubhouse, Twitter (TWTR) Spaces, and Spotify (SPOT) new live audio platform.

The other channel he’s had for years, but growing again, is asking popular designers to create virtual storefronts where they can curate their favorite products and, in return, earn commissions on sales. But it’s not just the big names. For example, Cyndi Lundeberg started writing reviews on Amazon for fun, and in 2015 the company asked her to join an early version of their influencer program. While still employed full time in public relations she now runs an Amazon storefront page called News, Booze, and Shoes and claims to generate $ 6,000 in commissions in a typical month, not a bad one. concert! Amazon has also hosted live Amazon shopping feeds with names like Dua Lipa and with consumer goods companies like Honest Business (HNST).

As is often the case, a lot of innovation happens in the startup world. According to The Information’s Creator Economy Database, startups in that database will likely have raised $ 5 billion by the end of this year. Startups that focus on creator services like Impact and Norby receive the most funding, around a third of the total, followed closely by creator platforms that connect fans with creators on apps and websites. such as the owner of WordPress Automattic. Eight of the startups in this database already have valuations of over $ 1 billion, including the aforementioned Impact, the Whatnot live shopping app, and the digital asset market (think NFTs) OpenSea. Not surprisingly, nearly 10% of the companies in the database take a crypto approach.

The bottom line is that we are at the start of an exponential era of transformation. Just as Apple’s iTunes Store turned the music industry upside down and the smartphone decimated the point-and-click camera, the designer economy is completely changing the way products and services are marketed and delivered. As we move towards what’s called the metaverse, or Internet 3.0, we’ll see this economy evolve more into new business models. Some will fail and others will turn into something we cannot imagine how we could have lived without. There are and will be more and more opportunities for people to make a living doing what they love most, and investors will be able to capitalize on this change.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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