Social platforms are investing big money into creator funds and products. Like LinkedIn ($25 million), Facebook and Instagram ($1B), YouTube Shorts ($100M), Snap ($1M per day), Only Fans (£80K), and the list goes on. The platforms are also aggresively launching new creator tools ranging from social / livestream commerce and live audio to self-publishing, fan payments, and subscriptions. 

Chris and Andrew explain why, and how this trend could evolve into program pullbacks and creator illwill, investment in creator-owed businesses, different incentive structures for different content types, and more. 

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EPISODE TRANSCRIPT:

Chris Erwin:

So Andrew it's time for another Roundup podcast. But before we talk about the topic of this week, which is creator funds, just a quick explainer to the audience we have been off for about a month since we last published. We took a little break at the end of August and through Labor Day. We think it's helpful to refresh and energize. I was off surfing in Portugal. And then was at my brother's wedding in Texas. What were you doing Andrew?

Andrew Cohen:

On a wedding tour as well.

Chris Erwin:

Hopefully we're coming back with a Roundup that's going to be better and stronger, version 2.0.

Andrew Cohen:

Yes. Feeling well rested. Hopefully it's rest, not rust.

Chris Erwin:

I've never heard that before, but I like it. All right. So let's talk about creator funds. So what's happening? Platforms are investing big money into different creator funds and initiatives, really to keep creators on the platform. Right? So some news like LinkedIn over the past couple of weeks launched a 25 million dollar creator fund. Facebook and Instagram have announced that they want to pay out over a billion dollars to creators. Snap has their spotlight program initially a million dollar per day, but pulling back on that, talk about that in a sec. YouTube has a shorts fund for 100 million, and then there is a long laundry list. They're Square, and Linktree, SoundCloud, Pinterest, OnlyFans, Twitter, and a bunch more. But clearly Andrew, a lot of activity in the space to try and get creators excited, right?

Andrew Cohen:

The formula is simple. Creators bring audience and audience brings revenue. So the way it used to work was that these incoming platforms, they would offer a really broad reach and that they would monetize creators and publishers audiences via advertising by connecting marketers with the customers. And creators and publishers, they would make revenue through a piece of the advertising on the social platform, but really the real outsize revenue and big enterprise value would come through monetizing their fandom off a platform through merge, through product licensing, through upstream TV and film sales, subscriptions, everything else. So really it would be social media is kind of the top funnel for audience reach and engagement and the bottom funnel would happen elsewhere where the creators would make the real money, but it started to change.

Andrew Cohen:

So first, emerging creator economy platforms as we'll call them, things like Substack, Patreon, OnlyFans, Cameo, they began offering more ways for creators to monetize their fans. And so creators and fans then started spending more time on those platforms. So quick lists, Substack has 500,000 paid subscribers and their top writers make over a million dollars annually. Patreon has 200,000 traders on their platform and they pay out over a billion a year to its creator community. OnlyFans had 85 million users. And last year in 2020 paid over a billion dollars to its creators.

Chris Erwin:

Andrew, I just have to pause you on OnlyFans. I can't believe 85 million users. Like that's huge. And a question. I don't know if you know this, but in the past couple of months OnlyFans, weren't going to cater to sex workers or sexually explicit content. Do you know if that user count fell since then?

Andrew Cohen:

I'm not sure. Because they did kind of do away with that decision almost within a week of making it. So I'm not sure if there was even long enough for a backlash to really manifest in user count.

Chris Erwin:

Sorry, tangent, but go ahead.

Andrew Cohen:

All good. Numbers made me step back as well. And so finally Cameo last year in 2020 had 100,000 new creators showing the platform and paid out 75 million to its creators in 2020. Yeah. So because of that, creators started spending more time on those platforms and their audiences did too. Secondly, platforms started to realize that how much revenue they're missing out on by only providing this top of funnel because outside of these immersion creator economy platform, there's a lot of top publishers and creators were using social platforms to build an audience and then they monetize elsewhere. So for example, Parcelforce said that this year that they're making 200 million in revenue in 2021. I bet social media is a huge part of their audience development strategy, yet a very minor piece of their revenue strategy.

Andrew Cohen:

MrBeast, remember MrBeast Burger last year, which has a projected revenue potential of 300 million. His whole audience comes off of YouTube. And finally Ryan's World last year in 2020 made 30 million in consumer products, which was more money than he generated off of YouTube ad. So I think between those two things, social media platforms saw that they've got some work to do to keep creator community and then their fan community on the platform and keep them happy.

Chris Erwin:

Andrew, based on all of that, I think now what we're seeing is that these incumbent platforms, they really want to better cater to creators. They don't want to just be like the top of funnel solution and distribution platform for their content, but really the ability to be an end to end funnel where they can allow creators to really engage more deeply with their fans, develop new monetization and revenue relationships, and really drive more time on platform for both audiences and publishers. So there's a few themes from these different product driven initiatives that we've seen platforms like Facebook, and YouTube, and Twitter do. And look, we really saw a spike in these product announcements from the end of 2022 to the first quarter of this year in 2021. And look, new announcements continue to persist up until today, but there was really that spike period during that six month window.

Chris Erwin:

And I think what we saw is that a lot of the incoming platforms were getting inspiration from some of these new emergence and upstarts and even their peers just brought it on and be like, well, where can we be a fast follower? What can we replicate? Right. That's a whole same classic argument of Instagram stories copying what Snapchat was doing back in the day. And I think the question that we have that's outstanding is which of these product initiatives are going to be experiments and are probably going to fall by the wayside? And what's really going to have staying power? What's going to really move the needle for creators and really delight their fans? And what's going to stick? We don't know, but it's definitely worth tracking. So there's, I think around four or five product themes that we've seen. One when Clubhouse came out with live audio, and everyone's talking about that being the next consumer frontier, just saw Twitter launch Spaces, Facebook get into the audio game and LinkedIn even do the same.

Chris Erwin:

And then when you saw OnlyFans and Patreon enabling direct to consumer monetization and like a tip jar, you saw Facebook fan payments, subscriptions, offering the ability to charge for live events. And then Twitter getting into super follows, allowing exclusive tweets and content. Right. Then there was a whole explosion of newsletters and the whole Substack revolution. Twitter this year, earlier this year bought Revue, a self publishing platform, Facebook even gotten to the self publishing platform again as well. And then e-commerce and live stream commerce. That was really exciting. You saw Popshop raise at a big valuation earlier this year, Whatnot did the same. So a lot of these platforms were like, oh, how can we get in the live shopping game as well? So Facebook and YouTube started innovating on some of their live shopping products. I think more is in the mix. TikTok has a Shopify partnership and then YouTube is even selling digital goods through a new partnership with Spring. That's a short list. There's likely many more after that. But I think the big question Andrew is, how is all of this going to evolve?

Andrew Cohen:

I'm really interested to see. I think what's fun about this is that no one knows for sure. There's so much competition and so much capital out there that we're all kind of building it and learning to fly the plane as we're building it. So I think like you said, there's already been some pullback, but I think that the structure and incentive of these funds and of these creator initiatives I think are going to continue to evolve in different ways. I think one thing that's really exciting to me is maybe the potential of these funds and platforms investing in creator owned business. So we've already seen VC Funds owne