Creator Economy 'Short Report' - The Creator Support Organizations - Part 1/2
Written in partnership with the French Student VC firm G. Ventures
The Creators are the poor relation of the Entrepreneurship 😭
It was still true a few years ago, when the YouTubers, influencers and other content writers struggled to stand out of the crowd and have a sustainable following base, and even more to make decent money.
But now, we have a broad range of services offering support for creators and help them to become their best themselves: the Creator Support Organizations!
Why these creators support organizations are necessary?
During this exploration, we wanted to meet an entrepreneur representing well this vertical, so we have met Corentin Lambert, Co-founder & CEO of Freeland, who kindly accepted to discuss and give us his insights about this industry, his vision about the future of creator support organizations, and many more things... It was a very interesting discussion and we have been very lucky to keep him a few hours of his time 🙏, dedicated to create side businesses in partnership with creators!
Let’s go for the exploration of the creator support organizations industry!
What’s the deal with content creation? It seems so easy...
Like any entrepreneur, a content creator needs two kind of supports to develop his/her business: money and help!
If you want to create content, from day 1, it is very easy: take your phone, publish some photos on Instagram, create some videos on TikTok, or write some paragraphs on Substack and click on “Send”... You have a ton of possibility to create your own thing.
However, we’ll rapidly see that if you want to reach lots of people, reach an excellent quality of content, and even make money, you need to take that very seriously.
Peter Yang has written this excellent article about the creator lean canvas, which explains how the creator economy startups will reach and make money with their clients, the creators. The methodology is almost the same for content creators.
A excellent content creator has to think like a tech founder: reach his creator/market fit; find his 1000 “true fans” and build a growth loop to scale his content creation and community size growth efforts, and monetize his community while developing barriers to entry to maintain his cash machine.
So the creator will need to have better material, have access to best practices and feedback from other people of the business to help him iterate his content creation and community size growth.
When we discussed with creators or listen stories of some of them, we noted that they have reached certain milestones, where they have to reorganize their content production and distribution to develop their activity and grow their followers community. They have, as all of us 24h per day, so they need money to buy tools, access to exclusive value (paid content, access to exclusive communities, creator-centric services ...) and hire people to help them scale & improve the content production. However, as they are solopreneurs closer to the freelancer than the startup founder, access to finance and support could be very scarce.
Furthermore, as the VC firm SignalFire said in 2020 in their report, they estimated that there are 50M of content creators in the worldwide, and 2M of them can make decent money from their activities: 4%!! Very low, given that people spend time and sometimes their own money to produce it.
What we see is the power law of the Creator Economy. In Hollywood, the studio powerhouses want to work only with a handful with A-list international actors earning millions of dollars, In the Silicon Valley (like anywhere in the world in average), around 1% of the startups are getting thousands or millions of dollars from venture capitalists. In the Creator Economy, the rule is the same: only the best creators (international celebrities included) earn lot of money, and the long tail struggles to stand our form the crowd.
Beyond the money, another pain point for the creators: the job cannot be learnt at school 🤷♂️! If you want to become product manager, go to school, make some MOOC, and attend to some masterclasses. After graduation, you could have access to support through Slack or Discord communities. If you want to become YouTuber, you have to learn by yourself, and learn the best practices by yourself in much more time than with the help of mentors or “teachers”.
So, the creators have difficulties to develop their activities and to manage them on their own and it is like that since the beginning of the social media era. However, why lots of creator support initiatives emerge now and not before? The first point, the battle for attention.
When you are Meta, the big player in the field, you don’t really care about these creators: they must go through your platforms to publish content, your users consume this content, you earn money thanks to ads paid by brands based on user content consumption: the life is good. But when you have Twitter, TikTok, Snap, Clubhouse, LinkedIn disputing the title, you understand that the user retention will be a big battlefield. Furthermore, as the barriers to entry to become content creators become lower and lower across the years, lots of content creators polarize user’s attention and become influencers. These influencers, self-organized in several layers (we’re thinking obviously about mega influencers, but micro and nano influencers hold this precious user attention), are not anymore tied to one platform, but to several ones and preferably the platform where there will reach a huge community size rapidly and effectively monetize it. One creator can now go from Instagram to TikTok in one click and pull his community to Clubhouse right after. As “gold” on these platforms is user’s attention, there will be a battle between the social media juggernauts to grab the most of content creators. As they could not make content creators sign contract enforcing them to publish only on their platform, they use backdoor method: attract them with money and help through programs and funds. In fact, the more creators become performant and professional with their help on their platform, better they are to create high-quality content and attract user attention, the more the social media earn revenues.
At the same time, we’ll have other independent initiatives, coming from creator-focused platforms, living on fees generated on creator’s revenue. The reason here is obvious: The creator and platform interests are aligned. Their creators are helped with money or non-financial support, the creators becoming more pro produce top-notch content. Consequently, there are revenue generation optimization for the creator, and a faster ROI for the platform by creator fees growth. We could say that these platforms, social media or not, act like VC firms: investing in the best creators, and hoping for a high ROI returning their money in multiples.
Ok cool, so what’s these initiatives bring on the table?
They bring the promise to support the creator all along its lifecycle. From 0 to 1, and from 1 to 2.
From 0 to 1, they will help the creator from building a large followers base to monetize its superfans, the creator’s core clients.
From 1 to 2, the creator has revenue streams, and have reached a big milestone (remember, 4% of all creators make decent money in the world). From there, they will help the creators from successfully monetize its first superfans to develop a multi-layer paid value offer. In other words, scale its activity and become a high-ROI effective cash machine.
What they deploy to accomplish this big promise? Two solutions: cash and support
Cash will be transferred to creators and they use it to buy tools and/or hire assistants to help him create content.
Perks will be diversified: it would be mentorship from big creators, partnerships with brands, peer community facilitating the knowledge and best practices sharing, or free devices such as a free smartphone.
Some creator support organizations provides either cash or support, it is depending on their structures (money require very few time-consuming support, but we need to spend more money per creator than the organization that have a large network to leverage on).
What kind of creators do they target?
When you read their promise, you could understand who they target.
From 0 to 1, it will be from the high end of amateur creators to the class of professional ones. In fact, the well-established professional creators does not need the help of creator support organizations to develop their followers base. They acknowledge the game dynamics (e.g. Yomi Dezel, the French content creator speaking about personal development and now personal finances or Austin Belcak, the LinkedIn influencer of 1M+ followers), or they don’t need help because of their “native” fame pushing organically the traction of their content (e.g. any Hollywood actress or actor). On the other side, the “nano-creator” will require too much time and effort to taking off the ground (not to mention the fact that the organization has no proof that this creator will be very serious or dedicated).
For 1 to 2, the professional layer of creator is clearly in sight of the creator support organizations.
I cannot give very clear market sizing about it, but for 0 to 1, let’s say that the target will be the upper tiers of the 46.7M amateur creators, and the lower third of the 2M professional creators. So, we will have around 16.2M of creators all over the world for this part (from 0 to 1), and the 2M of professional creators for the second part (from 1 to 2). (This market sizing seems like holding a finger to the wind, but we’ll take it 😂)
What’s the strategy to have the best creator “rookies”?
How these organizations will operate to have the best candidates in their program, and by extension, on their platforms? In fact, these programs need to attract the best talents in their program, like a sport rookie training camp to scout the best talents very early for their teams.
What kind of assets could attract the best talents? At first, a training program could be interesting if they have the best teachers, the best coaches. So, the creator support organizations have to access to the best teachers too. Of course, a peer-to-peer learning way is better for this job, so the “teachers” will be A-list YouTubers, TikTokers, Substack writers... Besides, these organizations and programs need to have to possibility to help their cohorts during and after the program. The capacity of venture capital firms to help their portfolio companies after investment, and scale this support is crucial given that to small size of venture capital firms. The same challenge will affect the creator support organizations: the capacity to scale the support will be crucial to bring to their cohorts all the attention they needed to develop their career.
At last, what could push the creator to go to one program or another? The two of the most precious assets for an entrepreneur: money and time! The opportunity to give a boost to his career, and the possibility to create new sustainable revenue streams. We have just seen the first part before, and now one of the main decision trigger for the choice of the creator support organization will be its capacity to help their cohorts make more money. Three choices: help to boost the content creation and its current monetization, launch new product & services lines, or both. Each organization will choose their angle and push it at its best.
So, with all these assets, how to attract their best candidates? The Go-To-Market strategy will be articulated around the inbound strategy and the outbound one. The word-of-month coming from alumni and open calls for applications will be the best way to attract new candidates, as people do when they want to find a new business school for example. The other way will be to promote their programs in the social media platforms, especially for creator funds which have the advantage to be part of the best social media in the world, so the promotion will be easy for them. Furthermore, these programs will be promoted in specialized media, used by creators.
Of course, these creator acquisition channels and strategies must be measured to decide which one is the best for them. So, the organizations will follow the metrics to verify the quality of their value proposition. At first, metrics concerning the mentee.
The followers community’s creator size growth, during and after the program. Check how the community of their “students” grow is a good indicator to see if the support create good returns for the creator. It is the same thing for the creator community engagement.
Creator revenue growth will be the end of the funnel and one of the best factor of success for the creator.
In second, metrics concerning the organization.
% of A-list or B-list creator coming from their cohorts. The more you have well-recognized people in your alumni network, the best it will be to attract new pupils, especially in a world when reputation makes everything.
Strength of the alumni network, measured by % of applications coming from alumni recommendations. The ecosystem of content creators is like a small, very dense network. As Corentin of Freeland said us: access to creators is everything in this business to succeed. It is the same for all the organizations.
How these solutions make money?
These organizations are not uniform: you have startups, agencies, in-house programs of GAFAM-like companies... Each structure uses its own business model to survive.
So, we have two main ways: make the creator pay upfront cash, or share revenue with the creator.
On one side, it is a customer/supplier relationship. The content studios are the best example. Morphe in-store YouTube studios charge a one-off amount to the creators to use it.
On the other side, the organizations work alongside the creators on the same goal: help creators make more money. In return for this, the structure takes a commission on the generated revenue, a direct percentage like the accelerators and incubators and an indirect percentage like the admin support programs. Difference between direct and indirect?
In indirect mode, the product is officially free of charge for the creator, and the program is financed through the regular fees collected by the company. If they help very well the creators, they would generate more revenues through the regular monetization feature.
In direct mode, the price is displayed: the creator will give a percentage of revenue in using the value proposition. Everything is crystal clear.
The last way is the creator-organization partnership agreement. Freeland is a great example. The organization makes a partnership deal with the creator and the organization takes a part of the profit of the “joint venture”. The company helps the creator to develop a new product by creating for him/her a tailored digital product (for example, a digital learning program), the creator has to market it, and the both parts split between them the profit.
Now, you know more why these structures are important in the Creator Economy ecosystem.
Let's go deeper in our review in the second part of Creator Support Organizations.
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The G. Ventures and Passion & Creator team