The coming influencer expansion: community
Summary:
The next phase of the creator economy will shift to community.
Platforms like Discord are well positioned to be a premiere platform of this phase.
We’ll soon see a wave of “community creator” products and platforms.
The influencer industry is doing quite well! A recent wave of financials, end-of-year wrapups, start-of-year signaling, and company shifts outline the velocity of the influencer market:
42% of US marketers used TikTok for influencer marketing in 2021, up from 33% in 2020 and expected to rise to almost 55% by 2025. (eMarketer)
75% of all US marketers used some kind of influencer relations campaign in 2021, totaling $4.14 billion in deals. (I was one of them.) Be aware: that still represents only 1.725% of the $240 billion digital ad market. Big, but lots of room for growth; more on that later. (eMarketer)
56% of content consumers consider nano- and micro-influencers more trustworthy than celebrities. Brands also find they're both more affordable and more relevant to niche interests, essentially giving brands a cost-effective pathway to personalize ads ahead of cookie deprecation in 2023. (eMarketer)
Big agencies, looking to show they're hip, are signaling their plans to vastly increase spending on TikTok in 2022. While most budgets still pale in comparison to other ad spend categories (see above), this kind of growth typically produces more sophisticated tools for brands, more sophisticated analytics and reporting, and more sophisticated products for both brands and consumers. (personally, I'm skeptical whether TikTok will figure this out long-term.) (The Information)
YouTube, observing these shifts, closed its original content studio. But this was a strategic shift, rather than a white flag: rather than competing with Netflix by bringing Hollywood to YouTube through YouTube Red, it realized that the biggest star YouTube creators already operate on mini-Hollywood budgets. So, it pivoted away from (very) capital-intensive, (very) competitive original content production strategy, and toward a platform-of-creators model. (food for thought: one might call YouTube the traditional box office equivalent of social video streaming, while TikTok looks more like cable.)
YouTube should know: their highest-earners made $50 million-plus last year.
Data from Stripe in November 2021 found the number of creators earning more than $70K per year increased 41% year over year.
While Substack does not work for everyone, it works for many. Meanwhile, more than $2 billion was spent on OnlyFans last year. Twitter introduced subscription features and Instagram is testing them. LinkedIn piloted a small creator payout program. I guess Clubhouse also still exists.
The big business around influencers - aka, socially driven content creators - should not surprise. Business follows behaviors, and studies like the Edelman Trust Barometer (disclosure: I worked at Edelman for a long time) have highlighted, going as far back as 2006, a) declining trust in news media, and b) people trust a "person like them" as a key information source.
Business followed these behaviors. Attention and ad spend has shifted digital and social for most of the last two decades. Bad actors created power by spreading misinformation, manipulating platforms, or both. (It's still alarmingly easy for bad actors to manipulate platforms with misinformation: simply create shoddy content, flood the zone with shares to become trending, and you'll earn mainstream media coverage. It’s unfortunate that more media have not caught onto this game.)
But technology executives and venture capitalists reacted too, updating products or creating new ones to bring influence to their platforms, and creating vast sums of wealth for themselves in the process. Over time, as certain voices started to stand out, they attracted more engagement on their respective platforms. To maximize influence, companies lured the most influential voices and big-name stars to their platforms through financial incentives.
Like nearly every media business since the dawn of time, these stars drive the most attention and command the most money. The Twitch hack found that the top 1% of all streamers earn more than half of all revenue on the platform. The top 1% of podcast earners make the vast majority of podcast ad revenue. Most concerning, Hank Green voiced long-simmering frustration with the difficulty of monetizing on TikTok (and spoke to New York Times about it).
Luring superstars to content platforms has been a tried-and-true practice across platforms for a long time. Media companies have, for decades, lured stars like Hunter S. Thompson to Bill Simmons to Katie Couric to David Pogue to Walt Mossberg to Jay-Z to Joe Rogan to Ninja to their platform in hopes of generating an audience to drive profitability however their business model works.
In fact, that we’ve reached this point says a lot about the maturation of the influencer industry. We could make an oversimplified, back-of-napkin model that outlines the progression of most “creator economies” and media industries over time, from newspapers, to TV, to movies, and beyond:
Generational turnover, technological innovations and disenchanted people prompt behavior changes
Behavior changes inspire new audience niches; new audience niches inspire new media and content types
To serve these niches, new platforms arise and old platforms react
New and old platforms war for audience attention; channel growth, product improvement, more rapidly onboard new creators to stay relevant, and spend big to sign the best creators
Consolidation phase: failing platforms shut down or get acquired by bigger ones
Creativity slows; the new media industry finds an equilibrium alongside other industries
Start again!
By this back-of-napkin map, we're in the middle ages of the current creator economy era. That begs the question of where content creators go next - for more growth in the current era, and where they’ll find growth in the next era.
Business follows behaviors. What new behaviors are starting to emerge? First, I found this slide from the 2022 Edelman Trust Barometer interesting: (slide 14)
Three of the "trusted" groups - "citizens of my country," "people in my local community," and "my coworkers" - represent trust in communities that connect the person to something they care about. Hmm.
OK, what else? A Spotify survey in 2019 found that 62% of younger consumers believe brands have the power and authority to create these communities. That syncs up with the Edelman Trust Barometer finding that businesses are the most trusted of the four major institutions (business, government, media, NGO's) (see slide 5).
And what do younger consumers want from these possibly brand-created communities? Deeper relationships and more meaningful engagement (see slide 5).
I feel like I've heard of a technology capitalizing on all these behaviors? Per New York Times:
"[Discord] has more than 150 million active users each month — up from 56 million in 2019 — with nearly 80 percent logging in from outside North America. It has expanded from gamers to music aficionados, students and cryptocurrency enthusiasts."
Discord's emergence is being driven by generational turnover: (from 2019)
"Discord doesn’t provide an age breakdown on its user base, but several moderators say non-gaming Discord servers are dominated by the type of people who follow YouTubers and meme pages on Instagram: teenagers. People talk about school, dating, memes, and general teen anxieties. When I posted a question in the Discord server for Kale Salad, an Instagram meme page with more than 3 million followers, a teenager quickly told me not to expect a reply from anyone on there, since 'pretty much everyone is in class right now.'"
Influencers are flocking to Discord to build deeper relationships with their communities: (same article)
"Last March, Ninja, one of the most popular video-game live-streamers in the world, taught Drake how to use Discord while playing Fortnite. YouTube A-listers such as Philip DeFranco, Grace Helbig, and the Try Guys all have their own servers, and subreddits such as those dedicated to discussing The Bachelor and The Real Housewives have their own Discord groups too. More than 200 million people use the service. …
"Many other influencers also say that before Discord, there was no way to effectively communicate with their community. Twitter is messy and public, and threads often get broken up and overrun by outsiders. Instagram DMs are difficult to manage and unsearchable, and public Instagram comment threads can get buried. YouTube comment sections are disorganized and overrun by trolls. Reddit is generally toxic."
And beyond its $10/month Nitro subscription service that comes with a few features, Discord is exploring ways for influencers and brands to monetize communities:
"Like its peers, the company is weighing ways to help influencers and creators to make money from their fans more directly, while taking a cut of any earnings.
In May, it launched a “Stage Discovery” feature where businesses or creators can list public events and it is piloting ticketed events. Musician Grimes used the new Stage feature to tease an unreleased song to 100,000 fans on her server, called the Grimes Metaverse (Super Beta).
Discord is also developing several of its own games in-house as a “small experiment”, Citron said, adding that the hope is that users make purchases within the games, allowing the company to take a fee."
The next, well-funded wave of disenchanted people - the crypto crowd - has already jumped on the Discord bandwagon. But Crypto Discord being huge isn't a cause, it's an effect: the next phase for content creators is the shift to community. Community will represent the next step function for creators/influencers to grab more of the digital advertising market.
Consumers are showing a high appetite for community engagement, too. My informal poll found that almost half of the respondents are in 4 or more communities across Discord and Slack. Sure, some were work-based, but the majority were focused on some kind of interest or brand. And they use their communities for deeply personal engagement, like sharing videos or photos that they want friends to see, but don’t want on the highly public, forever-documented “traditional” social internet.
Put it all together, and it means people are willing to sign up for many Discord’s, most frequently bouncing between a few they’re most interested in, and engage deeply. Zero friction to join + high engagement from the most interested consumers + opportunity for deeper relationships = a huge, huge opportunity for influencers, brands, and Discord!
I'm not saying that all influencers will jump to Discord, or that they should. Nor am I saying that Discord has figured it all out; on the contrary, many decisions remain that will impact what happens next.
How will Discord monetize this behavior? Can they continue to act on behaviors that drive business, rather than skating to the puck and reacting to isolated trends? (see: widely panned overindexing on crypto; that's what happens when you confuse behaviors with trends.) How will their brand and creator tools be received? Can they insert themselves into existing revenue streams by adding value somehow? Can they create an economy that equitably spreads wealth like YouTube? How will creators signal their brand deals in a way that's not annoying? And how will they execute on moderation, regulation and hacking?
What sub-industries and platform innovations will pop? I believe we will see a rise of “Discord-for-X” engagement platforms to capitalize on this behavior shift. What, for example, does the Discord-for-video look like? Who will do Discord-for-audio better than Clubhouse and Twitter? (now paging Spotify…) Will the emergence of Crypto Discord accelerate influencers signing multi-platform, brand-driven deals?
And finally, how will today's platforms react? Is Salesforce content with Slack being known as a tool for work (and competing with Microsoft Teams for enterprise business), or do they chart a middle path as the community-for-all product? How will YouTube overcome its famously bad community system? Can TikTok right the ship on monetization, and maintain its quirky culture in a community product? What will Facebook copy to Instagram? Will Patreon and OnlyFans make moves to retain even more of their stars' content and time? Will Substack try to build community on its own, or simply outsource that function to Discord? And if Discord finds itself in a war for talent with other community platforms, can they build up a war chest big enough to compete in the inevitable war for talent?
However those questions get answered, this all spells continued growth of the independent influencer world, and the creator economy at large.