In the recent months we have been witnessing the advent of a new trend that will have a disruptive impact for the next few years: the birth and growth of the “creator economy” or “passion economy”: a business sector focused on content creators, software products and services, designed to support creators in the realization of their passions.
The History of Online Commerce: From E-Commerce to the Creator Economy
The advent of the internet has given the possibility of accessing billions of information in a few seconds and has allowed people to do business and connect even if they are in different places; knowledge is now available online, most of the time for free. This has given people a very powerful tool and has democratized access to education.
The internet has also opened a new way of buying products or services with online commerce or, more commonly called, e-commerce.
In the initial phase, between the late 90s and early 2000s, many companies began selling physical products online. Starting with Amazon that was selling books online we now have all kinds of objects on peer-to-peer platforms such as eBay. In 2010 alone, the value of the global e-commerce market was $ 500 billion, and in 2020 that value rose to over $ 4 trillion with double-digit annual growth.
This has radically changed the way people shop and it has, with time, built trust in the internet dealing with our credit cards. Buying on the internet was a bit of a gamble back in the days but today it has become the norm.
In the second decade of the 2000s, online services started to be sold online: in addition to buying all sorts of items from Amazon, people started buying online services too: legal services, entertainment, interior design, beauty services, etc. within the B2C market, while in the B2B we have seen the birth of thousands of new companies that have built products to provide services to other companies.
The huge growth of the B2B market is also due to the adoption of the subscriptions business models used mostly by SaaS (Software as a Service) companies which allowed companies to scale pretty quickly thanks to the low cost and flexibility. Business customers pay a subscription fee to have access the software, with no need of buying it outright. There is no need to “own” the software and install it onto the machines. The tool is bought on the internet, downloaded from the internet, and updated automatically when needed. A SaaS user can cancel the contract whenever is not needed any more.
The pioneer of this market was undoubtedly Salesforce with the first CRM in the cloud. After that, all types of business services were unleashed: payment gateways and billing solutions, accounting and payroll, content management, web hosting, business intelligence, customer feedback management, support systems, etc.
Online services, especially B2C, gave new opportunities to millions of people to earn a living online, using sharing economy and gig economy platforms.
The sharing economy aims to optimize the use of underused goods, giving the possibility to rent cars, apartments, bicycles, or even a wi-fi network when they are not used by the owner.
The gig economy, despite having given the opportunity to millions of people to work in a flexible manner, especially for services where high-level professional skills are not required, has in some cases created negative effects such as work standardization and flattening of individuality.
The creator economy is the latest online craze. It is the result of a historical trend characterized by the decentralization of everything and the growing distrust towards big organizations and the system.
Until a few years ago, everything was centralized and managed by a few companies. Media, entertainment, education, were in the hands of a few. Now contents of any kind, audio, video, texts, etc. belong to the creator who, thanks to social networks, has the power to create it and distribute it, showing the world what they are passionate about, their individuality and their knowledge.
Substack and Medium are good examples of creator economy tools, two platforms that have disrupted the power owned by the mainstream media. They have cut the middleman between the journalist and the reader, which in this case, it’s the traditional media.
If, until a few years ago, information was monopolized by the most important newspapers and television networks now, thanks to these new channels, journalists have become independent entrepreneurs, can write what they really want to say, and have direct contact with their readers around the world.
They also have the ability to monetize the content by selling subscriptions with Substack or, if publishing on Medium, using a system of redistribution of the company’s revenues based on the success of the creator’s content.
Who are the creators?
“A creator isn’t someone who creates. A creator is an individual who scales without permission”. Hugo Amsellem, The Definition of a Creator.
Creators are people who leverage their original thinking and their passions, taking inspiration from the world of education. We have seen a switch, in recent years, in how education of all kinds has become decentralized.
Until a few years ago the knowledge holders were only universities and institutions, but today new courses are born independently every day; they focus on specific topics, carried out by professionals and enthusiasts of the sector who, without having a structure behind them, are still able to hold online classes with dozens of students. These people managed to build their own knowledge center.
Creator Economy Market Map
The same thing happens with influencers or YouTubers, some of whom have more viewers than television channels, despite the fact that they broadcast from their own home with a camera that may have been purchased on Amazon for a small amount, whereas television broadcasters run bulky structures that cost millions.
Creators are driven by passion, they create content around what they love the most, create awareness or entertain. Creators are free to produce without being dictated from above because they are independent; they share what they truly believe in and consciously or unconsciously they are challenging the status quo. They have more ownership, more control, and more upside. They trade security for freedom. They are entrepreneurs.
Examples of creators:
Artists get billions of listeners without labels
YouTubers build videos empires without TV
Podcasters build audio empires without radio
Course Creators build global classrooms without Universities
Writers aggregate 1000s of subscribers without newspapers
Streamers engage millions of viewers without sports channel
Today, there are several ways creators can monetize their content. Here, the most common:
This monetization method is used for example by Youtube which distributes 45% of advertising revenue to creators and keeps the remaining 55%. Although it is an effective monetization method, it only works for creators who are more mainstream and have a consistent number of followers. It doesn’t works as well for those who deal with niche or less popular topics.
This method is one of the best as it the only one producing an earning forecast that allows to create a roadmap to help accelerate growth. The business model based on subscriptions allows consumers to unblock content from the creators or access it before others, in the case of Substack for example, the consumer subscribes in order to receive the creator’s newsletters.
The subscription model is a very effective method to retain a customer base that, by paying for a service on a recurring basis, is more involved in commenting on the creator’s contents and feels part of a small community, a circle of people who are subscribers to a service with a common interest.
In this case, creators get an affiliate link to products related to their public profile. The link can be shared with the creator’s community. When products are sold, the creator earns a percentage on the sale.
For example, yoga teachers sharing free yoga lessons online can advertise a favorite brand of yoga mats and get a percentage on the number of sales coming from their channel. This business model is similar to the advertising model explained above, but with the difference that even those with a small audience can manage to earn. The biggest problem here is that the creator becomes also a salesperson, risking losing independence and credibility.
The creator’s economy in Education
Remote working made the use of tools such as Zoom, Google Meet, and Slack a common practice worldwide and changed online learning forever. Millions of people now work, practice, and learn online. Online learning till now was mostly on-demand, a passive and ineffective experience delivered by asynchronous courses. Now, with live streaming, online schools can truly compete with traditional education by offering an effective and exciting learning experience.
Knowledge influencers could only conduct lessons or workshops in person, reaching a limited number of students, local to the event. Now, they can broadcast their courses to people interested in the matter all over the world, building real online schools and creating virtual communities. The best way to deliver these course is using a Cohort-based course model, where attendees start together and finish together, sharing the learning journey with others and exchanging knowledge in a safe environment of like-minded people.
For the most common and classic topics, such as Law and Medicine, traditional universities and specialized schools are still probably the best places to find high-quality education. However, for topics that we can define “hot”, such as new technologies (coding, blockchain, AI, machine learning, etc.) that are constantly changing and need to be upgraded often, cohort-based courses, run by passionate creators in the form of boot camps are proving to work great.
Highly specialized and very specific, a cohort-based tech course allows dealing with a topic in-depth as everyone attending it is on the same page, and creates communities of experts.
Teachfloor is a tool that allows just that. It was built to empower online course creators by providing them with all the tools they need in order to build and deliver cohort-based courses. After years of experience in delivering on-demand courses, Teachfloor came to the conclusion that cohorts are the most effective learning model.
The platform enables instructors to deliver quality courses with higher attendance and completion rates. Easy to use, it has everything that is needed to provide an active and engaging learning experience, from the calendar to videoconference links, walls, messages.
Out there, there are millions of creators, professionals and experts who have a deep and valuable knowledge that can be shared and monetized. The cohort-based course model is the most effective for achieving this goal.
The creator economy: Conclusion
There has never been a better time in history to be a creator. Every time people have been empowered to do what they love, something great has happened. At last, people can work, create and monetize their knowledge and their interests, remaining independent by becoming “entrepreneurs of passions”.
The act of creating is embedded in human nature and the creator economy is here to stay. It will be a driving force for the next economic boom, so do not miss this opportunity to get involved.