Venture Funding Panic? Here’s the REAL Creator Economy Story

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Description automatically generatedReports Of Our Death Are Greatly Exaggerated: I’ve talked to a lot of freaked out people over the last week about the lack of VC funding for Creator Economy startups. The latest angst was precipitated by the Information’s Kaya Yurieff reporting on the 58% plunge in funding in 2023. Yes, it’s a huge drop – especially when compared to 2021- but let’s temper that with reality. First, venture funding is cyclical, impacted by economic cycles and the cost of money. It’s supply and demand – back in the ZIRP days of 2020, money was basically free – and thus investors chased the supposedly higher returns of venture. Today’s relatively high interest rate and rocky economic environment means less money gets allocated to venture. Less dollars means less deals across the board. But many VCs are also lemmings, racing hither and yon chasing the next big thing. They fuel the hype cycle but also lead us to the trough of despair.

There are many indicators of the state of the creator economy, and venture funding is just one. Creators themselves, as Brendan Gahan points out, are still doing well. And when you expand the definition of “the creator economy” beyond just YouTube, Instagram and TikTok, things look more rosy. So yes, VCs have moved on. I think 2024 will be an inflection year, where we’ll shift a bit from what has worked in the past and towards a new reality. But creators and the creator economy overall are stronger than ever.

Amazon’s Gazillionth Creator Economy Effort Launches: Amazon has had so many different fits and starts with creators. This new one enables direct linkage between creators, brands and Amazon’s Posts – using a new API (scroll down for story). This promises better reporting and accountability, albeit at a steep price. Amazon takes roughly 15% – or even higher – of most sales. That’s twice as much as even TikTok’s new 8% take. This focus on creator/sales attribution comes at a curious time, as Amazon just fired 500 employees – a third of the staff – at its live-streaming platform Twitch. Brands will likely embrace this – but at the peril of losing their core business to Amazon. There’s more behind the move – along with Temu and Shein, TikTok’s shop has clearly deeply rattled Amazon brass. But like so many other underwhelming Amazon/creator initiatives, including Spark, the Influencer Program, Amazon Live and more, I wonder how long they will lean in – and with how much vigor.

Get Your Popcorn Out: Generative AI and copyright battles are already the top spectator sport of 2024. OpenAI just accused the NYT of extreme prompt manipulation, calling the case without merit. Meanwhile, Open AI offers licensing deals of just $1-$5M to shut-up media companies, much like how Logan Paul is buying back CryptoZoo NFTs in exchange for waiving the right to sue. Hot takes abound, including Stratechery concluding that the Grey Lady has it backwards, and Gary Marcus insisting that the “desperate” AI industry is racing to save its business. My point of view? No matter what happens, the genie will never go back into the bottle. Extreme prompt crafting can certainly lead to odd outcomes – remember the simpler days last winter when Kevin Roose fell in love with his AI ($)? I think we’ll end up calling them all “derivative works” with some hastily legislated guardrails to avoid spewing out fully-formed copyrighted images and texts. Or perhaps we’ll end up with the AI version of Bit Torrent – doing the Generative AI dance in the privacy of our own homes. FWIW, I want a “gal” and a “rabbit” (HT to @lance ulanoff).

TikTok’s US ARPU grows 60% YOY: That’s just one of the many fascinating tidbits from Data.AI’s voluminous “State of Mobile 2024” report – available to peruse online or download free. In December we covered their data pre-release showing TikTok’s aggregate TikTok’s aggregate $10B in user revenue, but there’s much more, including TikTok’s astounding $1 US monthly ARPU – and we’re talking in-app payments only, not total ARPU across sponsorship, funds, etc. The report also chronicles the rise of Threads and the fall of X – although the former is still a small sliver of the latter. Note, you can only see regional breakouts in your browser, not in the PDF.

Hate Is Such A Strong Word: AdAge released a story about how creators despise affiliate programs. That’s not true – as you’ll find if you read the article (it’s not worth paying for). Instead, creators smartly practice yield management when it comes to sponsor messaging. A brand integration typically delivers more revenue than a performance or affiliate integration. But both are essential. It’s like an airline. You only have so many sponsored slots (aka seats) per media unit. And once you’ve published, those slots are gone forever. So yes, put a high-value brand sponsorship in if you can. But when those deals dry up, affiliate/performance insertions deliver less revenue – but it’s still something! Perhaps Agentio will solve this problem with programmatic insertions. But until then it’s all a part of dynamically managing ad inventory. And creators have gotten very good at that.









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