July 7, 2021
From Influencer To Empire: The Evolving Business Of The Creator Economy
The business of influence has always shaped the way we interact with the world. Historically, it permeated our society with celebrities or people with inherent money and power. Take Rihanna and Beyoncé — both began as famous singers who leveraged their names and brands to introduce companies like Fenty and Ivy Park. Since then, they’ve gained massive followings, with the former being worth an estimated $600 million.
Today, the creator economy is the primary driver of influence, with content creators amassing large followings through social media. The industry has been commoditized to the point where anyone with the right tools and expertise can build their own sphere of influence. But the power of the creator has extended beyond social media — today, influencers are compounding their reach with business partnerships (Charli D’Amelio and Dunkin’ Donuts) and launching their own businesses (Addison Rae and Item Beauty).
The creator economy is increasingly data- and technology-driven, especially as creators continue to gain power and influence in an entertainment world with seemingly endless business opportunities. Thanks to advances in AI modeling, creators can discover deeper and more granular insights, which ensures they successfully grow their platforms. Ultimately, this evolution is going to change the relationship between audiences, creators and brands — shifting the dynamics of power in entertainment.
Monetization in This New World
Historically, the influencer business model was rooted in brand sponsorship deals. And while it’s still an important part of revenue streams, influencers are finding innovative ways to capitalize on audience engagement. We’re seeing everything from merchandise sales to streaming deals to diversified creator portfolios. Some, like YouTubers Jeffree Star and Emma Chamberlain, are even building their own offshoot businesses. Others, like Chinese live-streaming sensation Xinba, are selling more than $300 million worth of goods in 12 hours on TikTok rival app Kuaishou.
This phenomenon is what I call going “from creator to empire” — creators utilizing their sphere of influence to become business moguls. Influencers have a level of loyalty that’s rarely seen with traditional businesses: People are generally more dedicated to people than brands. And because these brands are tied to a creator, influencers are able to capitalize on various business models in a way that traditional businesses cannot.
In the next few years, I predict we will see the emergence of “superbrands” — creators who utilize deep audience insights to inform businesses. Some may even turn to launching their own platforms or streaming services to continue capitalizing on their brand.
Even beyond the rise of superbrands, every influencer will have a diverse portfolio of monetization tactics. The number of streams depends on their sphere of influence — a creator with millions of followers will have more business opportunities than a micro-influencer. But regardless of follower count, all will see an increase in options in the wake of a decentralized entertainment ecosystem.
With this shift, I believe AI will become the standard for understanding audience engagement and identifying business opportunities that will resonate with each creator’s unique audience. And this will happen in strides as creators gain better access to data and tools to leverage unstructured data. This also gives creators ownership both over their data, as well as interactions with the community through new platforms.
As I’ve said previously, I believe that the future of entertainment is going to be a blockchain-driven content marketplace. We’re seeing the early days of this transformation with Patreon, Kickstarter, and even Twitch gaining popularity: Audiences are increasingly showing an interest in investing in creators directly. It’s not outlandish to think that one day, anyone from Christopher Nolan to Emma Chamberlain will be able to fund their work solely through features like blockchain.
We are also seeing the growing popularity of NFTs (non-fungible tokens) that enable people to purchase shares in physical goods, like cars or art. In doing so, consumers are helping creators become more independent, further decentralizing the power of entertainment. These advances will create new and exciting opportunities: By permanently tying their content to a financial transaction, creators can continue generating revenue every time their work is consumed, invested in or redistributed, enabling even more monetization opportunities.
In 10-20 years, the entertainment ecosystem will be nothing like it is today. The need for filmmakers and TikTok stars to financially rely on studios, platforms and businesses will be gone — replaced by a system in which anyone with the right tech tools will be able to create and monetize content independently.
Building a Tech-Savvy Team
The next iteration of the creator economy will demand that influencers become more tech- and business-savvy. If they take a wrong step, the consequences can be catastrophic to their personal image and businesses. Historically, influencers have worked with family and friends to navigate the brand-building process. Some have enlisted the help of agents and publicists, but the majority are managed by someone close to them. However, with rapidly scaling brands, creators need to invest in a full executive team to manage their brand and business opportunities.
Creators need a chief financial officer to manage the complicated financials that come with operating multiple businesses; a chief marketing officer to ensure a consistent brand across multiple ventures; and most importantly, a chief technology officer with a strong tech and data background to help comprehend this new world of entertainment.
Influencers will rely on testing and data to better understand their audiences. The content ecosystem is exploding with different platforms, and to even scrape the surface of comprehending available options, creators have to rely on AI and machine learning to grasp how to optimize these platforms. From there, they can make the most informed decisions about which additional revenue streams work best.
For all the industry professionals who dreamed of working in entertainment, now is the time to take the leap because the creator economy is booming. The future is bright for the industry, with endless opportunities to redefine the entertainment world. Creators are becoming the embodiment of my favorite Jay-Z lyric: “I'm not a businessman; I'm a business, man!”
Original article: Forbes