There’s a cold wind blowing, ushering in a slew of economic challenges that for months, even years, will impact pretty much everyone on the planet. The cost of living is rising and politicians all over the world seem unable to do anything meaningful about it.
Yet, if you’re an online creator, then perhaps there’s a silver lining: You’ll weather the storm better than some.
That’s the contention of Roger Patterson, co-founder of marketing platform Later and co-founder of accelerator Launch Academy. He outlines why creators could come out ahead, even in a downturn, in a blog post for Entrepreneur.
Point 1: Small Is Beautiful, Agile and Lean
Plummeting stock values and rising interest rates can pummel global enterprises and wreak havoc on national economies, but smaller businesses are often better positioned to pivot as needed. Patterson argues that low overheads and lean operations make it easier to adapt to shifting economic circumstances.
“One advantage creators have is the ability to monetize their ideas and knowledge in addition to, or instead of, physical goods. For example, writers have built and monetized audiences through newsletter subscriptions and musicians earn money through sites like Patreon or partnerships with Spotify.”— Roger Patterson
There’s already a template for this during the pandemic. “Legions of entrepreneurs moved to a digital marketplace, the vast majority of whom were solopreneurs or running small teams,” Patterson notes.
In the process, he suggests, these entrepreneurs have laid a strong foundation to withstand future economic shocks.
“Surviving a recession used to require deep pockets and rock-solid business connections, but the economy has changed to favor small and nimble operations that can pivot as demands change. No one is better positioned to do that than creators who, by and large, have built their careers listening to the needs of their communities and providing value accordingly.”
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Point 2: Creators Aren’t Part of the Global Supply Chain (Phew)
The pandemic screwed up the interconnected, just-in-time supply chain for hardware, causing massive delays in parts like semiconductors. The international oil cartel doubled down on this at the start of the Russian invasion of Ukraine, sending transport costs soaring. But if all a creator needs are an off-the-shelf webcam, a PC, and an internet connection then they should be good to go.
“One advantage creators have is the ability to monetize their ideas and knowledge in addition to, or instead of, physical goods,” Patterson writes. “For example, writers have built and monetized audiences through newsletter subscriptions and musicians earn money through sites like Patreon or partnerships with Spotify.”
“Surviving a recession used to require deep pockets and rock-solid business connections, but the economy has changed to favor small and nimble operations that can pivot as demands change. No one is better positioned to do that than creators who, by and large, have built their careers listening to the needs of their communities and providing value accordingly.”— Roger Patterson
While it’s true a decline in consumer purchasing could affect creators who depend on paying clients or community contributions, Patterson believes many will be able to offset losses by expanding their reach to more followers and implementing new monetization tools, like virtual tips and NFTs (remember them?).
“The trick for creators, regardless of macroeconomics, is to stay focused on building their own niche and nurturing the communities they’ve built.”
I guess so. Even in a downturn, as evidenced by the pandemic, we turn gratefully to streamed entertainment and digital services that we couldn’t go out to find.
Point 3: Creators Can Build a More Equitable Marketplace
This point seems weaker to me since it holds up Web3 collectivism as an economic savior. I’m cynical that such ideals won’t get eaten by Big Capital. But let’s hear Patterson out.
“Right now, only a small percentage of creators — roughly 12% — make more than $50,000 a year from their content. A large number of those creators do so by competing for the same contracts from a handful of global brands. A downturn that causes bigger companies to pull back on creator spending could actually result in the acceleration of the peer-to-peer economy.”
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Patterson points to the use creators can make of Web3 tools to monetize directly from their community. “A peer-to-peer economy based on genuine shared goals and interests between creators and their audiences, could even the playing field and help the industry mature into something more authentic,” he argues.
Maybe. Most creators are freelance and work from home. They still have to eat and heat that home, paying for exorbitant gas and electricity costs. Belt-tightening by consumers will inevitably shrink the advertising and marketing budgets of brands across the board knocking on to the creator economy. Can they make enough margin to survive? Many will. Some will not.
Patterson is not ignorant of the challenge. He knows the creator economy won’t be entirely immune. “For one thing, creators may face increased competition if we see more people enter the space out of necessity.” But he’s optimistic that creators are in a position to not only navigate the changing economy but to potentially find themselves in a better place “if they stay nimble and tuned into their communities.”