The Passion Economy
The ‘passion economy’ has been gaining traction for some time in Silicon Valley. In short, the passion economy allows anyone to build audiences at scale and turn their passions into livelihoods.
This new economy is fueled by ‘niche creators and builders’ who are empowered to pursue their passions and monetize their skills and hobbies on digital platforms. This term was coined by Venture capitalist Li Jin in 2019 to describe a growing segment of businesses whose offerings highlight the individuality of their creators.
A Shift in Power
Facebook has 2.8 million active monthly users and their advertising business in 2020 generated close to $84.2 billion in ad revenues. Facebook is largely funded from ad spend from brands and their value prop focuses on making the world more open and connected. Yet, apart from the elite “influencers” that reach that coveted megastar status, most creators receive no reward beyond the thrill of notching up “likes”. Creators largely have no way to monetize their content and as such, social media platforms get the majority of their content from ‘creators’ for free.
Creators largely have no way to monetize their content and as such, social media platforms get the majority of their content from ‘creators’ for free.
Finding Freedom
Those of us that were millennials were conditioned to think that getting a job in a more traditional setting and climbing the corporate ladder with a good 401k, or a ‘good pensionable job’ as we call it in Europe, was a wise and ‘safe’ career choice from our parents and society.
That dynamic is changing. We are now in the midst of a really exciting shift in power where the existing models of content creation and influencer marketing are changing. There is a seismic shift and flattening of the existing influencer hierarchy. The passion economy has created a new realm of possibilities for individuals and a new livelihood.
The flattening of this new economy allows anyone irrespective if you are an ‘influencer’ or not to carve out a successful niche livelihood. What’s most compelling about this movement is that individuality is celebrated. In the post-war economic boom, conformity was celebrated, and working as many hours as you possibly can has continued to be a trend in the US.
These new platforms empower anyone to build a scalable business around a unique skill, topic, or passion geared at niche communities. This is going to have a huge implication on the future of work trends and what society deems a ‘job’ in the future. Today, 36% of the US workforce are self-employed and this number is estimated to reach 50% of the workforce by 2026.
Platforms
There has been an explosion of direct-to-consumer media marketplaces. There are 100’s of platforms out there but see below some of the top options that our members leverage at Collective.
1. Substack: A four-year-old newsletter company. Substack’s value proposition (thesis is, in part) in part, is that media companies underpay their leading writers and by being a part of their platform, creators can achieve financial independence. Substack CEO, Chris Best stated, the goal of the platform is “to allow writers and creators to run their own personal media empire.” While Substack takes a 10% cut of earnings and payment company Stripe takes another 3%, writers pocket the rest. There are currently 500,000 paid subscriptions across Substack, and the top ten writers collectively make more than $15 million a year.
2. Kajabi: A platform that helps creators to build and sell online courses. Their 40,000 creators have sold nearly $2 billion- yes, $2 billion- through selling niche courses. Kajabi offers a subscription service to creators who want to monetize their expertise, offering tools for creating websites, online classes, newsletters, podcasts as well as the ability to easily collect payments. The platform gives complete autonomy to creators to highlight their brand and create new revenue streams. One of our members at Collective, Delyanne Barros, a former lawyer, left her successful career in the legal profession to become a full-time creator. She is one of the most sought-after creators on the platform, where she offers a course on how to ‘Slay the Stock Market’. Delyanne is on track to retire by 45.
3. Patreon: A membership platform that connects people (patreons) support people (creators) largely via video. Patreon’s name was inspired by the concept of patronage where in historic times, creators such as artists, musicians, and authors would rely on wealthy donors' patronage to fund their passion work. Patreon allows creators to have a predictable revenue stream via membership contributions. Patreon provides the tools to allow creators to set up multiple membership tiers and the subscription rate at each tier is defined by the creator. As a patreon, you are given the flexibility to choose your monthly level of support, and in doing so get exclusive access to “rewards” that are only available to Patreon supporters. Patreons make as little as $27 a month up to $214k a month.
The Future of Work
These platforms are enabling anyone to be a creator and builder, work wherever they want and earn a livelihood in a way that celebrates their niche passions. There is a transfer of power from the social media giants to the passion communities. Just as we saw direct-to-consumer e-commerce brands shake up retail where they grew fast and connected directly with customers, these direct-to-consumer media marketplaces allow creators to be compensated and communicate directly with their communities.
The future is bright for content creators and the opportunities are only going to get more accessible and lucrative. The future of work is here. Welcome to the Passion Economy.
WRITTEN BY
Galvea Kelly