[Photo by Nick Scheerbart on Unsplash]
The Odysseus Files, Issue 25
Playing Your Own Game, Part 3
Is the Attention Economy Sustainable?
[Note: this is Part 3 of a miniseries within the broader Odysseus Files called “Playing Your Own Game.” These miniseries will group broad topics thematically, helping you connect the dots between them more easily.]
The creator economy is facing a bit of a crisis. Shifts in the online marketing world, in consumer behavior, and in the creator world itself are all aligning to create a perfect storm.
Can you still build a successful creator business? If so, what will it take?
Over the next two issues, we’ll tackle these questions, with insights from some people who are pushing boundaries in this space. Let’s jump into part one.
The idea of a “lifestyle business” is big in the creator space, because it represents the idea of intentionally building a small business with low revenue but also low stress and time commitments. The stated goal of this is to prioritize other, more important things in life than revenue/income.
This is a valuable counterpoint to the pressure in the “tech founder” space to optimize for growth above all else. It allows creators to fund doing work they love while (ideally) creating the lifestyle they want.
And if that’s your goal for your business, go for it.
But if you’ve followed along with The Odysseus Files for any length of time, you know that one of the core tenets here is sustainability. By sustainability, I simply mean the ability for a process (in this case, your business) to continue operating with minimal inputs and despite external pressures.
Sustainability (or, to be more specific, financial sustainability) is about creating resilience in our lives and businesses, allowing us to proactively and intentionally respond to threats while taking advantage of opportunities.
And, if creating a positive impact with your business is important to you, sustainability is the first step required to optimize for that desired impact.
Crafting a financially sustainable business means:
Building for the long term, not just the next few months or years
Prioritizing relationships with customers so they keep buying from you versus constantly chasing new sales
Thinking like an investor/owner instead of a worker
Building a solid brand foundation rather than focusing on tactics
All of these points are the antithesis to how most creators build their businesses. (Which, in most cases, results in simply replacing one job with another - when the hustle stops, so does the income.)
So, what’s the path to creating a financially sustainable creator business? First, let’s break down the creator model.
Breaking Down the Creator Model
Understanding the Model’s Weakness
Creators are fantastic at getting attention. In fact, they’re arguably better at that than at monetizing that attention.
For many, monetization is a means to an end. To these creators,
Marketing & selling feel sleazy, like the dirty work they have to do in order to fund their dream.
Promoting their work takes second place to “providing value” (whatever that means - usually, anything that doesn’t involve a sales message). The effect is that their audience rarely knows they even have anything for sale.
One of the most common pitches is to ask their audience to “support their work” - positioning themselves as the client in a (very cheap) client-patron relationship.
Other monetization paths follow what everyone else is doing: competing for the same advertising & brand sponsorship dollars, selling low ticket digital products, or offering higher priced courses or coaching packages.
None of this is bad, in any way. As long as you know what you’re building, what potential you have, and what you might be giving up.
The latest research into the creator economy reflects the somewhat self-limiting nature of the typical creator game: according to a survey of over 1,000 creators by the Tilt, the average gross revenue for full time creators in 2023 was just $108,000, with a gross profit margin of 59%.1
Essentially, the average creator makes about the same income that they would in a fairly mid-level corporate job. (Minus the benefits, of course.)
Meanwhile, they’re trapped on the same content hamster wheel that corporate content marketers are.
It’s increasingly difficult to get your content to stand out online, where many staple digital tactics are losing effectiveness while increasing in costs (read more about the challenges in content marketing and paid media).
Alexis Grant, founder of They Got Acquired, penned an excellent article on the challenges creators face in marketing, selling, and standing out. She sees creators experiencing a high rate of burnout, due to the need for constant hustling just to keep up. She believes these factors will cause the creator bubble to burst. (You can read her full article here.)
Especially with AI, the pressure is increasing to maximize quantity: the moment you stop or slow down publishing, the algorithms start working against you and you lose momentum.
In the end, many creators have simply swapped one job for another. The only true benefit remaining is that they’re creating the content that they’re actually interested in.
The Income Cap
Through a mix of data and observation, creators tend to fall into something of a revenue pyramid: the majority at the bottom sit at the 5-figure mark. The next tier up land at a low 6-figures.
Here we hit a sort of ceiling, where creators have to start thinking more like business owners. Their business structure might need to be modified; systems need to be developed; the direct link between time spent and dollars earnt needs to be broken.
Those who can navigate this transition hit a sort of “made it” point, from the mid 6-figure mark up to low 7-figures. This is where most creators (especially solo ones) cap out in terms of earning potential. Where, without becoming a giant media brand (an increasingly stagnating business model anyway), there’s not a clear path upwards simply collecting attention.
The handful of creators who have crossed this threshold (think, the Justin Welshs of the world) have done so only through huge audiences or large teams (basically, the giant media brand approach).
The Opportunity
We’ve talked a lot about what’s wrong with the model, but let’s go back to what’s right.
Many brands recognize the opportunity better than creators do: they have the product that the creator doesn’t have, and the creator can attract the attention that they struggle to on their own.
Together, you have a perfect fit.
Except, creators are losing out. They get paid to feature a product, but brands are happy to pay that sponsorship fee because they know the backend value they get is worth far more.
For creators who are great at attracting attention, but struggle to monetize beyond a low to mid 6-figure revenue stream, the answer is ownership.
P.S. - Keep an eye out for next week’s issue, where we’ll explore what this looks like through the lens of some movers and shakers in the creator economy.
The Tilt, 2023 Third Annual Content Entrepreneur Benchmark Research