The Influencer, The Social Platform, and the Arms Race for Attention - WITH CRYPTO for influencers!
Creator funds are all the rage in the influencer industry, as social platforms seek to attract top influencers to work on content to be posted on their platforms, for the purposes of increasing their share of attention.
Welcome to the economics behind the attention economy.
Social platforms are at the stage of jostling for the time of those who are most able to attract the attention of the average consumer, with money. YouTube has spent over $30 billion over the last three years or an average of $10 billion per year, and recently launched its $100 million fund to invest in creators on Shorts. TikTok will be investing as much as $2 billion whilst Snapchat has already spent more than $100 million since November 2020 to attract creators for its Spotlight feature. Facebook, Instagram, Pinterest are hot in pursuit as the traction leads to greater distinction between the “haves” and “have-nots” in the social media sphere; platforms that manage to pull away from the pack will do well whilst others will begin to find themselves in a downward spiral of less resources to keep up with the competition.
In the end, when they are unable to attract enough creators to publish, they will perish.
"Publish or Perish" model
In essence, social platforms are not very much different from publishing houses that still live the “publish or perish” model. The content consumed by those in times past were books that kept people informed and entertained has now taken a completely different turn. Influencers can become “financial experts”, with the disclaimer that what they say does not constitute financial advice. Many of these individuals made a tidy sum of money during the 2020 lockdown and because the stock market rose in tandem with measures meted out by the Federal Reserve, many influencers saw the opportunity to share about their experiences and in some cases, the place to be an “expert” to their followers.
As the arms race heats up, there is much room for many creators of different social standing in the creator-verse, to make money. Influencer marketing firm Mediakix estimates that the sponsorship market will hit $15 billion by 2022. From the influencer with a million followers to the up-and-coming influencer with just 50,000 followers or 5,000 followers, there is a price for the content created.
A smaller following can mean a niche, relatable group profile with distinct likes and dislikes, making it cost effective to target certain messages. In a world of “fake-posting / posing”, authenticity is sought after and with it, opportunities typically begin to sprout.
Crypto and the Influencer
The applications of cryptocurrencies also come into the fore, especially with the content creation economy. The hype at the moment is about the promise of levelling up of the content creator economy and decentralisation. But whilst crypto has promises to level-up the market, the capitalist model of winner-takes-all will still be prevalent. As the Bible puts it, “the poor, you will always have with you”. In short, it will be difficult to break the mold or model where top dollar flows naturally to top talent. But as each influencer has only so much bandwidth, brands will find other ways to work with “next tier” influencers to get their messages across.
Fans and audiences can also invest in their favourite creators by buying their token. BitClout’s token model is a prime example of this. The platform allows users to monetise their social followings. When followers purchase the coin of a particular inflluencer or public profile, it goes up in value.
At the time of this writing, Elon Musk, who had a special profile created for him (he has yet to claim it for himself), has a ~$10m market capitalisation of the Elon Musk coin on BitClout. A fan or an investor in his coin will have to fork out ~$31,000 per coin (you can of course, buy a fraction of the coin). Caveat emptor - Rug-pulls: this crypto investing approach is vulnerable to the main owner of the creator coin selling out on every investor who bought into the coin once there is a critical mass; very much akin to a Ponzi scheme.
There is currently no regulation oversight on this area and the Securities and Exchange Commission (SEC) is doing it utmost to be empowered to step in to protect the average crypto investor. That being said, the potential in the creator economy is bright, and in due time, the kinks will be ironed out, especially to do with crypto.
Brands do well to keep their eyes peeled to this space and move in tandem with developments rather than taking a backseat, especially since the changes are rapid and trends shift quickly. Keeping abreast and finding niches to occupy will be the best bet on the way forward.
This content was syndicated from SYL+JAS Bureau, with permission.
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