Creator Businesses Are a Risky
One of the biggest blind spots in creator economy discussions is about just how risky creator businesses really are. This is for quite a few reasons, but predominantly:
- Creator mental health / burnout: it’s hard to keep up with the joneses.
- Hype cycles: time on top has an expiration date.
- Poor decision making: one bad decision and a creator’s career is over.
- Platforms and algorithms: at the will of platform changes, decisions, and distribution.
- Revenue inconsistent and not diversified: a lot of creators have over 50% of their revenue coming from one source.
The MCN model was to de-risk through volume in exchange for 10% of ad rev. This hasn’t played out because it heavily favored MCNs.
So, I think the better question to ask is: how do boutique management agencies or small creators de-risk? And then, further, how do companies entering the space build with de-risking at the core? Here are some ideas:
Make creator collectives.
Let’s say, a creator agrees to put 10% of her YouTube ad revenue into a pool with a group of amateur creators. Over the long-term, she’s betting that one creator will succeed in a huge way. It may or may not be her. This de-risks and promotes collaboration.
Build out other content / IP.
Simple in theory, more difficult in practice. Study Barstool to understand how to do this well. Look at Disney’s evolution, as well.
Build a better Team 10.
Team 10 gets a bad wrap, but it was a revolutionary idea that fizzled because of the personalities involved. There’s a seed of something there that someone will get right, whether that’s an individual creator or management company.