I’ve been making YouTube videos for 3 years now with now over 800K subscribers with an average of 3M views per month, but I still haven’t quit my full-time job. I’m actually an anomaly at this size. Even in the tech industry, most people would have quit by now and focused on their YouTube careers. So when do they quit? Once they feel like they have the following needs met:
If you think this is obvious, it’s because it is. What do employees want in a traditional career?
In this article, I will talk about how the fundamental needs are the same, but the environment makes it tricky compared to a traditional job. And if a product or service improves one of these needs, your product will succeed amongst Creators.
Monetization: Improving the Attention to Capital Efficiency
For Creators to make money, they have to convert attention into money, and that money comes from an eventual purchase by their viewers. There’s no going around that. For example, Ad Sense revenue can only exist if some of their viewers eventually buy what ads are selling, or else eventually, the advertiser money will dry up, and the Creator’s CPM will decrease.
What creators care about is how to get the biggest portion of that viewer’s purchase, reduce the money lost from third parties, and have the viewer’s spending go directly to their pocket. That is what I call Attention to Capital efficiency from a creator’s perspective, which is measured by RPM (revenue per mille), which tells you how much you earned per thousand views.
Another way of increasing this is to sell a product that has the right fit for your audience. For example, my channel is about programming and computer science. I will have a harder time selling make-up products than selling programming courses, hence a lower RPM.
Lastly, you can increase your RPM by having multiple revenue sources from the same audience's attention. If the multiple revenue sources do not cannibalize each other, then that’s even better. For example, I would sell merch for my fans who just love me unconditionally, but I also sell programming courses for beginner programmers who might not have bought t-shirts with my face on them, even though my face is gorgeous.
Here are some examples of features and products that help us increase that RPM:
Patreon and YouTube memberships allow us to sell directly to our audience whatever it might be that we’re offering.
Influencer Sponsorships allow us to get paid upfront and reduce the “YouTube Ad Sense” middleman.
Teespring allows us to create our own product without much work to sell to our audience.
Twitch donation/monetization products are examples of excellent products. They created a need we didn’t know viewers had: to be seen and interact with the Streamer when chat is too overwhelming. It created a culture of donating and normalized spending money on streams.
To be honest, after being on the “Creator Economy” Twitter for a few weeks, most startups I’ve seen fall into the Patreon and YouTube membership model where they’re building something so fans can support their creators. And usually, those startups don’t really have an answer to “who are you building for?”. If your audience is “Creators,” then it doesn’t say who they are at all. What size are your target creators? What content do they make? What niche are they in? How tech-savvy are they? How much time do they have outside of making content? What products are they already using? If you’re building for ALL creators, then you’re also not building for anyone.
By the way, I don’t want to coin any terms, so I’ll list a few here to represent:
Monetization efficiency (I like this one most, it’s clean)
Attention to Capital Efficiency
Revenue per view
View to Revenue efficiency
Attention Conversion Efficiency
Consistency: How to keep viewers loyal?
The biggest fear every YouTuber has is their viewer base dropping slowly; it’s like a slow, painful death. Though there are instances where a platform just shuts down (like Vine), and they’ll lose a big part of their viewership, that is pretty rare, and it’s possible to recover from it by moving their audience to another platform if they have a loyal fan base. Platform’s algorithm changes that are unfavorable to a creator is a problem too, but creators can adapt.
This might be an unpopular opinion amongst my YouTuber friends. Still, I think the number one cause of viewership dropping is simply because their viewers aren’t interested in their videos anymore. Just like how famous actors come and go, our relevancy on YouTube has a natural decay, and we proactively have to make “innovations” to our content to make sure we don’t lose our audience.
Compared to a traditional employee, Creators have a much harder time getting stability in their careers. Creators have it better in terms of monetization since they can increase their efficiency, while an employee just gets a regular salary with no huge upsides in a small time frame. Employees, however, have job safety… or at least it is dependant on the performance of the whole company. However, for a creator, they are the company, and it’s a volatile market.
There are two ways you can solve this problem:
Redistributing the creator’s risk
Increasing their followers’ loyalty
Redistributing the creator’s risk will probably be a financial product where you’ll have to reduce the creator’s upsides but allow the creators to have a more consistent income. In essence, you’ll be an insurance company insuring their viewership. Not sure if creators would like that, we love the thrill.
Increasing their followers’ loyalty, I have no idea. The biggest factor is how much their viewers still like them, so the bulk of it is how they view your content. Creator education is critical and effective, but startups are probably not interested in that. You can think about ways to interact with your followers, but personally, I don’t think it’s worth it because I hate interacting with my audience. Don’t tell my followers, please.
Growth: Reaching a broader audience
Like a traditional employee, you’re not going to stay at your job if there is no prospect of growth and promotion. For creators, we want our channel to have a bigger audience year over year, but not all creators succeed, and it’s definitely not guaranteed. Let’s talk about the creator journey a bit.
As a creator, you’re competing with other creators. There are limited watch time hours every day from YouTube viewers, so creators have to fight for their piece of the pie. Luckily YouTube’s overall watch time is growing year over year, so the pie gets bigger. But let’s imagine for a second it isn’t, then how would you grow?
The key to a creator’s success is dominating a niche. Being the best at whatever niche they’re in. Niches are not topics, so “Programming” is not a niche. “Big Tech Company engineer who makes comedy sketches but also educational” is a niche, so it’s actually a lot easier to find a niche or even to create one. A better term would be “finding your voice” and people who want to listen.
Once they’ve found their niche, they should start broadening their niche into topics that have mass appeal. For example, I talk about tech; many people in tech also care about personal finance, then talking about personal finance is a good topic to branch out to. The more overlap it has, the easier the transition.
A perfect example would be Twitch streamers. Many top streamers like Shroud and xQC started by being the best at their respective games (CS:GO and Overwatch); they were competitive players. However, they wouldn’t be the size they are today if they haven’t branched out into either multiple games or “Just Chatting.” If you stay with a specific game, you’re limited by the game’s audience's size.
One YouTube example is PewDiePie, who used to make gaming content. Now it’s just his personality that we care about; it doens’t matter what he does.
Sometimes, these transitions happen overnight, with one viral video. For example, Jarvis Johnson used to make software engineering content.
But once he had his “5-Minute Crafts Is The Worst Channel on YouTube” video blow up and go viral. He followed the momentum and became a Commentary channel.
However, not all channels transition that drastically, but viral videos are an excellent catalyst.
What can startups do to help? I don’t know. If I knew how to engineer growth on my channel, I would be famous today.
The rule of thumb for creating products for creators is to have empathy. Remember that most people have the same fundamental needs in a career, but try to recognize the differences in the environment. Once you do that, you can have a clearer picture of what we would want. I can’t help you with empathy, but I can paint a better picture of our environment.
In the future, we’ll dig more into the Creator’s journey, monetization efficiency, and some history of the media industry and how it relates to the creator industry.
One thing I've been thinking a lot about is owned distribution for creators. I don't know if there's an opportunity for a VC-funded startup in that space (I'm talking about truly owning their audience, not just relying on ANOTHER platform), but would love to see more creators invest into channels where they can dictate the distribution as opposed to relying on algorithms to share their content. I think that's one way to increase the monetization efficiency (I like that term) by being able to intentionally share content to the right segments of their audience. One example is to build SMS or email lists, they to success though will be using those channels not just as a notification system ("Just uploaded a new vid! Go like, comment, and share!") and actually using it as an opportunity for engagement and value add.