Passion Economy News #3: TikTok’s Creator Fund, Amazon Explore, The Edtech Explosion, and More

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Welcome to Issue #3 of the Means of Creation weekly news roundup where we break down the latest news on the passion economy, including the happenings related to platforms, creators, startups, and trends. Last week’s most clicked link was SignalFire’s Creator Economy market map. 

Our first month of the Weekly News Roundup will be a free beta; the goal being to make this the most helpful resource for founders, investors and creators in the passion economy. We’re looking for your feedback to make this happen! (form also linked at the bottom). 

Stuff We Published

This week, we published our latest episode of Means of Creation with Ankur Nagpal, CEO of Teachable! Teachable is an online platform that enables anyone to sell courses online. They’ve generated over $500 million in sales for instructors and have transferred knowledge to over 30 million students. 

Find it as a podcast on Apple Podcasts, Spotify, Overcast, Breaker or wherever you listen to podcasts, or as a video on YouTube here. As always, you can view more episodes and subscribe to the Means of Creation YouTube Channel.

Top of Mind

‘CENTRALIZED’ VS. ‘FREE MARKET’ CREATOR MONETIZATION

The Radical Egalitarianism of TikTok's Creator Fund Matters // Hank Green, Pay Attention

Hank Green recently published this piece describing how creator monetization creates interesting incentives for the platform, creator and audience. Oftentimes the monetization method pushes creators to congregate around the same style or aesthetic, thus influencing the entire platform’s vibe and audience experience. 

As a specific example, Hank discussed the differences between TikTok’s Creator Fund and other ad-based monetization methods. TikTok’s Creator Fund was first announced in July 2020 as a pool of $200 million that gets paid to US-based creators. The payouts are based on views, engagement, and region--an egalitarian monetization method that treats every viewer as equal. This is in contrast to ad-driven platforms like YouTube where creators with more affluent audiences earn more, because their ads can command a higher CPM:

“..the amount of money we make from YouTube is a function of the amount of money we make for YouTube. [..] I know that not every view is created equal.”

“The majority of YouTube ads are auctioned off to potential buyers, and those buyers are interested in reaching specific people. So if you make content about personal finance for affluent 30-somethings, there’s a lot more competition for your audience than if you’re making content for teenagers.” 

The essay was written after a conversation with Li Jin, who also explored this topic. Li detailed how the user perception of Instagram as polished, aspirational, and curated stems in part from creators’ incentives to earn income through affiliate purchases and brand sponsorships. This orientation around commerce necessitates creating the feeling among the audience that what they have already is not sufficient.

https://twitter.com/ljin18/status/1311487141931876353

Unlike YouTube or Instagram, TikTok’s Creator Fund pays out creators based on content engagement. This prioritizes users’ attention instead of a specific dollar amount that their content has earned for the platform. 

“The money was in a big pot, and it’s getting spread around not based on who is responsible for making it, but by who is responsible for engagement,” Hank writes.

TikTok’s monetization mechanism isn’t without critics and the platform has come under fire for being opaque or reducing the reach of creators who are participants in the Creator Fund. Some reports stating the fund is paying out just 2-4 cents per 1,000 views. 

The most important takeaway is that the creator monetization model adopted by a particular platform fundamentally changes the content created by users. While platforms like YouTube and Instagram incentivize polished, professionally produced content that caters to audiences with purchasing power, TikTok prioritizes engaging, relatable, user-generated content that values every viewer equally.