Thursday, July 5, 2018

The group of Davids taking on Streaming Goliaths Netflix, Amazon, and Hulu

A consortium of documentary buyers is taking on Netflix, Amazon Prime Video and other streaming giants. Here's how, and why, they're doing it.

As over-the-top (OTT) providers grow their subscriber bases around the world, billions are being invested in content acquisition. For 2018, Amazon Prime Video has earmarked $5 billion and Netflix has budgeted $8 billion for creating and licensing new shows.

Not surprisingly, the top-of-mind question for many producers is whether or not reaching a deal with one of the streaming giants is the way to go in what is becoming a post-broadcast world. The budgets are sizeable, the reach is global and the subscriber base is only going to get bigger over time. However, there are trade-offs, of course, the most significant of which is that ownership rights must often be handed over.

Enter the International Buyer’s Coalition, a consortium of global documentary buyers that came into being at Sundance 2016 where it made its first acquisition, Nanfu Yang's Hooligan Sparrow. 

The coalition includes PBS’s Independent Lens, BBC’s Storyville, The Netherlands’s VPRO, Israel’s DBS/YesDocu, Denmark’s DR, Norway’s NRK, Ireland’s RTE, Spain’s Telefónica, Belgium’s VRT and Sweden’s SVT. This initiative is part of a global movement toward strategic alliance-making between legacy media to counterbalance the power of Netflix and Amazon. Other ecent examples include the European Media Alliance and the France Télévisions–RAI–ZDF partnership.

Speaking recently at the annual Hot Docs documentary conference in Toronto, Ro*co Films’ Annie Roney, one of the driving forces behind the International Buyers’ Coalition, admitted that despite the pooling of multiple players’ budgets, it was unlikely that the coalition could come close to matching the financial enticements of major OTT providers.

So why even try? It turns out there are advantages to working with public service broadcasters.

Mandy Chang, commissioning editor for BBC’s Storyville, and a coalition member, sees the group as embodying the spirit of public service broadcasting: people and organizations centered around a shared goal of telling important stories and getting those stories out to as many people as possible.

Lois Vossen of PBS’s Independent Lens, another coalition member, noted that she had witnessed firsthand the frustrations of filmmakers who believed in the importance of having a broadcast window for their documentaries, generally on public media. However, the terms and conditions of Netflix’s deals prevented such airings.

The coalition therefore fills a blank space for documentary producers, where competing with the major streaming platforms happens not in terms of dollars but of deal terms. 

The benefits of working with the coalition include the following: 
  • One-stop shopping for multi-region deals
  • Rights and ownership retention
  • On-the-ground marketing and publicity support
  • Versioning assistance
  • Data on a film’s impact both online and offline 
A recent International Buyers’ Coalition acquisition was The Fourth Estate, a 4-part series documenting a year inside the New York Times’s coverage of the first 18 months of the Trump presidency.

The Fourth Estate was the closing night selection at this year’s Tribeca Film Festival and will be aired on Showtime in the US, the BBC in the UK and RTE in Ireland. A different edit of the series was made for the Irish national broadcaster to better speak to the knowledge level of viewers there. According to BBC’s Mandy Chung, “this kind of collaboration is very rare these days”, adding that it is what sets public media apart in a world where a handful of streaming platforms are imposing new rules and norms.

“If a filmmaker’s first priority is revenue and a Netflix Original offer is on the table, a coalition offer won’t compete,” said Annie Roney. “But if a filmmaker is also interested in a film’s impact and developing their relationship with the international broadcast community, a coalition offer can prove to be competitive.”

Note: This is an edited version of a post that originally appeared on the Trends blog.

Thursday, June 28, 2018

The Blockchain’s Building Blocks for the Entertainment Industry

In a recent segment of This Week Tonight, comedian John Oliver described the blockchain, and its most popular application, the bitcoin, as “everything you don’t understand about money combined with everything you don’t understand about computers.” And Oliver is probably right. Despite countless articles and explainer videos, for most of us, a mention of the decentralized digital ledger system of the blockchain elicits a furrowed brow.

Creatives and producers may at first think that blockchain and cryptocurrencies are not part of their universe, but recent developments both in Canada and abroad suggest otherwise. A 2017 global benchmarking study conducted by the University of Cambridge revealed that 8% of blockchain applications are focused on media, entertainment and gaming. This is the same percentage as for those built for the healthcare industry.


Here is a handy mental shortcut when it comes to the blockchain and entertainment industry: anywhere a transaction involving an intermediary or middleman exists, the blockchain can probably prove useful. Creative examples of using the blockchain include for micropayments, settlement of royalty payments, automated billing, simplification of rights management and copyright tracking.

Though these are early days in the evolution of the blockchain, the space is abuzz with activity because the blockchain represents an entirely new way of doing business. Instead of a world of people, paper and offices, it automates transactions and does so in a way that is updated and constantly verified in real time. This does not mean that no one is in charge, but rather that no single entity holds sole power.

“The whole world runs on supply chains that are contracts between dozens of people. On blockchain, it could be one contract,” explained Christine McGlade of Toronto’s Analytical Engine Interactive, during Canadian Screen Week, which took place in Toronto in Spring 2018.

She invoked the example of a cup of Starbucks coffee and how it took a journey of many stops along the way to go from coffee bean to the palm of her hand. At each of these stops, transactions occur and each one of these transactions becomes part of a supply chain that costs money to operate and therefore adds costs to the final product.

In a recent Forbes article, UK-based Nick Ayton, co-founder of The 21 Million Project—which is said to be the first film and TV production company living on the blockchain—claims that working around the usual industry intermediaries can have a significant impact on budgets. Just how significant? By as much as a factor of 6, claims Ayton. Is this a hyperbolic claim? It may well be, and amid the frenzy surrounding both bitcoin and blockchain, wild claims are going to be made and aggressive believers (or salespeople) are going to try to get us to buy into their vision of the future. We probably won't know how things will really take shape until, say, 2025 or 2035, so for now the best we can do is survey the landscape of possibilities.
“One needs $100 million in Hollywood to make a film and grease the middlemen,” said The 21 Million Project’s co-founder. “In [our] production there are no middlemen… so a $5 million budget delivers $30 million.” Furthermore, anyone can invest and/or make creative contributions to 21 Million’s productions. “Fans […] can influence what gets made and can enjoy the benefits of success and receiving royalties while knowing that the production process was gender equal, pay equal, fair and transparent.”

There are costs and there is value, and artists and producers are increasingly asking if the costs charged by middlemen are worth the value that is ultimately created. One of the solutions proposed to solve this problem is the blockchain-based smart contract, a piece of code that creates automated, yet still trusted, contracts that make it possible to remove the middlemen from transactions and agreements. In the case of the entertainment industry, a smart contract could ensure that everyone in the supply chain receives the payments due to them, without delay and without additional fees and percentages being added on by third parties.

During Canadian Screen Week, Christine McGlade mentioned the importance of thinking about agreements in Canada’s entertainment industry that are value-based rather than money-based. In this category fall budgetary items such as in-kind contributions and deferrals, which have a dollar value but only become revenue flow if and when a production is profitable.

There may be no better illustration of the utility of smart contracts than the now famous picture of a Degrassi royalty cheque in the amount of $8.25 posted by Drake on his Instagram account last summer. The value of the labour required to make the calculation, draft the cheque, place the cheque in an envelope and send the physical cheque to wherever Drake receives his correspondence had to exceed the amount of the cheque.

The issue at hand isn’t that the $8.25 payment could have been, say, $15 if it was handled by a smart contract, but that payments in the amount of $825 or $8,250 due to artists could potentially become $1,000 or $10,000 or more in the world of automated workarounds enabled by blockchain technologies.

Ed. Note: For a more skeptical view of blockchain and the entertainment industry, see Chapters 11 and 12 of David Gerard's Attack of the 50 foot Blockchain.

This article is an edited version of a post that originally appeared on the CMF's Trends Blog.

Wednesday, June 6, 2018

OTT is not just Streamed TV

While both over-the-top (OTT) platforms -- the likes of Netflix, Amazon, and Hulu -- and traditional television offer similar content their respective business models are radically different. Whether you're coming at it from a viewer's perspective or a producer's perspective the way these seemingly similar yet actually very different systems operate is significant.

“My main thing is that we’re in the consumer satisfaction business,”said Netflix’s Chief Content Officer Ted Sarandos in an interview with Variety last year. And this wasn’t just a glib mission statement from the C-suite. Rather, it was an encapsulation of the quantum leap the industry formerly known as television is making, from a world of a broadcast-based, advertising-supported business models to the more direct to consumer routes made possible by subscription-based OTT platforms offering on demand streams of movies and TV shows old, new, and custom-produced for the service.

OTT vs. TV at a glance

·       OTT platforms have real time individual-level audience data, so unlike broadcasters that work with weekly or monthly averages, they use and deploy big data analytics for everything from recommendations to program creation.

·       With more data, OTT platforms can take more risks.

·       OTT platforms live on recurring revenue from subscribing customers, not advertising deals.

·       The OTT customer is not a passive couch potato, but an active consumer who may go elsewhere if they’re not getting what they want.

At the 2018 Prime Time conference, a get together of creators, producers, broadcasters, and platforms held annually in Ottawa, one of the most vigorously discussed topics, in both panels and hallways, was adapting content creation strategies for the burgeoning OTT marketplace. Few things have shaken up the television and film landscape like Netflix et al have, with their global reach, their advertising-free formats, their existence outside of the cable bundle, and their array of on-demand programming have become nothing short of obsessions for viewers around the world. Prior to their existence 'bingeing' was something we did with a family-sized bag of Doritos or a pint of Haagen Dazs. Arguably, it still is, but now we combine high salt and/or high fat bingeing with hour after hour of series about drug lords, cult leaders, politicians, and royalty.

OTT is direct to consumer channel, TV is not

At Prime Time a variety of points of view were offered to help frame the key differences between the mediums, one of which was that conventional television is a B2B business, as opposed to OTT, which is a B2C business.

Admittedly that’s a lot of acronyms in one place so let’s break them down.

B2B, or business-to-business, is a way of doing business in which products and services are sold to other companies, vs. end users. Think, for example of ad agencies, a classic B2B scenario.

Marketers wanting to sell their product, say, a new breakfast cereal, turn to agencies to help them craft the creative campaign and also to buy the media space such as television, print, or radio where the ads will run, and through which consumers become aware of the new offering. Trusted relationships form the basis of most B2B transactions, sales cycles tend to be long, and cost mark ups happen at various links in the supply chain. Traditional broadcast TV and film have B2B written all over them. Producers sell to broadcasters and/or distributors, sometimes with agents, managers, and lawyers involved, each of whom receive a percentage or flat fee for their involvement.

Now contrast the B2B model with B2C, or business-to-consumer pipelines, which are a hallmark of business done on the internet. Many intermediaries are cut out of the supply chain, and the manufacturer can also be the merchant. Think of eCommerce sites or Amazon vs. physical retail, or, in the world of music think of Spotify and Apple Music vs. radio. Or, to return to the focus of this article, think of Netflix, Amazon Video, and Hulu vs. terrestrial broadcasters and cable companies. And yes, the platforms themselves are intermediaries, and yes ‘pure’ B2C in film and TV would look more like a purchase from the iTunes store, but there is some room for elasticity with these definitions.

The point of distinction to note is that transmission of programming by way of OTT platforms provides a direct channel of communication between the platform and the viewer. Not only that, but granular consumption data is available with OTT -- e.g. every stop, start, and pause – compared to the broad brush strokes of largely undifferentiated audiences that Nielsen ratings have historically provided.

And that's why OTT companies can take more risks

How does this more direct to consumer channel affect producers? During the Prime Time panel New Forms of Content, which explored both new form factors for content and new channels for its distribution, Cream Productions President Kate Harrison pointed out that “ [OTT streamers], not being advertising-based like broadcasters, can take more risks." Not needing to be concerned with content being 'advertiser-friendly' is certainly a big point of distinction between OTT and TV, but there's even more going on at the level of the new architectures of the industry. In his article Why did Amazon build a studio rather than buy one? Jeffrey Cole of USC Annenberg's Center for the Digital Future takes a closer look at the changes in the entertainment industry as tech companies start putting their tent pegs in the market. To answer the question posed in the article's title --  Why did Amazon build a studio rather than buy one? -- Cole offers the following insights, which demonstrate how the emerging new rules of production and distribution freed up both Amazon and a new generation of creators.

  • "Amazon understood that they could create a new playbook for entertainment as they did in retail and for the book business The company recognized that there was a tremendous pool of creative and business talent that would flock to the large budgets, creative freedom and new rules as one of the world’s biggest companies moved into entertainment. Quickly, they saw they could rent whatever studio space they needed (why own it?) with their content partners."
  • "Streaming meant no network sales force to sell advertising and no worldwide distribution team to book content into theaters. Netflix already showed how easy it was to compete with major networks and studios. OTT meant no local stations or movie theaters to deal with...Funding was one thing Amazon had plenty of, and large Hollywood budgets were small in Amazonian terms...All this talent was attracted to the new rules of entertainment: Amazon didn’t have to cater to advertisers and therefore could be freer than almost all television. This gave them the freedom to appeal to underserved parts of the television audience such as the very young and those over 50."

Click here for the full article by USC's Jeffrey Cole.

OTT as an eCommerce business

OTT also has impacts outside of the creative production side of the business, and these came to the fore in the panel Four Vantage Points On The Future. Jay Gardner, Shaw’s VP of Product Development, noted that OTT has turned many in the content business into distributors as well. “And it’s a hard business. You have to worry about rights, tech support, back office billing, and customer service.” John Penney, EVP of Business Development and Partnerships at 20thCentury Fox put an even finer point on things. “The business model of OTT is just not comparable to broadcast”, he said. “OTT is an eCommerce business that uses content to bring in recurring revenue.”

As with eCommerce businesses, the focus with OTT is on digital platforms that are customer-centric, vs. the broadcaster-centric, schedule-driven world of broadcast TV. The couch potato of the broadcast world, whose time on the sofa could be engineered with lead-in programming and programming bundles such as ‘Must See TV’ and the Thursday night lineup, has given way to an empowered viewer with the freedom to watch shows on demand, on a schedule determined only by them, and on the device(s) of their choosing.

The once almighty broadcast network no longer loads the schedule on behalf of the viewer. Furthermore, the data-rich nature of OTT platforms ensures that success or failure are swiftly determined by the people who actually consume the programming, as opposed to network executives' best guesses.

For more on the industry changes in play with the shift from TV to OTT see Chapter 3 “New Channels and New Platforms“, in the White Paper I recently wrote called Adjust Your Thinking.

Thursday, May 10, 2018

The Long Tail in 2018: Niches Meet Streaming and Social Media

You may have heard the business principle which states that 80% of the sales come from 20% of the clients.

Economists refer to it as the Pareto Principle, or Power Law, but for most of us it’s the phenomenon that underlies the long tail theory popularized in 2004 by Chris Anderson in an influential article in Wired Magazine and developed into a full-length book two years later. Anderson looked at some of the most innovative companies of the time, such as Amazon and Apple, and observed how—despite the long talked about 80/20 rule—businesses were being built by selling fewer units of a larger selection of inventory. This flew in the face of the industry’s conventional economics, which emphasized mass markets and scale as the only way to develop and maintain a sustainable operation.

The 21st century Internet-enabled market, contended Anderson, was a 'market of multitudes', where items that didn’t sell in large volumes did not have to slough off and disintegrate, but instead could find a new life further down the 'tail' of smaller, more specialized markets. Writers, producers, musicians, and artists working outside of the mainstream mega-hit business saw long-tail economics as a beacon of hope for content that didn’t necessarily appeal to the masses.

When Anderson popularized the theory, its underpinning was the Internet’s new unlimited shelf space. A dozen years later, with the advent of streaming and social platforms, the long tail is further defined by the move to media on demand, recommendation engines as well as online comments, likes and shares. In this new environment, one’s market for a niche offering can live anywhere in the world.

The topic of how the creative community can use the long tail to its advantage was put to a panel of producers at Canadian Screen Week recently held in Toronto. The streaming and social-fuelled long tail brings with it challenges, but also new opportunities.

Finding a broadcaster, securing financing, and making a project is a sequence familiar to producers, and one that has worked for many years. Now, however, the network and the producer may not have the same goals. While the network is going to be interested in either advertising or subscriptions, depending on its business model, the producer is interested in views and quality of engagement.

High quality if not fanatical engagement is nothing new to Sam Dunn, co-founder of Banger Films, the Toronto-based studio that zeroed in on the genre of heavy metal music documentaries over a dozen years ago. Dunn describes this niche as “so big, but nobody knows it exists.” To this end, Banger’s early productions took a deep and international perspective on the eardrum-pounding subculture with films such as Metal: A Headbanger’s Journey and Global Metal and followed that up with artist-specific projects on Iron Maiden, Rush, and Alice Cooper.

At the nerve centre of anything Banger Films does is a community of hardcore fans, who live and breathe the genre and are generally underserved by mainstream outlets. This is the thinking behind some of Banger Films’ recent branching out to other genres such as hip hop, with their acclaimed Netflix series Hip-Hop Evolution, and the world of gaming enthusiasts on YouTube with Gaming Show (In My Parents’ Garage).

In spite of the studio’s global success with niche programming, Dunn confesses that “I wish our tail was longer, but we were slow to embrace digital and social. We sold a lot of DVDs on our first few films so, for us, it’s been a game of catch up.” Moving away from a cash cow that’s working isn’t an easy shift for producers", and Dunn explained how the studio’s digital strategy is now very conscious about leveraging the long tail.

“We have Banger TV, a metal-specific YouTube channel, and we ask the audience what they want to see daily. And metal heads are very opinionated… The whole thing has been a challenge as the major music networks like Much, MTV, and VH1 became not about music. So we had to get to know new people, like Netflix, HBO, and Amazon. You’ve got to be friends with everyone, because it’s a fragmented market.”

Content targeted at niches changes various aspects of the audiovisual business, from production to distribution to marketing. Mark Bishop of Marble Media, the company behind the tween-oriented medieval-themed game show Splatalot, sees a host of advantages made possible by digital and social platforms. “We’re in over 120 countries with Splatalot and, when we’re selling to other territories, we post full episodes online, which we can do because we hold the rights. We can then see where the audience is, understand it through data, monetize online, and then take those numbers to a broadcaster.”

Other ways today’s long tail differs from yesterday’s is where the value is generated and the role played by the crowd in marketing campaigns. David Miller of entertainment marketing firm Agency71 noted: “Your theatrical release is your marketing campaign for what you do on digital and social.” In other words, cinema screenings are now seen as something that builds credibility and in turn serves marketing and promotional purposes for everything that follows, as opposed to the final destination it once was. Miller continued: “And now you need to think about things like what the thumbnail for this film will look like once it’s on iTunes.”

Speaking to a situation Mongrel Media encountered recently with one of their releases, Jessica LaGrassa revealed how the audience knew best.“We thought it was a horror film, and we marketed it that way. Then the community told us no, it wasn’t, so we had to pivot. We changed the artwork on the poster and positioned it as a thriller. We can make these changes within hours and getting it right means being able to generate digital revenue.”

But digital and social aren’t magic, nor are they free, contrary to what some may think. “You have to invest in people time,” Marble Media’s Bishop reminded the group. “Constant community engagement is an investment. Plus, you have to spend dollars to target and promote on social and digital platforms. But, if you do it right, when the time comes for your next film, the community is there.”

This post originally appeared on the CMF's Trends Blog.

Sunday, April 29, 2018

When TV and film go global. And digital. And then everything changes.

The TV and film industries: Little change for decades then a deluge of change. Which brings us to this update on some pieces I put together recently on how writers and producers are dealing with turbulence being the new industry norm.

Why such choppy waters? Because, as discussed here, in the TV industry very little changed for several decades.

But now everyone in the audiovisual industry knows major change is afoot—from falling licence fees to competition from OTT providers like Netflix, Hulu, and Amazon, to the growing role of data and analytics to personalized recommendations pushing programming to viewers. And that isn’t even a comprehensive list, but what is indisputable is that the monopoly on attention long held by broadcasters and networks is being challenged, and the challenge is coming from many different directions. For the full article on some of the ways broadcasters and producers are navigating their way through the digital and streaming transformation click here.

One of the biggest challenges for traditional broadcasters is the massive amount of investment going into content licensing and production on the part of the streaming only services. The biggest investor by far is Netflix, which is said to be spending $8 billion on content acquisition in 2018, a number that includes the underwriting of about 700 original shows globally.

Here in Canada the big topic is the $500 million over 5 years the company has pledged to production north of the 49th parallel. Some Canadian productions on Netflix have become among the most popular on the service worldwide. Yes I'm looking at you Anne with an E.

And of course producers want to know how to make the approach to the platform that has over 120 million subscribers and is seen in close to 200 countries. See the article on pitching to Netflix here.

And what about TV, once thought of as the small screen in our living room, in contrast to the big screen at cinemas. It isn't going away, of course, but it too is going global in its scope. There's a whole TV-as-a-franchise world out there, in the form of things like those bake-off, celebrity dancing, chef tantrum-throwing, and millionaire-making quiz shows. 

Create once, sell many times. So goes the saying from the playbooks of entrepreneurs everywhere, and now the saying is in bold face type for TV creators.

They're called 'TV formats', and whether they involve singing, selling, cooking, shopping, renovating or any number of potentially competitive activities, they have galvanized an industry once centred around drama, comedy, and news and information programming.

What began as a small slice of the TV landscape has, since the early 2000s, has become a multibillion dollar annual market, with a reach that extends to hundreds of countries worldwide. The full article on the higher risk but high reward world of TV format creation and production can be seen here.

Friday, March 2, 2018

YouTubing: Not What It Used To Be

A quick follow up on the post from earlier this week on earnings in the creative economy in these days of a new breed of celebrities who ply their craft online and build their following from the ground up. We tend to hear a lot about social media influencers making thousands per tweet, stars of Instagram with major brand deals, and of course professional YouTubers pulling in the big dollar, often without leaving their room.

As is the case in most marketplaces, especially those with low barriers to entry such as digital entertainment, a few make a lot and most don't earn much. Increasingly the way to make it on YouTube, which is the focus of this post, is for creators to use their online fame as a jumping off point, for activities such as books, personal appearances, merchandise, sponsorships, and product endorsement.

Because the revenue coming in solely from advertising running against the videos,  even for those with millions of views per month, is simply not enough. The CPMs (the amount that advertisers pay to reach 1000 viewers) for online ads have been declining on YouTube for most creators, a combination of a huge amount of inventory on the supply side (i.e. the 400+ hours of video being posted every minute to the site), as well as companies' concerns about brand-safe content moving many advertisers to premium YouTube inventory that tends to be produced by well-known creators and is generally considered family-friendly.

For the average YouTuber the squeeze is being felt on both sides, then: Competition from all the new creators wanting to get in on the action, and a flight to safety by the brands and companies with the biggest digital advertising budgets, such as P&G.

A study conducted recently by Professor Mathias Bartl of Germany's Offenburg University illustrates just how challenging it has become to make a living on YouTube alone. Bartl's analysis showed that even if you're in the top 3% of creators on the platform, and that means the bottom end of the tier averages about 1.4 million views per month, your net income from advertising (after YouTube takes its 45% cut) would be just under $17,000. (And at the highest end, where the likes of Smosh, Lilly Singh, and a bunch of game commentators whose names you don't know if you're over the age of 22, yearly incomes can run from $10 - $20 million, with ad revenue often being just one component.)

Click to enlarge
Not only that, but as you can see in the chart above the percentage of videos getting the lion's share of the views on YouTube has gone from about 40% in the early days of the site to about 3% more recently. And finally, for some additional context, there are roughly 16,000 channels on YouTube that receive in the neighbourhood of 1.5 million views or more per month, and that's out of a pool of millions of channels. Being in the top 3% is seriously hard work. Where you really need to be in order to make a living on YouTube is in the realm of the 2000 or so channels with 1 million subscribers. That seems to be the new level of success required for 'big enough'.

Related Posts:

Online Creators and Cash: Some Numbers From The Creative Economy
The Industry of YouTube: A 2017 Snapshot

Sunday, February 25, 2018

Online Creators and Cash: Some numbers from the Creative Economy

It’s a time of unprecedented choice. For everything from types of yogurt to entertainment. And as far as the latter goes this wasn’t always the case. In fact, the inverse was. There were only so many channels on TV, so many theaters in a city, so many slots on a radio station playlist. In other words, limitations were the defining characteristic of the marketplace.

Now nobody is keeping your writing, your music, your videos, your podcasts, or your handcrafted designs out of the purview of a global audience. The problem used to be getting a green light so you could get your work on the air, in a store, or otherwise in front of people. That's now the easy part, with the hard part being getting anyone to know or care that your work is available on Etsy, Soundcloud, Vimeo, YouTube, Patreon, and the like.

So what does this climate of ease of upload and/or availability of content or goods mean for creators? It's now been a decade or more since most of the ‘super platforms’ for content and commerce came onto the scene. In the early days people spoke of a radical inclusivity and democratization of creative processes and markets made possible by digital connectivity and networks. More recently there has been work done on what's being termed the 'degradation' of cultural creators and their creations, suggesting that despite the availability of inexpensive tools and low cost or free platforms, the inequalities and hierarchies of the corporate world are being reproduced online.

It is against this background that a study described as "the first rigorous quantitative analysis of America's new creative economy" has been conducted, estimating the income earned by creators across activities such as blogging, photography, music, self-published books, and handmade objects, with a focus on independent vs. celebrities generating revenue online, e.g. people with last names like Jenner or Kardashian.

Where the income earned by creators comes from:
  • Revenue share of advertising
  • Subscriptions
  • Affiliate marketing (commissions for referrals)
  • Sales of products made by the creators (e.g. on Amazon, Etsy, eBay)

Also note the following regarding the study: Income from activities such as influencer marketing, in which the ‘star’ from YouTube, Instagram, etc. paid to promote other products and/or services, are not included and revenue numbers for sellers on eBay are for self-made/handmade items only.

The top line numbers are as follows:


I ran the numbers to come up with averages, as opposed to aggregate figures. Even though averages can be misleading, because just one outlying high earner can disproportionately skew the average higher. Think of being in a room full of people and calculating the average salary of people in that room. Then think of that room if a few CEOs, let alone Warren Buffett, is standing in it.  So yes, averages aren't ideal, because they don't tell us how many people are making, e.g. more than a living wage, but I’m working with what I have, and here are those averages, and note that they’re for full year 2016.

Click to enlarge

Based on this cursory analysis it looks like you shouldn't expect to make much money anywhere except possibly on Twitch these days. And for those who may not be aware Twitch is a live streaming platform, acquired by Amazon in late 2015 for close to $1 billion dollars, which is dominated by live game play and commentary, but also has some oddities like streams of a guy Ubering drunk college kids around

Not included in the study was Patreon, a donate-what-you-want subscription service for creators across a wide range of products and services. While there are a lot of people making a little money on Patreon, and a little is better than nothing, it turns out only about 2% of active creators on the platform are making what could be considered any sort of a living. On the other hand Patreon paid out more than $150 million to creators last year, dollars that otherwise would have been more difficult for individual makers to access.

So whether or not any of the reported numbers are good news or bad news isn't really the question. It is the new reality for creators, for whom new options exist outside of the old system of limited channels, genres, and form factors.

To access the full report, entitled "Unlocking the Gate: America's New Creative Economy", click here.

Related Post: