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6 Tier Content Frame: The only way to monetize
Welcome to this week's version of Contrarian Thinking. If you've ever wondered how some of the biggest names in the biz do it...we've got ya covered. You know the term 'Content is King' well, in today's age, attention is the new currency. So we're chatting how the biggest creators monetize their content, and 6 ways you can work the content flywheel.
Today in 10 minutes or less, you’ll learn:
- Sturgeon’s Law - The truth about creation
- Bet you’d never guess who coined the term “Content is King”
- Influencers suck at monetizing
- 6 Levels of Monetization - The pro way to make internet money
- “Great content is the best sales tool in the world.” - Marcus Sheridan
MENTAL MODEL
Mental Models to Blow Your 🤯
Sturgeon’s Law
Theodore Sturgeon is called the father of science fiction and came up with a principle I use to hone all of my ideas. It’s called Sturgeon’s Law: “90% of everything is crap.”
Sturgeon’s idea is essentially this: Make a lot of things, beat and whittle them down, because most of it won’t matter BUT some of it will.
So, using Sturgeon’s law, I came up with this realization that most people just do not monetize content well. They do too many things, forgetting the most important. They sell their soul before they even know its real price. Here’s what I found… diamonds in the rough of this new type of currency we call content.
THE MAIN EVENT
Content is King
You’ve heard it before and scrolled directly over the cliché. Yet I bet you didn’t know who came up with that saying. Billy MFing Gates wrote this essay in 1999 about content reigning supreme and dubbed it king. He said:
“Content is where I expect much of the real money will be made on the Internet...”
While some things he said in the essay have not stood the test of time such as, “the Internet is the multimedia equivalent of the photocopier”, **much has proved to be incredibly prescient. Photocopiers are dead, but content is still alive and kicking. The reason comes down to understanding that humans pay the most for things that they can get the least. That’s why in the middle ages only Kings could afford to wear purple due to its rarity. What is the purple equivalent today? What is the rarest commodity at this moment?
Your attention.
If we can take up more of it, we can profit more than anyone in the world. That is the truth of the 24/7 news cycle, the bottomless scroll of TikTok, the constant vitriol of Twitter and the proliferation of companies becoming media companies.
Here’s the fascinating part. Most content creators do not know how to take the massive amount of attention and eyeballs they are generating and turn it into dollars. They sell their souls for the cost of a skinny tea affiliate fee. (Cringe.)
I think it’s safe to say that a tea does not make abs. The gym does. But this is where most creators start. They get attention, panic at needing money for that attention, and start pimping out skinny teas, gummy vitamins, crappy white labeled merch, and my favorite… VPNs.
If I ever let an article get sponsored by a VPN or an NFT company, you can throw gummy bears at me publicly.
Why Do So Many Monetize Their Content Poorly?
Because they’re dumb. When it comes to making money, at least. The original influencer was not a business professional. I saw this firsthand. I had an influencer fashion company years ago and believe me, not being business oriented is me being kind. But that has changed completely. Why?
- Privacy laws limiting narrow targeting of users
- Cost and competitiveness of advertising increasing
- Consumers’ loss of trust in advertising
Enter the importance of your localized content. Now your local influencer is not just this:
But this… a new friend of mine who talks about his laundromats, vending business, and coin collection in the multiple businesses he has.
Or myself who has businesses doing tens of millions in revenue, Alex Leiberman who sold for $160M+, Alex & Leila Hormozi who are worth $100M+, or Naval Ravikant who is close to a billionaire. Why would humans worth so much deign to create Tikky Tokky’s? I shall tell you how and why they’re using this new type of leverage.
Attention vs Intention
But first, how do you get paid the big bucks? Not all attention and views are created equal. Ryan at Perpetual wrote a newsletter on why Mr. Beast has fewer followers than PewDiePie and yet Pew makes $9M while Mr. Beast makes $100M+ a year. The difference? Attention vs Intention. From Ryan:
Attention is cheap. It’s easy to grab. Even easier to fake. The impact: revenue doesn’t scale.
Intention is hard to gain. It takes consistency and purpose. It takes connection with your audience. The impact: revenue has a higher ceiling than you can imagine.”
What is the difference in attention vs intention in one visual? Who do you think is worth more? Who has a more engaged audience from an INTENTION standpoint? Naval Ravikant or Devin Brugman? Naval is worth arguably close to $1 billion while Devin is worth about $1-5M. The difference is who they sell to and the games they choose to play. Level 10 games, level 10 outcomes.
HOW THE SMARTEST CREATORS MONETIZE
6 Tiers of Content Monetization:
Level 1: AdSense and platform passive ads
The easiest way to monetize is to get on TikTok, YouTube, IG, start creating content, and then get paid by the platforms a percentage of your ad revenue split. This is also the worst way to monetize as you make an incredibly small percentage for the value you are driving to the platform by creating content for their users. It is HIGH Easy, LOW ROI.
You do not need:
- Business knowledge
- Fans to pay
- Ability to sell
- Ability to create product
- Infrastructure
- A team to scale
Why is it Level 1?
- You’ll probably never make millions, but you can make tens or hundreds of thousands
- The multiple you sell for will be from 0 to 3X. Most creators accounts are worth little to nothing
- Case in point: Little Baby Bum sold for about $7M
Level 2: Sponsors and custom ads
The second way to monetize is to get brands to pay you for creating content for them or being sponsored by them. This is also largely a terrible way to monetize as you make an incredibly small percentage for the value you are driving to the platform by creating content for their products. You have no residual sales, you don’t get paid when you sleep, you will burn your audience. It is HIGH-ish Easy, LOW ROI.
You do not need:
- Fans to pay
- Ability to create product
- Infrastructure
- A team to scale
Why is it Level 2?
- You can make millions, though you’ll never get the full value you deliver. Eventually, you will become irrelevant or off-trend, and brands will no longer pay you for your time
- Multiple is 2-3X your PROFIT. Most creators’ accounts are worth little to nothing.
Level 3: Information products
You create your own information products, such as courses, masterminds, e-books, playbooks, etc. We do this with courses like (LINK) our ‘How to build a media business course’, ‘How to buy a business’ course, etc. Entire industries have popped up to support this level with companies such as Thinkific or Udemy paying creators to build products on their platforms. This is a higher-level game. You build once, sell many times, have re-occurring revenue, and can get paid while you sleep. It is Moderate work, Moderate ROI.
Why is it level 3?
- You can make tens of millions, but there are a few problems. Information products degrade. Very few courses or communities last for decades or are sellable without your face attached. They are easily copied and duplicated unless you are constantly building a moat and, at some point, you have to be careful you don’t become the dreaded “guru.”
- Multiples are 2-4X Revenues
Level 4: Proprietary IRL products
This is where the celebrities start to come in. There is a reason every celebrity you can shake a Hollywood star at owns a tequila or alcohol business. The Rock, Kendall Jenner, George Clooney, Kate Hudson, and Ryan Reynolds all vie for alcohol. It’s probably because they trade at 7.85X equity to revenue multiples. But the key isn’t just in alcohol, it’s having a product you can sell that transcends a creator. It requires an idea, team, capital, execution, scale, and an ability to sell, but you can even make a billion with it as George Clooney knows. Yet it’s not the easiest way.
Why is it level 4?
- You can make hundreds of millions of dollars by creating this type of ancillary brand and product set, but the multiples will still not hit the highest levels
- Multiples are 4-7X Revenue, 4X = (consumer packaged goods and beauty products) to 7X = (alcohol)
Level 5: SaaS, or tech products
This is where the VCs and Silicon Valley start to come in. Creators who can build either software or hardware products are getting to the top of the food chain. No doubt about it. Why do you think HubSpot bought The Hustle? Because they knew their audience would decrease their acquisition cost sizably. In the future, some of the biggest tech companies will partner with or be started by creators. It’s an incredibly sophisticated game that requires massive capital, intellectual capital, talent, and expertise, but it’s highly lucrative.
Why is it level 5?
- You can make hundreds of millions of dollars by creating this type of ancillary brand and product set but the multiples will still not hit the highest levels.
- Multiples are Software = 17X, Hardware = 15X
Level 6: Licensing, royalties, investments (VC/PE)
Finally, the peak. My prediction is the next wave of top-tier creators will all play here. It’s why Kim Kardashian launched a PE fund. It’s why Andreessen Horowitz launched a media company. It is why a bunch of creators are doing solo GP funds, and why Reese Witherspoon does options on royalty deals for her book club. Creators may be all smiles and selfies, but the ones who play in this game are sharks. There is no higher ROI on your money than creating investment portfolios, royalties, licensing deals, and options. You know the only people better at making money than VC companies? PE companies like Blackstone who bought Reese’s company.
Why is it level 6?
- It is normalized to make hundreds of millions in this space. If you don’t understand proper deal structuring I’d suggest you join Contrarian Cashflow, (LINK) because this is where the real money will be made
- Multiples are Publishing = 20-30X, Finance 10-18X
Create, but Play the Right Games
You have to think about what your ROI is for your time, your ROI for your audience’s attention, and your ROI for your work.
Most people monetize too early, using the lowest returning options.
You will not be most people.
Let’s go straight to the big leagues,
Codie and the Contrarians
Written by Codie Sanchez, edited by the Contrarian Team
📧PS: If you want to turn your business or idea into a content machine, we made something for you. Our '7 figure email list' course turns your IRL business into a content machine by turning audience you 'rent' into audience you 'own.' Check it out?
CONTRARIAN EXTRAS
The Not So Boring Section:
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Disclaimer – This is the “Be an adult” section. Everything mentioned above isn’t advice, just a recount of what I did. That said: This article is presented for informational purposes only. The opinions stated here are not intended to recommend any investment or provide tax advice. Neither are they an offer to sell or the solicitation of an offer to purchase an interest in any current or future investment vehicle managed or sponsored by Codie Ventures, LLC or its affiliates. All material presented in this newsletter is not to be regarded as investment advice, but for general informational purposes only. Day trading and investing do involve risk, so caution must always be utilized. We cannot guarantee profits or freedom from loss. You assume the entire cost and risk. You are solely responsible for making your own investment decisions. We recommend consulting with a registered investment advisor, broker-dealer, and/or financial advisor. If you choose to invest with or without seeking advice from such an advisor or entity, then any consequences resulting from your investments are your sole responsibility. By reading/sharing this newsletter or consuming our content on our other channels, you are indicating your consent and agreement to our disclaimer.
