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A quick note from your friendly neighborhood newsletter writer

If you’re a longtime reader of this newsletter, then you’re likely aware that there’s been a general advertising slowdown that’s affected nearly every sector of the media industry. I haven’t escaped this downturn. For most of 2022, I sold out just about all my available sponsorship inventory, but since January or so most of that demand has dried up. I now sometimes go weeks at a time without a single sponsor.

I’m taking steps to hopefully ameliorate this problem — including working with a newsletter ad agency that can conduct cold outreach to potential brand partners — but in the meantime, my monthly income has taken a substantial hit.

Creating content for my newsletter and podcast is my full-time job, so naturally I’m quite worried about how this downturn will affect my career. If at any point you’ve considered converting to a paid subscription, now would be a great time to do so.

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Ok, back to our regularly-scheduled programming…

The Creator Economy "middle class" does exist

If you cover the media industry long enough, then you start to notice that certain narratives repeat themselves over and over again. One such narrative that I see pop up once every few months or so is this notion that the Creator Economy only rewards an infinitesimally small number of “winners,” leaving the rest of us fighting over meager scraps.

It usually starts with some sort of study that attempts to quantify the earning potential of creators, and then that’s followed by a rash of headlines touting a lack of a creator “middle class.” Reading these pieces, you’re left thinking that a tiny group of millionaires are capturing the vast majority of revenue and that your chances of establishing a career as a creator are pretty much nonexistent.

The catalyst for the latest round of pessimistic headlines is two new reports: one from Goldman Sachs, the other from Citi. While their methodologies for quantifying the Creator Economy differ in some respects, they both tell a similar story:

• There are somewhere between 50 million and 120 million creators producing content today

• Their content is generating between $60 billion and $250 billion annually

• Only 4% of creators are generating north of $100,000 per year. The average creator on YouTube only brings in $150 a year

Those last two stats, of course, served as a springboard for those who wanted to throw cold water on the Creator Economy. “Money from brands and other marketing may flow impressively and towards elite influencers,” wrote the Financial Times’s Leo Lewis. “But this thrilling economy of monetised, democratised content … has not created its own middle class.”

But is that really what the data shows? And is the framing of a “creator middle class” even the right one for understanding a career in this industry? I don’t think so. Here’s why:

Creators aren’t workers, they’re small business owners

Part of the reason I don’t like the “middle class” framing is it assumes that a creator’s career is similar to any other 9-to-5 job, whether it’s a legal assistant or dental hygienist. In those roles, it’s generally accepted that you start with an agreed-upon salary that’s guaranteed by your employer. 

But creators aren’t employees, they’re small businesses. When a person launches a podcast or a YouTube channel or a newsletter, they’re essentially launching a one-person startup. According to most available statistics, the startup failure rate is north of 90%, and even those in the remaining 10% often take years before they reach profitability.

Let’s say a new restaurant opens in your neighborhood. Would you reasonably expect it to turn a profit in its first month — or even its first year? Building a successful business — even a small one with just a handful of employees — takes a considerable amount of runway and overhead. And yet that’s rarely taken into account in these studies.

The barrier for entry is extremely low

Another flaw in these studies is how they determine who qualifies as a creator. If I launch a podcast and put out a few episodes, am I included in the group of 120 million who are struggling to generate a full-time living? I’m fairly certain I would be. 

But that’s absurd considering the low barrier to entry to the industry. Judging a creator business on the basis of only 10 episodes would be like assessing a restaurant’s profitability the 10th day after opening. When it comes to publishing content on the internet, the barrier to entry is pretty much non-existent, which is why there are millions of newsletters, podcasts, and YouTube channels that are abandoned within months of launching. Is it actually reasonable to include all those in a study meant to assess the feasibility of a creator business?

I think not. I’ve proposed this before, but I believe any such study should set minimum requirements for inclusion. If you’re a podcaster or YouTuber, for instance, you should have a minimum of 100 hours of video/audio published. If you’re a newsletter creator, then perhaps set the bar at 100 editions sent. Once you establish this higher bar, then you’ll likely find that a much higher percentage of creators are making a living from their work.

The top creators are essentially media companies

The final way that I think these studies and op-eds are misleading is their portrayal of successful creators as consisting of just a handful of millionaires who are hoarding all the money inside their gilded mansions. But if you’ve spent any time covering the Creator Economy, you’ll know that even moderately successful creators start employing other people once they reach a minimum revenue threshold.

On the low end, this might involve hiring a writing assistant or producer, but many of the largest creator-owned channels will have dozens — or sometimes even hundreds — of employees. Watch any studio tour of the top YouTubers, and you’ll see a bustling ecosystem of writers, editors, producers, and other helpers that handle every aspect of the business. 

These employees comprise the very “middle class” that skeptics claim doesn’t exist, and there’s evidence that this workforce is collectively huge. A study commissioned by YouTube back in 2021 estimates that 400,000 people in just the U.S. are working at least 40 hours a week producing content for the platform. If even half those are generating a living wage, then that means YouTube alone has generated more jobs than the entire local news industry. 

***

So what are my views on the actual feasibility of making it as a creator? Well, I think to answer that question, you have to provide some historical context.

Let’s say a 12-year-old in the year 1990 told you they wanted to grow up to be a professional artist — whether it’s a novelist, musician, painter, or filmmaker. Back then, you would have placed their chances at achieving this dream as extremely low, since it would have required a convergence of factors including talent, opportunity, geographic proximity, and good old-fashioned luck. The barriers to entry for these industries were extremely high.

But if a 12-year-old were to express the same dream today? I’d put their chances at achieving their goals much, much higher. That’s not to say it still wouldn’t be extremely difficult and require years of hard work, but I’m in agreement with Patreon CEO Jack Conte that there’s never been a time in human history when it’s been more feasible to build a career as an artist. The vast majority who try will still fail, but a larger number than ever will actually succeed. That fact alone should give aspiring creators hope.  

What do you think?

Am I delusional in thinking that a creator career is feasible? Did I underestimate the barriers to entry?

I actually want to read your thoughts. I’ll round up your answers in this Friday’s newsletter. Click this button to sound off in the comments:

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This college professor built an incredibly popular newsletter about web tools

There’s this common saying you hear in academia: those who can’t do, teach. But that axiom certainly doesn’t apply to Jeremy Caplan. Not only did he have over a decade of reporting experience before he started teaching entrepreneurial journalism at the City University of New York, but in 2020 he launched his own entrepreneurial media outlet: Wonder Tools.

Wonder Tools is a free weekly newsletter that highlights the most useful websites and apps to make your life and career easier. Since launching on Substack, it’s grown to over 23,000 subscribers and generated a million visits in the last year.

In my interview with Jeremy, we talked about his journalism career, why he went into teaching, and what compelled him to launch his own media outlet.

Watch our conversation in the video embedded below:

If video embeds don’t work in your inbox, go here.

Quick hits

When a newspaper makes it difficult for users to unsubscribe, it's not only bad for consumers, it's bad for other publishers, since their readers will be more hesitant to subscribe in the future. [Lenfest Institute]

There's some great advice here about how to get better at selling newsletter ads. [Newsletter operator]

This is a good profile of Penske Media, which has done an impressive job of acquiring and reviving legacy publishers. [LA Mag]

This YouTuber with 5 million subscribers basically invented his own genre of sports content. Pretty incredible. [Colin and Samir]

Some interesting stats here in regard to the amount of "direct" traffic to various media outlets and whether it's a leading indicator of a site's monetization potential. [A Media Operator]

ICYMI: Inside Morning Brew's video strategy

Morning Brew video host Dan Toomey talked about how he came up with the format, his daily routine for writing scripts, and Morning Brew’s strategy to grow beyond TikTok and launch new video series.

I’m pretty much off Twitter these days

Here are the other places where you can find my daily curation of media industry news:

1. Substack Notes

2. My private Facebook group

3. LinkedIn