An Introduction to the Passion Economy

An Introduction to the Passion Economy

High barriers to content production and distribution (think recording studios, television networks, newspaper presses, broadcasting companies) made the world boring. Upfront costs must be recouped and exceeded for content to be worth the investment, which incentivized optimizing for “hits.” Hits need to please the masses — they play to the common denominator, not the margins or the niches that make up the long tail. As a result, we have lived in a world of right-down-the-middle content, but the dynamics of the internet shift the power to the individuals who create content, not the institutions that distribute it.

Recently a new class of distribution channels and their accompanying business models (think YouTube, Substack, Patreon, Instagram, Teachable) have allowed individual creators to bypass the legacy institutions and capture more of the value for themselves. This means they are free to cater to a much smaller audience. If you can establish a direct relationship with your more narrow audience, you don’t have to produce a hit, you just need to please, as Kevin Kelly says, 1,000 true fans, or as Li Jin argues, 100. As the endless niches of human interest are filled by creators, we will find content that is more meaningful and our time spent consuming media will be more fulfilling.

The Passion Economy

Today, this trend manifests itself in the passion economy, which describes a class of passionate individuals exploiting the dynamics described above to provide value for a highly specific niche and the tools, marketplaces, and platforms that support them. And while the passion economy is nascent, it is by no means small. Ninja will draw a stadium’s worth of concurrent viewers on a good day (he averages over 38k), PewDiePie’s YouTube videos each get more views than Fox nightly news (last quarter Fox averaged 3.4m primetime viewers while PewDiePie’s videos averaged 6.3m), and an eight-year-old who makes toy review videos made $26 million last year. Aside from these standout successes, there are countless examples of creators that earn a sustainable living without becoming household names like this family who sails around the world and makes videos of their adventures or this group that teaches science through animated videos.

Most of the action in the passion economy today is very much exploratory. Creators are experimenting to find the right medium and content to reach their audience, and the supporting companies are searching for a business model that balances both freedom and value. There is also an “unlocking” of labor and creativity taking place. New platforms have birthed new media categories for creators to fill, as Twitch has done for video game streaming. Podia and Teachable give rise to otherwise nonexistent labor by offering a scalable outlet for creators to share their expertise.

Eventually, however, we see the passion economy emerging from its current perception as a fringe movement for artists and influencers to become a core element of the future of work. Keep in mind, in the past decade, gig work went from being a frowned-upon concept to employing over a third of the American workforce. With the right tools and business models, it will become commonplace for individuals to earn freedom and value by leveraging what they alone are best at to create more enriching content.

Influence, Authenticity & Proximity

In the pre-passion-economy world, an individual, no matter how talented, was behind the scenes of a media brand. The best journalist still sat at a NYT desk and earned a salary. By taking away the desk and the salary, a creator is more authentic, vulnerable, and free. The attraction to creators has always existed, it has just been obscured behind the high walls of production and distribution.

People crave authenticity—a quality that brands inherently limit but creators emanate. Because creators target specific niche interests that are closer to consumers’ identities, they also achieve a level of proximity to their audience that was previously impossible. In our view, this will make individual creators more influential than the institutions they used to serve. In other words, influence was previously granted to individuals who were close to those with capital and distribution. Now the two are decoupled, and influence must be earned directly by way of authenticity and proximity.

Something extraordinary happens when a creator finds their audience and vice versa. It feels like the way it always should have been. Creators are free to do what they are best at—maybe even something that only they can do; consumers find value in it and can transact with them more directly. By setting creators free to monetize their individuality, the endless barrage of content competing for our attention will give way to more meaningful, personalized consumption.

By setting creators free to monetize their individuality, the endless barrage of content competing for our attention will give way to more meaningful, personalized consumption.

Closing the Gap

If you’re new to the space, it may seem like this trend has already played out: Instagram, YouTube, TikTok, and others are all mainstream platforms dominated by individual creators. Influencers make loads of money all by themselves. The average person consumes plenty of podcasts and blogs. However, there is a massive imbalance between the time spent on individual creators and the dollars that flow to them versus traditional media.

As our media diets shift toward individuals, that imbalance will grow until the monetization catches up. We’re doing more work to quantify this gap because, eventually, time and money will reach equilibrium—they always do. We’ve seen the gap between attention and dollars close several times – cable television in the 60s, early adopters of the internet in the 00s, mobile web several years later, and gaming is underway today. As individuals close the gap with more effective monetization, we anticipate a significant opportunity for companies to support creators and remove the friction between them and their audience further unlocking the passion economy.

Disclaimer

Future of Work, Passion Economy