Angel Audiences

The following is an excerpt from a collaboration post I did with Nir Kabessa for Forefront. This excerpt stands on its own as a high level frame - the full post goes into much more detail on current experiments and details for how this could work in practice.

Angel audiences

Imagine you’re in a five-year-long fishing competition with one of the best fishermen alive. You start with nothing but a hook and a small wooden raft, while he already has a nice rowboat, a bucket of baitfish, a rod, and some cash. Buying new supplies requires cash, which can only be earned by selling fish. Catching more and bigger fish requires better supplies. Play this out five years and guess who has managed to get a huge motorboat and land the blue marlin?

This is the competition new creators enter every day on the internet.

Zero marginal cost of distribution means that a single creator can serve endless fans without incurring major operational costs that make them charge more for the service. I can get a tennis lesson from one of the best players on tour, attend a live concert from a grammy-winning artist, and learn how to filet a halibut from a Michelin starred chef — all online, for next to nothing.

If the main challenge with building the creator middle class is helping creators establish initial traction, which systems would we need to put in place to make that possible? What existing models from other areas can we use for inspiration?

In startup land, angel investors fund projects at their very initial and riskiest steps. Although some do it to great profit, the term “angel” comes from the idea that the capital they provide is a godsend to entrepreneurs who would otherwise be too early to get investment from banks or have more established means. They are often former entrepreneurs themselves, interested in part just for the fun of it.

Creators also need investment at very early moments before they find true content <> audience fit, but even just extending the analogy it’s clear that their angels will look different. If a startup’s angels are successful entrepreneurs, a creator’s angels would be other successful creators.

Another fairly obvious but critically important difference between creators is that most creators have neither the desire nor capability to establish LLCs, issue shares, or otherwise build some way for people to share in the potential upside of their growth. A key reason for that is that most creators — even successful ones — won’t ever be so big that it warrants the overhead of setting up traditional shareholder-type structures.

Tokenized subscription could create an angel audience of other creators, investing in something very early and very risky with the dream of a potential upside but also just for the fun of it. We see this already with so much of what’s happening with Web3. There are pure speculators but that alone would be nowhere near enough to spin the wheel as fast as it is turning. Many people are making statements with their wallets about their values and the future they want to see, and the chances of a return just sweeten the deal.

Funding the creator middle class

Right now in the creator space, the closest thing to this model is in the upfront advances that more and more big platforms are paying creators to join and produce content. Substack, Clubhouse, Snapchat, Facebook, YouTube, and others all pay cash advances to creators in the hopes that they then generate even more revenue for the platform. It works because those platforms have benefited disproportionately from creator content and have remarkably deep pockets as a result. They can spread the risk of failure across a huge number of creators and offer cash upfront that creators couldn’t dream of otherwise. Especially for less established creators, that upfront cash is the only way they can dive in and build traction.

Web3 is pushing from several angles to make creators less dependent on platforms, and expanding the way creators can generate upfront financing would be a key way to do that. By all accounts, it seems that the primary revenue model for the next wave of creators is freemium, and tokenized subscriptions fit neatly into that frame.

No doubt there are many unanswered questions. The technology to enable this new model still has a way to go and, for it to be useful for most creators, it will have to become a whole lot less “crypto-y.” Web3 is growing fast, but most creators and consumers just want to create and consume content without having to dive too far down the rabbit hole. Unless the crypto can be hidden behind the surface, it seems likely that more traditional non-token access models will need to live in parallel for creators to maximize their revenue.

The building blocks are all in place for angel audiences and tokenized subscriptions, and the potential implications are huge. It won’t be for everyone or every creator, but even if incentivizing early financing could increase creator innovation by 1%, the compounding dividends overtime for all of us would be astronomical; a bigger creator middle class, less dependent on huge platforms, and more connected to the audience that can help them grow.