Nothing in the middle
Some speculations on the hollowing out of incumbent business models.
Predictions about the future are seldom accurate, but often useful.
In the last few months, the “creator economy” has hit the mainstream. While creators have been around forever, creation, particularly digital, is undergoing a renaissance. If you haven’t been paying attention, here’s a recap:
Early on, platforms like Patreon (primarily for performers) and Kickstarter (primarily for makers) let creators connect directly with their audiences, eliminating the middleman and putting more of the money into creators’ pockets.
Then payment tools (Paypal, Stripe) and logistic providers (Fedex) and marketplaces (Etsy) and portfolios (Deviantart) and more made it possible to set up a virtual company overnight. I can stand up a T-shirt store on Spreadshirt and be in business tomorrow.
Knock-offs and copying have always been a challenge. Streaming and subscriptions fix some of that, and more recently, cryptography has given us Non-Fungible Tokens (NFTs)—uncopyable tokens that attest to the authenticity of a creative act. A crudely-drawn bitmap of a monkey in a hat just sold for over US$1.5M. (Ironically, the same people who bemoaned copyright protection and DRM are falling over one another to launch something.)
In today’s headlines, financial services provider Square is buying a majority stake in Jay-Z’s musical platform, Tidal, in a final undoing of a music industry that robbed artists of their livelihood by paying a pittance for streaming and charging for “breakage” long after we stopped using CDs.
If you’re a creator, things are looking up. You can build and sell directly to an audience, without intermediaries stealing most of your profit. And there are plenty of turnkey tools to help you, from marketplaces, to delivery companies, to billing platforms, so you don’t need to be a technologist.
Even retail services platform Shopify is positioning itself as the anti-Amazon, because its target customer is a seller who thinks their product is unique and special. After all, you only want a branded storefront if you think your product is worth branding. Otherwise, you’d sell your product on Amazon and let it compete on cost and ratings.
This is happening everywhere, quickly. For example, it’s not clear whether conference panels can survive pop-up discussions on Clubhouse, where experts opine spontaneously to an audience of hundreds. And pop-up kitchens, boosted by COVID, are giving established restaurants a run for their money at only a fraction of the cost and risk.
At the same time, there’s huge consolidation around the basics of life. Amazon is becoming a global Company Store. It’s partnering with community colleges to offer the Amazon Small Business Academy. Now, when you go to college, you can study nursing, policing, accounting or … Amazon. The debate around Universal Basic Income is about giving everyone what they need—food, shelter, and so on. So there’s a clear split between needs and wants. In some countries, this is called Welfare, or the Social Safety Net.
Put another way: A Picasso sells for a lot, precisely because there are only a few of them. But nobody makes fake Amazon Basics.
What we want, and what we need
It’s hard to know where this is going. But it’s easy enough to imagine a future where:
The things we need—the bottom of Maslow’s Hierarchy—are provided by heavily regulated oligopolies or governments. They win through efficiency, and there’s little branding involved: I don’t care which potato I get, or where my electricity comes from. They’re price-sensitive, and if a vendor tries to gouge me on price, I’ll switch. They’re the standard of living, and the wealth of the society is judged by what’s included (education, healthcare, and so on.)
The things we want—art, music, branded clothing—come from bespoke creators. They win because I care about them, follow them, and believe that others will think more of me by embracing them. Supreme slaps a white-and-red Futura Italic label on shoes and they triple in price. Wants are price-irrational, and often, I’ll want something more if it costs more. Stella Artois’ slogan, Reassuringly Expensive, is a great example.
Not so fast, creators
But those creators shouldn’t get comfortable. Even as it flourishes, the creator economy is being eclipsed. AI is producing works that surpass what many human creators can achieve. GPT-3, Generative Adversarial Networks (GANs), and other advances in machine learning can generate amazing things. OpenAI’s DALL-E creates images from written prompts (here’s “avocado chair.”)
Icons8 has a stock art library of 100,000 human faces that don’t exist.
How long until an algorithm puts clipart out of business? How many Fiverr accounts aren’t human?
The creator economy is simply not ready for AI. A single developer could make thousands of creators obsolete. At best, a human collaborates with an AI—whether they’re just using Photoshop’s neural filters, or writing prompts for GPT-3 to generate reams of text. At worst, the human is simply a brand ambassador for an algorithm.
How to make money in ten years’ time
Here’s a prediction (which, as mentioned, is probably wrong, but possibly useful): In ten years’ time, there will be three main ways to make money:
Be ruthlessly efficient at delivering what people need (Amazon; a government; a regulated monopoly or utility.)
Be a creator who makes what people want, ideally one who’s better at writing prompts or curating generated results from an algorithm (GPT-3, etc.) and acting as its brand ambassador (influencers.)
Be a platform for those creators, rent-taking on their work (Netflix, Stripe, Tidal, Fedex) and helping them create artificial scarcity that drives up price or prevent copying (NFTs, blockchain.)
These ideas are almost certainly wrong. But they’re definitely interesting. We’re hollowing out the middle of most legacy business models, and the economy a decade from now may look radically different from the one we know today.
Sidenote: a Fourth Way
There’s a fourth way. On the surface, we still look human. And laws give us agency—human rights, the vote, freedom of speech. But humans today are nearly unrecognizable from those of 40 years ago, because we have a digital twin. We spend as much of our waking lives online as we do in person, and the online version of ourselves doesn’t have rights. In fact, we have to pay for it to exist, whether with our time or our hard-earned money. So you can also:
Run a subscription service that allows people’s digital doppelgänger to exist (broadband access, virus updates, antispam, calendar management, etc.)
This is a really big notion, and I don’t want to get into it here, but the ability of cognitive technology to rent-take on our digital lives, and how we govern it for the good of everyone while preserving innovation, is something I want to spend a lot more time thinking about.
Assuming an algorithm can’t do that for me.