Influencers and creators dominate social media as the creator economy booms
Social media platforms have undergone a significant transformation, shifting from a space for personal connections to a global distribution platform for creators and influencers. The creator economy, fueled by the demand for entertaining content, has turned social media into a lucrative industry. As the sector continues to grow, it is projected to reach a value of $480 billion by 2027, nearly double its current valuation of $250 billion, according to a report by Goldman Sachs. However, this shift has not come without consequences, as algorithms and engagement-driven strategies implemented by tech giants have changed the nature of social media, leaving little room for regular users.
The Changing Landscape of Social Media:
The evolving creator economy has reshaped social media platforms, with creators becoming increasingly dependent on the algorithms of Big Tech. As these algorithms prioritize engagement, the user experience can sometimes suffer. Sasha Kaletsky, cofounder and managing partner at Creator Ventures, highlights that social media services have become more focused on content distribution rather than fostering connections between friends and creators. This shift has led to a decline in public posts from regular users, resulting in feeds dominated by professionally entertaining content.
The Dominance of Incumbent Tech Giants:
While some upstart social media companies have attempted to revert to the friend-oriented version of social media, they have failed to gain traction. Poparazzi, BeReal, and Dispo are examples of platforms that aimed to recreate the original social media experience but ultimately shut down or struggled to compete with tech giants like Meta, TikTok, Alphabet, Snap, and Twitter. TikTok and YouTube Shorts, Alphabet’s TikTok copycat, are currently leading the engagement-heavy version of social media. These platforms offer creators access to large audiences and provide brands with reassurance that their ads won’t appear alongside controversial or offensive content, a concern that platforms like X have faced.
The Appeal of TikTok and YouTube Shorts:
TikTok and YouTube Shorts boast significant logged-in monthly user bases, making them attractive to content creators and advertisers. YouTube Shorts, with 2 billion monthly users, and TikTok, with approximately 150 million monthly active users in the U.S., offer creators the opportunity to monetize their content through brand partnerships. These platforms also prioritize brand safety, ensuring that ads and sponsored content are not associated with inappropriate material. This focus on audience size and brand safety has contributed to the success of TikTok and YouTube Shorts in the creator economy.
The Role of AI in the Creator Economy:
As creators adapt to the changing strategies of social media platforms, they must also navigate the rise of artificial intelligence (AI). Caspar Lee, cofounder at Creator Ventures and an influencer, believes that AI will play a pivotal role in assisting creators rather than replacing them entirely. AI can provide creators with new tools to produce more content efficiently. Startups like ElevenLabs, which utilizes AI to replicate human voices, have already gained traction in the industry. Creators can leverage AI-generated voices for supporting roles in their videos, expanding their creative possibilities. However, the use of AI-generated voices may require platforms and creators to disclose when AI is being employed to maintain transparency with viewers.
The Authenticity Factor:
While AI has permeated various aspects of the creator economy, including the emergence of AI-generated influencers, industry experts argue that AI will not replace actual influencers. The appeal of social media creators lies in their authenticity, and AI-generated characters lack this crucial element. Sasha Kaletsky emphasizes that people follow social media creators because of their authenticity, making it unlikely that AI-generated characters will become a dominant force in the industry. However, the development of AI-generated characters presents an intriguing investment opportunity for technology investors in the creator economy.
Conclusion:
The rise of the creator economy has transformed social media platforms into global content distribution platforms. Creators and influencers now dominate these platforms, leaving less space for regular users. TikTok and YouTube Shorts have emerged as leaders in the engagement-driven version of social media, offering creators access to large audiences and brand partnerships. While AI plays a significant role in assisting creators, it is unlikely to replace them entirely due to the value placed on authenticity by social media users. As the creator economy continues to grow, it will be essential for platforms and creators to strike a balance between leveraging AI tools and maintaining the genuine connection that draws audiences to social media content.
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