McCreath: Big Tech stocks power ahead
Facebook Inc. is betting big to get its piece of the creator economy. But even for a dominant technology platform, money alone doesn’t guarantee success.
On Wednesday, the company announced plans to pay more than US$1 billion to creators by the end of 2022 for making content on its platforms — from providing initial seed money to giving bonuses based on certain milestones. The initiative follows comparable creator funding initiatives from ByteDance Ltd.’s TikTok, Alphabet Inc.’s YouTube and Snap Inc. over the past year.
Facebook’s investment is a competitive move. It is intended to counteract TikTok’s soaring popularity with new influencers and the rapid growth of other startups that enable artists and writers to monetize email newsletters, podcasts and videos. And the social media company certainly doesn’t want to miss out on what could be the next big internet trend. According to SignalFire, more than 50 million people already define themselves as content creators, a figure that will most likely rise over the next few years.
Of course, Facebook does bring some big assets to the table. Its main platform has nearly 3 billion monthly active users, and it has vast financial resources to fund whatever engineering is required. But for all of its advantages, it is unknown whether the company can help creators develop loyal and paying audiences for the peripheral new offerings. Thus far, its initial creator economy efforts have been unimpressive.
Case in point, the shoddy release of Facebook’s Substack clone called Bulletin. Despite its launch fanfare last month, it seems as if the company does not fully understand what is making the current email newsletter subscription business work: high-quality, deep domain knowledge in specific information niches that readers are willing to pay for. Bizarrely, Facebook instead went the opposite route and recruited an array of mainstream-oriented celebrities. Worst of all, many of the writers didn’t put much effort in their initial posts, making a first impression that leaves much to be desired.
These types of mistakes wouldn’t happen at startups that live or die based on their main product. That’s why upstarts such as Substack, TikTok, Patreon and Clubhouse have clear advantages over Facebook in winning the creator economy. By being closer to the needs of their customers, startups develop features faster and execute better than big corporate bureaucracies. And once they attain a certain momentum and create a large enough community in their respective areas, it becomes harder for anyone else to catch up.
Product execution and obsessive focus are far more important than money or even a big technology platform. A billion dollars may still be cool, but it is not enough.