“I’m not a businessman, I’m a Business…Man” — This is where Passion Economy starts!
If you’d never imagined you would see Jay-Z in the Daphni Chronicles, we have just done it. But we are not here to talk about the rapper, but about the meaning of this sentence which is a good introduction to today’s topic: The Passion Economy.
The goal of the Passion Economy is to allow everyone to sell their knowledge, skills or entertainment. Given this statement, one question comes to mind: Why haven’t we talked about the passion economy before? The reason is that many sectors that are part of the Passion Economy were under-monetized or under-utilized to their potential.
Let’s take the example of a podcast. Historically, a podcast has always been free to listen. The way a Podcaster generated revenue was through advertising, a model that was reserved to a few and not as rewarding for the creators. The Passion Economy is a solution to this problem: with technology and through digitalization it enables creators to generate new kinds of revenues. Its purpose is to reduce intermediaries between creators and their community by using technology to create new types of platforms and give creators their freedom back
The Passion Economy is both recent and old. The concept and designation Passion Economy began to spread at the end of 2019 in the tech ecosystem with Andreessen Horowitz’s article written by Li Jin which defined the Passion Economy as followed:
“The new digital platforms that enable people to earn a livelihood in a way that highlights their individuality. The Passion Economy is driven by the fact that creators, through their personality and differences, are able to bring a community together around a topic they are passionate about, a skill or a superior knowledge they possess.”
But if one looks a bit further into the past, one can observe that people have always wanted to earn a livelihood through their passions. Also, one of the main platforms in the Passion Economy, Patreon, was created seven years ago. Moreover, there has been an increase of small creators on social media (Instagram influencers) or also on platforms such as YouTube and Twitch in the past years. It has even become something children dream about, they don’t want to be a footballer or astronaut, they want to be Youtuber, influencer: content creators.
We had the chance to interview several actors of the Passion Economy about the way they see the future of this sector. Here are their insights and testimonials.
- Thomas Koch: Marketing Manager, France at Patreon
- Matthieu Stefani: Entrepreneur & Podcast creator (Génération Do It Yourself & La Martingale)
- Yoann Lopez: Newsletter writer (Snowball) & Ex-CMO at Comet
- A Youtuber/Coach that wants to remain anonymous, we will call him “Nick”
Before telling you about these testimonies, here are some data about the Passion Economy. Keep in mind that this sector is still very young (this term appeared in November 2019, at least that is what we found), and the market size has not been revealed yet. According to Disciple Media, the Passion Economy is worth today over $38 billion. This is mainly driven by 3 sub-sectors that compose this Economy: Life Coaching ($15b), Self-improvement ($12b) and Influencers ($8b).
An interposing fact about the Passion Economy is that it has many sub-sectors. To name a few: Podcasting, Newsletters or Tutoring are part of the Passion Economy and if one goes further and with a bit of imagination, one can easily include almost every sector in the Passion Economy.
But, does a creator know that he belongs to the Passion Economy?
Passion economy? These 2 words may seem familiar to some of you but they are not for some of this field’s players. And this is something that surprised us during our interview. Can you believe that they almost all didn’t know that they belong to the Passion Economy.
During our interview with Matthieu Stefani… Wait a second, you don’t know him? The famous french podcaster — we are 100% sure you have already listened to one of this famous podcaster’s 170+ great episodes where he interviews the most inspiring French entrepreneurs. If you have 87min, go and listen to the one with our partner Marc Simonici here. He also launched two years ago a new podcast about personal finances: La Martingale. But before being a Podcaster, Matthieu Stefani is above all an Entrepreneur. He founded CosaVostra in 2013, a digital strategy consulting agency that has offices in France, the UK and Tunisia. And this is not it, he recently launched a Masterclass with Clémentine Galey (another great podcaster) “Entreprendre un Podcast”. Since then, 500 masterclass has been bought in one month for a price of 275€ each. We told you Passion Economy is really booming!
Now that the presentations have been made, we can continue. So we were saying, during our interview with Matthieu, he mentioned that he didn’t realize that he was part of the Passion Economy “until someone called me to talk about this topic for an article” like we did, but basically for him it was Passion with no immediate business idea. And the same thing happened when we talked with Nick. Nick is a “multi-content” creator, meaning he creates different types of content. Indeed, he is a Youtuber with millions of views, but also a Coach in personal development. He created his own personal platform to share his content with his community and has run his business since 2010. But unlike Matthieu, Nick directly tried to monetize his content which is not necessarily the case for everyone who usually first starts to create content before trying to monetize it. However, even if monetization was key in Nick’s model, he didn’t know that he belonged to the Passion Economy.
These are the two kinds of creators, observed Thomas Koch at Patreon: Passion Creators and Entrepreneur Creators.
We are sure you already know Patreon but for those who don’t Patreon was co-founded in 2013 by Jack Conte and Sam Yam and has already raised $192m. It is a membership platform providing tools for creators to manage their community and to monetize their content through a subscription offer they provide to their fans. Currently Patreon hosts more than 200k creators, supported by more than 6 million active contributors.It has also enabled creators to earn $2B since its creation in 2013.
So, back to our Passion Creators and Entrepreneur Creators. Passion Creators put forward their passions, they are the ones that first start to create, and then think about monetizing their content. This is the case of:
- Matthieu Stefani, who didn’t think about turning his podcast into a business and only wanted to talk about interesting subjects with people he admires.
- Yoann Lopez, who started thinking about monetization when he had 1k subscribers.
On the other hand, the Entrepreneur Creators are the ones that look immediately to generate revenue like Nick.
- However, Thomas adds that all creators, whatever their field, always become entrepreneurs: they have to manage a community, make their own marketing, etc.
There are no better creators than others, ok you are going to say…of course the ones with millions of followers are better! It depends on the engagement of the community. Thomas from Patreon told us that even “small creators” are capable of being great creators because they target a niche and the community is very passionate and engaged about the topic. And these creators are now able to reach their audience easily thanks to the new platforms that have emerged.
But what are the limits of these new platforms?
We also talked with them about the new platforms that emerge in the Passion Economy. Of the three creators, only one uses a platform: Yoann Lopez who uses Substack — an online platform that enables publishing, payment, analytics, and design infrastructure for newsletter creators. Yoann started a year ago his newsletter on personal finance on this platform named Snowball (here is a link to subscribe, we highly recommend it!), and has now more than 9k people receiving it, including 1,5k+ premium subscribers (which represent $110k+ ARR!). However he is also thinking of stopping using Substack. We wanted to understand the reasons why these platforms are not used by all creators.
Even if they all agree that these platforms are good for new creators as they open doors, they all think that they are not flexible enough. According to Nick, even if the platforms offer skills that sometimes creators don’t have, they are only at the beginning of the creator’s journey. He believes that a creator will always move away from the platforms, mainly because platforms don’t offer the flexibility a creator needs. Moreover, when a creator doesn’t do something he loses revenue. Yoann also supports these remarks through his experience with Substack by explaining that he “wants to explore more features regarding my newsletter, however they are not yet accessible on Substack. These platforms allow an easy content creation, distribution and monetization. However the Passion Economy is the beginning of the creators, the biggest will turn into a company and will no longer be part of it.”
Our discussions with the creators showed that platforms that are created for the creators democratize and legitimize the job “Content Creator” by enabling anyone to become a creator. However, with their current features, the platforms can only be one part of the creator’s journey: the beginning. But as the job “Content Creator” is being democratized, this means that there will be more and more competition in the sector and a question creators can legitimately ask themselves is:
Will there be enough space for me?
Matthieu Stefani, even if he thinks that there is still a lot of space for creators, seemed a bit worried about the “super-stars” who are getting most of the audience. A phenomenon that could be intensified by the acquisition from important platforms such as Netflix or Spotify. As an example, Spotify has already acquired Joe Rogan podcast for more than $100m or even the Obama family’s podcast. In all, it is estimated that the Swedish platform is investing more than $800m in the purchase of content and in technological investments specific to podcasts.
“In addition to their aura, which will naturally bring them a large audience, the platforms that will buy their content will have every interest in highlighting them, which will make the task even more difficult for the much smaller creators.” says Matthieu Stefani, which fears that the platforms will seek to make their investments profitable by setting aside the smaller creators and promoting the content they acquired.
On the other hand, these platforms are also attracting talent from traditional industries. Substack, for example, does not hesitate to grant advances of several tens of thousands of dollars and to provide social and legal coverage to attract the best talent to create their own media. This could lead to a salary increase in the traditional industries, to keep their best assets in their ranks, a strategy already used by the New York Times. They consider their journalists as a start-up would consider a developper with key expertise and pay them accordingly (Average journalist wage in the US is $42k and at the New York Time it is $104k). If you are interested in reading a more in-depth research on the topic, I recommend you the newsletter written by Yoann on the New York Times here.
However, by reinventing themselves and creating more and more premium contents, creators could face a major issue: the Content Privacy and this topic caught our attention.
Is the premium content enough protected?
In our opinion, the premium-content was easily shared to non-premium users and the creator wasn’t protected enough regarding his/her content.
However, they all agreed on the fact that sharing their premium work generated leads for them. First, Thomas Koch argued the fact that : “Creators come at Patreon as they are also looking for a slightly closed environment to exchange with their fans”. Therefore, fans present on Patreon or subscribed to a premium offer are not there to be toxic with the creators they are following. On the contrary, they are here to support them. And the creators we interviewed go even further: “We can’t protect ourselves from piracy and there will always be content leaks. However I don’t think this is bad — I see it as free advertising” comments Nick. As an example, Nick told us that when he started his coaching activities he used to send his videos from the post office. And even if his clients could share the video to their friends, Nick often needed to check and delete his videos that were uploaded on streaming websites. Yoann also encourages its readers to share his newsletter, for him this means that he produces high quality content and he sees these occasional readers as his future clients.
Are you still following us or did we lose you?
This Passion Economy is fascinating, we could write about it for hours! We have one last thing to conclude on this subject before leaving you. During our research on the Passion Economy, we have gone through different phases of understanding the topic. And the main questions remains on our minds. Jobs like journalist, author, teacher have been existing for years but were never qualified as being part of the Passion Economy. But the fact that these sectors are today disrupted by technology changes the situation. So is the Passion Economy a sum of multiple sectors, or the digitization process of these sectors?
Also, is “Passion Economy” only the name of a step during which creators grow their community before scaling-up and becoming a company? Will the platforms be flexible enough to keep creators during their whole lifetime? Will it provide more freedom to creators to give them total freedom to their imagination? Finally, will there be enough place for all the people who want to make a living by becoming creators?
There are still many questions to ask regarding the Passion Economy as it is a new concept. But at daphni, we’re excited to see the different projects that will be created in the coming years. We believe today’s platforms, giving freedom and tools, will in a way change how people approach entrepreneurship and even more being a creator.
Let us know what your thoughts on the Passion Economy are and the way you see the future for this new economy!
With Love ❤️
The daphni team
A HUGE thanks to Felix Aubert for his work on this article!
