The booming digital content creator economy

Digital content creators, whether it’s YouTube, Podcasts, Substack, or Twitter, are making record money with ads, product placement, consulting, and subscriptions, and this trend has accelerated after Covid, as individuals and companies find themselves with an abundance of free time, profits, and disposable income. From a 2021 Fortune article, “…last year, YouTube’s ad revenue grew 31% to $20 billion, versus overall revenue growth at Alphabet of just 13% to $183 billion. And in the first quarter, YouTube’s ad sales jumped 49% to $6 billion, beating the 34% growth of Google’s total pie.”

All that hype in 2017-2019 about the ‘adpocalypse,’ as I correctly predicted, was just noise or a blip (this is why you have to always be skeptical of well-worn media narratives, or at least assume that things are not as bleak as they sound). There are more ads than ever on YouTube, such as intro and outro ads, and higher CPMs (which measures how much money advertisers pay and how much money publishers earn per 1,000 views) than ever before too, such as super-pricey insurance and credit card ads, which are very expensive for advertisers and lucrative for YouTube and content creators (who split the revenue). Other times you’ll watch a video and 10 minutes into the video there will be some product placement or sponsorship announcement such as for VPNs. This trend of more ads, more product placement, and higher CPMs shows no sign of slowing.

Multinationals are like, “We’re making record profits since Covid…let’s shower YouTube with ads to promote our latest cloud servers, grammar-checking app, insurance policy, or credit card offer.”

But the growth is hardly limited to just mainstream stuff, like gaming, music videos, pranks/stunts, or comedy. Niche and technical/smart stuff has also boomed, which is the main focus of this article.

10-15 years ago the assumption was hardy anyone would want to watch decades-old videos of Warren Buffett shareholder meetings, physics and math lectures, or mini-documentaries, such as about the ‘coming Netflix crisis’. At the time the internet was dominated by cat videos, porn, movies and music services and downloads, and ‘listicles’, as well as Facebook. Those things still exist, like Spotify, but now there has also been this huge explosion in other topics as well.

For example, math videos on YouTube not uncommonly get 100,000+ views in under a week…yes, math videos. Here’s an example of such a video, about group theory, which since August 6th, 2022, has racked up over 116,000 views:

The Sabine Hossenfelder video Does the Past Still Exist? totaled an incredible 1.3 million views in just three weeks, which is more than even music videos by popular artists.

Although mainstream stuff like fitness can easily get hundreds of thousands of views for a single video in a day, weird niches such as binge eating videos not uncommonly rack up tens of thousands or more views.

Technical, non-mainstream niches, such as coding, math, or investing/finance, have very high CPM rates, because the audience is mostly composed of older or professional middle-aged people who have disposable income, compared to mainstream subjects, such as cat videos, in which the audience likely does not have as much money. In invoking the correlation between IQ and income/wealth, videos that target a smarter audience will tend to have higher-paying ads…even if the correlation is weak (.15 in the aforementioned illustration), smarter videos will generally have wealthier viewers. Same for extremely lucrative product placement. Advertisements for coding bootcamps are very common, and although they seldom produce competent coders or lead to good jobs, they do make a lot of money for the bootcamps and the people promoting them.

Podcasts and interview formats have also boomed, such as Joe Rogan and Lex Fridman, whose productions not uncommonly run many hours per interview, and generate massive ad revenue. Other examples include short-interview formats like the hugely popular YouTube channel ‘Soft White Underbelly’, that taking the opposite approach of someone like Rogan or Fridman, the host Mark Laita briefly interviews individuals who can be described as ‘losers’ of society, in front of a stark black and white backdrop.

Regarding Substack and the ‘pundit industry’, that too is booming. Freddie says he is making $200k+/year with Substack. Others easily making in the 6-7 figure range. Getting just 1/10 of Freddie’s income is good income for just writing an essay every week. But also, additional revenue from Amazon affiliate links and other opportunities. This beats most journalism gigs, and you have total creative control and can work anywhere, and also the subscriber list, which is valuable in its own right.

Substack writers are making so much due to two main factors: First, the explosion of personal wealth and strong economic growth over the past decade, and especially since Covid, means more disposable income, especially for the top 20% of income earners. There are people who probably have enough disposable income to support dozens of writers without thinking twice about it. I remember an Econ Talk podcast by host Russ Roberts in which he says he subscribes to many Substack accounts. Second, the realization that people are willing to spend a lot of money to support individuals whose values are similar to their own. People take politics and the culture wars seriously; chipping in $5/month to your favorite dozen ‘culture warriors’ is seen as playing one’s part for the ’cause’.

And of course Only Fans, which has also boomed since the pandemic. Blogging/newsletters, podcasts, YouTube, pornography, etc. are not new…but the convergence of certain factors–mainly a new and hugely captive audience (in part due to Covid restrictions and the trend of working from home), the intensification of the culture wars online (also due to Covid and 2020 election), record disposable income, and obscene advertising money–has suddenly made these otherwise old niches extremely lucrative.