The future of social media will look a lot like marketplace companies, here's why
I’ve booked my flight from ATX to LA, where I’m heading next! But in the meantime, am going to do a few social things while here — seeing an outdoor/COVID-safe Dave Chappelle show, a dinner with some tech folks, etc. Should be fun. But I’m also excited to be back in California again, and eventually, home in SF.
Anyway, quick topic I wanted to mention today. I had a previous post called Passion Economy vs Creator Economy which came to the topic from a marketplace lens, drawing on my time from Uber.
But now I want to take the opposite view, and talk a bit about the topic starting with the social media lens. In particular, why social media trends will eventually move it towards looking more and more like marketplaces. And by the way, what do I even mean about that!?
Couple thoughts there.
First, social media used to be more about friends/family, and these days, it’s increasingly about public content made by hyper-popular creators. Instagram, YouTube, TikTok, Clubhouse, and others have content from friends, but it also layers on really popular creators. And what that means is a high degree of bifurcation between the “supply” and “demand” sides of the network, so that rather than everyone having approximately 200 connections, we have a world where some users have millions and some users have 10. It makes the highly connected creators extremely valuable, and something the platforms will compete over. And that’s a very different trend than before.
Second, you can now be a creator as a type of work. And that means making money, yes, but then you quickly want all the other things — health benefits, coworkers, a career progression. This is exactly what I saw first-hand at Uber, where drivers liked being their own boss and having work flexibility, but then also wanted a lot of other things that are part of the “bundle” of a job. Tech can unbundle the job, but then there will be other startups and features to bundle it together.
Third, ad monetization is giving way to creator-led monetization. This is happening for a variety of reasons — user experience, certainly, also because it’s hard to build ad infra from scratch. It takes years. But also there’s something key, alignment with content creators. Startups that say they’re aligned end up being more aligned! So that’s great.
Fourth, at the moment, a lot creators are making money by selling merchandise — these are ecommerce businesses. But I think we should just imagine that eventually they will sell everything, from services to online education/courses to shoutouts to everything else. You will be able to pick and choose your catalog of services/digital goods/merch you want. It’ll be completely turnkey. And then you’ll want lots of back office and infra to manage all of it, some of it provided by the platforms and some as third party tools.
Fifth, platforms are getting big. Really, really big. Back in the day, MySpace was huge when it had tens of millions of users. Today, there are many platforms with over a billion active users, and they are continuing to grow! This makes them some of the most valuable businesses in the world.
OK what does this all mean?
To me, it means that a lot of what drove early marketplace dynamics — like look at eBay, with small groups of sellers and buyers focused on collectibles, and eventually evolving into full-on large businesses selling across many verticals. I think that is inevitably what is going to happen with social media. They originally started as kind of consumer-to-consumer platforms and then are becoming prosumer-to-consumer, as creators evolve. But entire media companies will eventually be built, so that it’s small-business-to-consumer and eventually enterprise-to-consumer. The next Disney or Discovery or whatever will be built on these social media platforms and start out maybe with individuals.
During the prosumer phase, the creators want some basic analytics, a VIP program, some people to call. And also insurance and coworkers and other things I’ve mentioned. But eventually when they evolve into companies, they will want big company things — APIs, account management, analytics, global networks, partnership opportunities, etc., etc. It’s a matter of time.
Maybe the best example of this dynamic and how it manifests over time is the App Store. Initially it was individual developers and folks making games, flashlight apps, fart apps, etc. But as it started to hit scale, they became companies. And we got apps like Instagram and Uber out of it. The same cycle I think will happen in the social media world.
Right now, I think the market is super interested in all the individual creators, but I think it’s just a phase in the market. Where we’re going will look a lot more like large scale marketplace platforms, and it’ll enable a new generation of entrepreneurship and business on the planet. Very exciting, I think!
Alright, well that was my quick riff for the day. Hopefully interesting to all of you!
Andrew from Austin (for now!)