Twitter Acquires Revue

Welcome to Issue #17 of the Means of Creation weekly news roundup, where every week, Li and Nathan break down the latest news in the passion economy. These news roundups are usually for paying subscribers only, but to celebrate the launch of Every we’ve made this one public! Hope you enjoy :)

But before we jump into the news, three quick updates...

1. Last week’s conversation: on the maturation of the video creator ecosystem, with Joshua Cohen

Last week we interviewed Joshua Cohen, cofounder of Tubefilter (the go-to source for creator economy insight) and the Streamy Awards (an annual event considered to be the Grammys for online video creators). Both have been pivotal for the legitimization of the creator economy. 

Listen to the recording in your podcast app or watch on YouTube!

2. This week’s conversation: collab houses, satire, content, and commerce—with Katia Ameri & Elijah Daniel

Katie Ameri and Elijah Daniel are co-founders of Rocketship House, a villa in the Hollywood Hills that serves as their platform for content and venture creation. You might know Katia from her starring role in Zoom Bachelorette, or from her work as the founder of Mirra, a skincare newsletter with over 100k subscribers. Elijah is known for his viral satirical stunts, such as becoming the mayor of Hell, Michigan, and outlawing straight people, only to be impeached later that day. In a feature profile last a few months ago, Taylor Lorenz of the New York Times wrote, “his career could be seen as a blueprint for how to succeed in today’s digital media landscape, if you’re willing to make a few people mad in the process.”

As always, we’ll be chatting at 11am pacific / 2pm eastern on Friday. To listen live, join us on Clubhouse or YouTube! And if you can’t make it, we’ll publish a recording of the show to our podcast and YouTube channel soon.

3. Li launched a course!

Li is launching a 3-week-long Creator Economy Course, starting February 22nd. The cohort-based course, geared at operators and founders, will unpack macro-level industry trends and frameworks for building for the creator economy. The goal is to equip founders, product builders, and investors with mental models to build and evaluate creator-focused products.

Apply here!

And now, onto the news...

---

Top Stories in the Passion Economy, 1/28/21

Twitter Acquires Revue, a Newsletter Publishing Platform

What Happened? 

• Twitter just announced that they have acquired newsletter publishing platform Revue for an undisclosed price. The Dutch platform is five years old and has only raised $318k to-date.
• Twitter also plans on retaining the team and the Revue brand; adding new features enabling a ‘seamless integration within Twitter.’ 
• Currently, Revue has a 6% take-rate for paid newsletters which Twitter plans to reduce to 5%.

Li: Interesting! This acquisition makes sense. People have joked that Twitter is the top of funnel for Substack newsletters, and now, Twitter can fill out the rest of the funnel, too.

Nathan: Ha, true! I think the key here will be the extent to which Twitter can meaningfully reduce friction to conversion and help writers convert a bigger percentage of their Twitter following to paid subscriptions. They certainly are in a good position to do so, but to fully leverage it would require some bold product decisions. For example, YouTube has a Patreon competitor that few creators use, because it’s buried and under-developed.

Li: Agreed. In general, the subscription newsletter category is definitely heating up, with lots of solutions that range from aggregators (Medium, Forbes) to platforms (Ghost, Substack). Having more competition and more options is a good thing for writers, who can pick the platform that is most suited to their needs. That being said, I can’t think of any writers that use Revue. It’ll be a challenge for them to catch up to Substack in terms of writer acquisition and brand awareness.

Nathan: Interestingly, Casey Newton hosted his newsletter on Revue before he left The Verge and went full-time on his Substack. But yeah, I suspect this acquisition is more about the team and maybe the technology, but not really about the customer base.

---

Clubhouse Raises Series B at $1b Valuation, and Announces Creator Monetization Features

What Happened?

• Clubhouse recently raised a Series B funding round led by Andreessen Horowitz, with speculative reports suggesting a valuation of $1 billion. 
• The platform will start testing new monetization features for creators such as subscriptions, ticket sales, and tipping. It also announced a ‘Creator Grant Program’ to support emerging creators. 
• Clubhouse currently has 2 million weekly active users, according to CEO Paul Davison.

Li: Should we caveat that both of us are angel investors?

Nathan: Yes, we should disclose that 😅

Li: I know there have been a lot of negative takes on the price of this round, but I honestly think a $1 billion valuation is a steal. Clubhouse is a social network with clear product-market-fit and global network effects—the upside is uncapped. That is extremely rare, and can be potentially worth a tremendous amount.

Based on my conversations with creators and their teams, they are really excited about the platform and are figuring out how they should utilize it. That’s really promising for the future of content quality—and thus user engagement—on Clubhouse.

Nathan: I agree. I saw some people saying “2m weekly active users isn’t that many, they don’t earn revenue yet, how can it be worth a billion?” but what this misses is that a16z is in the business of finding outliers, and those don’t come around very often. So when you find something where you think this is it, you bet big. And, importantly, you bet based on what it’s on track to become, rather than what it is today.

Other than the valuation, the most interesting thing about Clubhouse to me is that they’re one of the few companies to approach hyperscale that thinks of itself as a creator platform, rather than a user-to-user network. They’re focused on getting creators paid. 

Li: I’m struck by how supporting creators and compensating them financially is now becoming table stakes for platforms. Social platforms are recognizing much sooner that the creators are the genesis of value and engagement. It took Snapchat 9 years to pay creators at scale: they were founded in 2011 and announced their Spotlight program for creators just last fall. 

Nathan: It makes a huge difference that they are focusing on creator strategy from the beginning. Tech platforms are really good at optimizing towards one thing, so having this in their DNA will be a big deal. 

Li: Totally. It’s also interesting that they call it a “Creator Grant Program” — sounds more charitable than just a revenue split. 

 The Creator Fund and Spotlight feel like a lottery and people love uncertain outcomes, while the YouTube Partner Program just feels like you are being compensated for your work.

I’ll be really interested to see how they structure the grant program. The balance to strike is rewarding the creators who are generating the most engagement and have the most followers, but also supporting emerging creators who could potentially be big on the platform if they had more resources.

---

Forbes is Launching a Newsletter Platform 

What Happened?

• Forbes is launching a platform that will help 20-30 preselected writers with existing audiences to launch their own paid newsletters.
• Their pitch to writers is to offer them the benefits of a big publication while letting them retain their editorial independence. These include: marketing, minimum guaranteed salaries, legal support, editorial guidance, copy editing, and fact-checking assistance. 
• Forbes is using data to set different subscription prices for each newsletter. Writers will be paid out a 50:50 revenue split and a cut of ad-revenue. 

Li: It’s really confusing trying to understand who they are targeting with this program.

Nathan: I think this is targeted at journalists who have a job, write a column and are used to having distribution, an editor, and other big publication perks. If they’re trying to attract writers who are happily running their own profitable paid newsletter, they’re probably barking up the wrong tree.

Li: On the spectrum of “media employee” to “passion economy participant”, this is closer to being a media employee. The deal comes with a minimum salary and typical media job benefits, so it’s like being an employee, but with more upside and ownership. I could see this being a good retention tactic for talent at media companies.

Nathan: True. I think the biggest drawback is that if you part ways, you have to buy your email list from Forbes. We’re not doing that at Every. If a writer leaves, they get to take a copy of their list. But that makes me wonder, Li, what do you think of our model? How does this compare?

Li: The appeal of going with Forbes versus Every will be their distribution. If they are going to actually promote your newsletter to other people, that’s pretty compelling. A lot of people still read Forbes. While with Every, you guys are still only a year old and just getting started yourself. But Every is good for folks who want more control, ownership, and freedom. 

Nathan: Yeah. We split the IP and revenue, writers can also take their mailing lists with them when we part ways. But I’d also add that we have a pretty distinct editorial vision from Forbes. At first glance it seems like the same thing (“business”) but really I think the kinds of topics we’re interested and our basic vibe/styles are quite different.

Li: Isn’t it a risk for Every to give writers a copy of their email list? They could grow with you then move on when they’re big. 

Nathan: Yes, for sure. But that’s the case with almost every creator platform. The key is to have compelling value propositions that help creators stick around. And for us our focus is on building a unique editorial community and culture, and a unique audience that is into our kind of thing.

---

Instagram Planning to ‘Consolidate’ Video Formats 

What Happened? 

• Instagram lead Adam Mosseri recently revealed the platform’s 2021 roadmap in an interview for the Verge. 
• He acknowledged the threat of TikTok: “We’re growing both in terms of how much people are sharing and how much people are consuming, but we have a long way to go. And we have to be honest that TikTok is ahead.”
• He also hinted at a possible consolidation of the different video formats on the platform; specifically IGTV and Reels. “That’s probably too nuanced a distinction to resonate with anybody, so we’re looking about how we can — not just with IGTV, but across all of Instagram — simplify and consolidate ideas” 

Nathan: It’s interesting to compare the different approaches various social apps take to copying each other. Instagram added a bunch of different formats, which was ugly but possibly effective, and definitely side-stepped the need for making difficult product trade-offs. But Snap, on the other hand, has remained almost too focused: Spotlight is the exact same as the regular Snap format, even if it could use some more TikTok-esque elements to really shine.

Li: I remember when IGTV was announced at VidCon! It was Instagram’s answer to YouTube. But before they could properly copy YouTube and get traction for IGTV, a new competitor came up to copy :) 

Nathan: I wonder if it’s a good strategy for Instagram to look at TikTok or YouTube and think we need to have this too.  These new formats probably are better, and they definitely pose a problem to Instagram’s time spent in-app. But jamming in new formats on the platform is risky. It’s a Hail Mary—in the attempt to win big, you might lose what you already have.

Li: Jamming in all of the various formats that creators and users might want results in a really crowded, confusing UI. The new IG design isn’t creator-friendly. It took me 5 minutes to figure out how to post a video. 

Nathan: Agreed. And it probably doesn't show up in the numbers right away, but it shows up in the user experience — which eventually shows up in the numbers. 

Li: It used to be the case that these social platforms had different formats, so creators would express themselves differently on each platform, and you had creators who were uniquely suited to each different format. Now, formats are converging, and creators need to post on multiple different apps to cater to several different, fragmented audiences. Like it’s really a statement on the state of social that we need Linktree.

---

A16z is Creating a New Media Property

What happened?

• Andreessen Horowitz recently announced that they are creating a new, technology-focussed media property. 
• They plan on inviting domain experts to publishing op-eds, written pieces, newsletters, videos, and other content. 
• They have hired industry-veteran Maggie Leung as an executive editor to spearhead this project. 

Li: This ties back to our Forbes versus Every conversation: the talented writers are no longer tied to a single organization. They seek freedom and independence but can also tap into the audience and distribution of larger brands. New media models reflect this: Every, Forbes’ newsletter project, and this new media property from a16z. 

Nathan: There’s a lot of misplaced concern from journalists: “This will be propaganda!”. I think they are right. A16z won’t be doing critical reporting, especially about their portfolio companies. But that’s not the point. Not everything has to do that as long as there is an ecosystem for healthy discourse. 

It’s really valuable to have a publication doing deep dives for people building companies. Many of the accountability focused publications have drifted away from doing this. Which is fine, but it’s unsurprising when others step up to take their place. 

Li: I think because most people had “full-time jobs,” practitioner writing had been missing from the media ecosystem. There used to be just people who worked, and then people who observed those who worked and wrote about it. Now those lines are blurring because it’s easier than ever for practitioners to build an audience and publish.

It’s a very natural move for a16z. I wonder if it would’ve worked if they had tried the Forbes model. 

Nathan: Do you think there’s a tradeoff between paid subscriptions versus monetising through venture capital? 

Li: Yes absolutely. The rough strokes of the Forbes model is: writers get a minimum salary + Forbes’ brand reach + the upside of subscriber revenue. Maybe a16z could give their writers carry? We’ve been talking about subscription supported media, why not VC-supported media? a16z could be the leader there.

 Nathan: Yeah, people are doing this with rolling funds. VC-supported media works well in the early days when you are finding new trends, writing about them, and sourcing investments. But once those investments become mature, it becomes less aligned with readers as investors are inherently biased towards their portfolio companies 

Li: I disagree, I think VC-supported media could actually be more aligned with the interests of the reader. It’s just a different perspective. Because they have a more in-depth perspective on an industry they’ve invested in, they’re better at spotting disruptive threats and new models. 

Nathan: They definitely have a more in-depth understanding. But there’s a principal-agent problem: since the readers are hiring the VC as their agent, but the VC’s priority is their investments. 

Li: I think it depends who the reader is and what their goals are. I’ve been told by many founders and operators that they’ve learned more from my writing than business writing in newspapers or general coverage of startups. There’s lots of readers who want to understand innovation. Who better to learn from than those who are investing in it?

Nathan: That may be true, but they should also be aware of the inevitable bias. 

---

Passion Economy Financings

• Creative Fabrica, an Amsterdam based platform that enables a social marketplace for craft enthusiasts has raised a €5.7 million Series A funding round led by Felix Capital. Founded in 2016, the platform currently hosts 1 million creators. 
• Genflow, an agency that helps creators build their own D2C brands, has raised $11 million led by UK-based investor BGF. The agency has built $100 million in brand value with influencers like Summer McKeen and Jordyn Woods. The company also has its proprietary influencer analytics platform Genlytics.