Articles

Biased Towards Monopoly

Winners-take-all is the language of the internet. In fact, it is often what serves the common good.

Google is the dominant search engine and Facebook serves more than 2 billion people to become an advertisement behemoth. As it is happening in the world of corporations, so is it happening in the world of creators. The top 1.5% on Spotify pull 90% of royalties, top 10 writers on Substack make $7m. The more you check the creator economy and the technology corporations, the more you see similar divides. A situation where the top 1% make approximately more than the bottom percentages.

I conclude after observing this narrative that this is a feature of the internet and not a bug. Since network effect is what drives a lot of the successes, plus the mimetic desire in humans, it’s only expected that such a pattern emerges.

Network effect means a system/phenomenon becomes more valuable with every additional user to the network. I will benefit more from WhatsApp if everyone that I know uses it. So will others who use it and the network will grow thereby to emerge as the winner that will take all. In the world of individual creators, this happens when a creation gains more approval based on the fact that it has gotten a lot reviews and say feedbacks.

Mimetic desire means we desire a thing once we realize that our neighbour has it or is demanding it as well. It’s the reason why social proof will help you sell more products/services than the service/product’s feature itself.

This is the way of the internet and it’s the reality that the creator in the gig economy must be made quickly aware of.

The internet is biased towards monopoly. It always optimizes for a winner-take-all. That’s not a bug though, but a feature of the internet. The way it makes up for that inherent ”weakness” is to give room for originality. The analogue world rewards conformity instead.

The Internet allows for originality

Li Jin said in a tweet, “all the things I loved doing while growing up that were dismissed as “wasting time” are now activities that have value.” When we were kids when there are a finite number of things that you can do to bring you money (representation of value). Today, almost anything imaginable that you can do and publish on the internet can bring you money. Times have changed and the demand problem that used to devalue those activities have been solved.

The reason why those activities don’t have value then is that there is no demand for them. Anything that you can do that commands demand is a thing of value. Demand means someone is willing and able to pay for it.

Pre-internet, conformity is necessary because society has exhausted the threshold of craft possible. So you cannot produce a skit and expect to make a living from it. Even if you can, you may be discouraged because it’s not “noble”. Skits are even more feasible, playing video games used to be a time-wasting activity for example, but not anymore. As it stands now, there are a lot of video games streaming services that can help you turn your passion into a money generating activity. The number of things that you do to earn money now is a lot, since global demand has been unlocked. Anything now can be of value. How is this relevant?

This phenomenon implies that you can now be yourself without the need for conformity. You can do this and still give value to the world. As I noted in the thread referenced below, “In an ideal world of the internet, when you distribute anything, it is supposed to reach the current 4.5 billion people on the internet. Once it reaches them, you should get the ‘45,000’ people that will be able to connect with you and what you’ve created. Your audience is that ‘45,000’ spread across the world.” But pre-internet, there was no way your uniqueness could connect with those 45,000 people spread across geographies, hence, the need to confirm.

So the way the internet works now is that it doesn’t reward duplicity so much, you cannot be another Joe Rogan, there can only be one, and that one has been abundantly rewarded. You cannot be another Naval. The more of yourself that you bring on the internet, the more unique you become on the internet and the greater your reward. Those who mimic get lost in the crowd.

Does that mean everyone can become the top 1%?

The simple answer is no. What you become from your craft will be a function of your uniqueness, relatable audience and tenacity. To be mathematical completely, I will add a “plus an error term (sometimes called luck).”

You see, even though what the internet reward is your uniqueness, which makes it hand over a monopoly to you, all monopolies are not the same. Some can bring you $100,000 a year and others may only give you $10,000 a year. Yet, as we’ve learned, a $1m a year is not impossible.

An honest question: what do you need to lead a comfortable and stress-free life? Maybe not an amount of that will bring you to the %. What some people need is some 1,000 true fans while 100 true fans will do for others.

The concept of true fans is to highlight to creators that to be successful, you don’t need millions of customers or millions of clients. You only need some true fans who believe in you and would pay for your services. The “1,000” concept is saying all you need is 1,000 true fans that would pay you $100/year. While “100” concept proposes to look for 100 true fans that would pay you $1,000/year. In both scenarios, the idea is that $100k per year is big enough a reward for any creator online. This number would anyone to the middle class in the richest countries comfortably. Of course, the numbers are only hypothetical and you can work out what is good for yourself. But to get those true fans, you will need to act in a way that will get you abundantly rewarded which is bringing your unique self into your creation.

The search for the true fans

Time Urban wrote a thread a month ago on how the interplay between what you create and how they translate to fans.

Here’s how he described it:

If you create art/content—songs, YouTube videos, articles, podcasts—think about people who come across your work as 4 categories of reactions:

1) Didn’t like it

2) Thought it was solid/fine

3) Really liked it

4) Absolutely loved it

1s and 2s are gone forever. 3s might come back. 4s will subscribe and evangelize your work to everyone they know. 4s are what make your work take off, not 3s. A piece of work that yields 4s at a 20% vs 5% rate probably ends up with probably 10X (or 1,000X) the spread.

The thing is, content that yields a lot of 4s also usually yields a lot of 1s—more 1s is the cost of going for more 4s. Likewise, creators trying to minimize 1s also usually minimize 4s. So it’s really two choices: the 1-4 strategy or the 2-3 strategy. 1-4 beats 2-3!

I like his methodical description of how the creator economy works. Like I noted above, it relies on network effect and mimetic desire in humans. 4s are those who would compel mimetic tendencies. They are the initial true fans and the evangelists. And because they like your content or art, more people from other groups of the divide would find a reason to like it as well. Sure, not all will end up liking but enough for you to make your life comfortable and venture profitable.

And yes, to get them, you will have to choose an interplay between your various forms of content/art.

Largely, the internet is some beautiful tool that we have now. Never before have we had access to so large a pull of demand that each of can tap into with our originality. And never before has monetizing our originality been this easy.

So we are all individually left to maximize the advantage that is in our hands.

Leave a Reply

Your email address will not be published. Required fields are marked *