January 9, 2021
The Creators Monetization Portfolio
I've had 10 requests in the last week on how to approach monetization for creators. Most are looking for one-off recommendations on what they need to do but the answer is more nuanced than that. To help creators understand, I've highlighted a portfolio approach similar to entrepreneurs (prior to discovering the below thread). Most creators should not rely on one source of income whether that be a product, service, or branded shoutouts/advertising. Instead, they should utilize a portfolio approach that allows them to not only grow their revenue, but protect themselves if one income stream fails.
Here's how it works:
10% Promotion/Affiliate: this percentage of your revenue should come from direct promotions of products you would actually use, do use or support. The reason being is that when you promote products that are related to your target audience, you can use those sponsored posts or ads to get in front of the brand's audience as well. Say you run a dog blog that has 100k active followers and a brand reaches out to you for a branded partnership/promotion of their product. When you're negotiating terms for the deal, negotiate that they will share your sponsored post with their audience.
This achieves a couple of things:
1. you get paid for the brand deals
2. you get exposure to a new audience that will potentially follow or subscribe to your content. This compounds over time and results in better brand deals and a larger audience.
20% Paid Communities/Newsletters: paid communities and newsletters have gotten a lot of attention through platforms such as Substack and Patreon and through the success of creators such as Ben Thompson of Stratechery,Web of 2PM, Dru of Trends, Lenny's growth newsletter, and Anthony Pompalino's Pomp Letter. While paid newsletters and communities can generate a significant amount of revenue with a smaller amount of customers, it's a difficult way to monetize for the majority of creators. The reason being is that the minute your content becomes pay to consume, you're decreasing the reach of some of your best work. Additionally, you aren't giving the leniency of taking breaks from creating content which leads to content burnout.
In terms of communities, paid communities require outside resources such as community managers and can't become too large. Once communities become too large, individuals feel lost in a sea of others making them not want to partake or engage in the community. This isn't the case for all creators but it should be noted the paid community and paid newsletter space doesn't work for everyone.
30% Digital Products: digital products can be anything from a second brain, a database of resources, printables, or a template for how you create your content. I place great importance on digital products because digital products have virtually 0 costs of goods sold. Unlike physical products which require shipping, inventory management etc, digital products can be highly profitable. Companies such as Big Life Journal do millions alone from PDF printables.
15% Physical Products: physical products are relatively straight forward. Platforms such as Fanjoy and Printful have enabled creators to create physical products without worrying about inventory and other barriers to entry. The challenge with physical products is that COGS eats into margins; however, this doesn't discredit the opportunity for physical products. Physical products are a very large opportunity for creators but it doesn't lie with dropshipping and poor quality products. It requires investment in inventory, quality materials, and supply chain management. The DTC brands of the future will be built by creators or the distribution network of creators.
25% Courses: courses both self-paced and cohort paced are growing at a rapid rate and are an increasingly great way for creators to monetize. Similar to digital products, the COGS for self-paced courses is virtually 0. While cohort paced courses require a time investment, it also creates the opportunity for creators to charge more money. It's not shocking to see a cohort-based course priced at $10k+ with people willing to pay that. However, the course route requires having knowledge or skills that people are willing to pay for. Naturally, you can pack up anything into a course; however, you can't always justify a high ticket barrier to entry.
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