“Nearly two years ago, I published ‘The Passion Economy and the Future of Work,’ which laid out a vision for online work that was informed by and a reaction to the challenges of the gig economy. While the gig economy represented a major development in the evolution of online-enabled work — removing geographical constraints for work opportunities and offering greater flexibility — it also entailed risks that were disproportionately borne by workers: reduction of leverage, income instability, lack of rights and protections accorded to employees, and lack of autonomy. Through powerful network effects and ownership of data on customers and reputation, gig platforms serve as gatekeepers to their workers being able to access income. Some scholars argue that the gig economy — which encompasses 55 million Americans or 34% of the workforce — has eroded a century’s worth of hard-won worker protections.

Source: Li Jin, Li’s Newsletter

AT A GLANCE:

Over on Substack, Li Jin, founder and managing partner of early stage Venture Capital firm Atelier, takes a deep dive into the evolution of the creator economy, including the challenges faced by creators in a burgeoning industry that primarily benefits — and is controlled by — a handful of social media platforms.

With more than 50 million “micro-entrepreneurs” currently in the US, a number of new startups are aiming to serve creators and make it easier for them to earn a living. But Li argues that “unless we radically change the foundation of the creator economy — how creators find and connect to a community in the first place — these solutions are incremental at best, and don’t create a fundamental unlock for the issues plaguing the current creator economy.”

In defining the challenges faced by creators, Li draws parallels to the gig economy: “Social media platforms have shifted from supporting creator individuality to commoditizing creators in order to maintain their grasp on user attention, a necessary ingredient for advertising-based business models,” Li writes. “This dynamic undermines creator success and independence, making the creator economy just as corrosive for online workers as the gig economy.”

Li traces the evolution of capital from the Industrial Revolution to the present day, noting the shifts from production to finance and financial services in the late 20th century. Today, Li writes, “with the shift to platform-mediated work, capital is evolving once more, to ownership of data that enables productivity.”

Challenges facing the creator economy include over-supply and competition between creators; exploitation of creator labor; insecurity and volatility for creators, which can lead to burnout; and intermediation and taxation by creator platforms, which own the relationship between creators and fans and are therefore also able to intermediate the economic relationship.

Li outlines the her vision for a building a healthier creator economy, along with the principles technology developers and platforms will need to embrace to bring this vision to reality. These principles are ownership and portability, or strategies that allow creators to maintain ownership of their content; credibly neutral creator mechanisms that don’t rely on algorithms to gatekeep the relationship between creators and fans; and creator-friendly business models including direct monetization and minimally extractive platforms to foster what Li calls a “creator middle class.”

Finally, Li calls for creator interdependence and solidarity: “Today’s creator economy, as it exists on centralized social platforms, pits creators in competition with each other in a constant battle for fleeting attention. Going forward, my hope is that we can build platforms and mechanisms that incentivize mutual support between creators, where one creator’s success does not come at the expense of another’s.”

Read more at Li’s Newsletter on Substack: “The creator economy is in crisis. Now let’s fix it.“