It’s All About the Benjamins
About three years ago, I started working on a design project. I set up a website where I put my mom’s unconventional jewelry designs. The plan was to enable small and mid-sector jewelry manufacturers in India to get access to great designs for their jewelry products without them having to bear the cost of hiring a designer in-house or buying design software to make great designs and employ staff to use that software. Our business model could be thought of as “design-as-a-service” (DaaS?).
There came a point where we started thinking about having third-party freelance designers to put their collections on our website and we promised that they can keep whatever revenue they make from their designs. We thought it was a win-win. These designers will get more exposure for their work and we will get extra design collections to put next to ours for increasing the overall value, credibility and consumer choice on our website. In Silicon Valley terms, my intention was to convert our website from a product to a platform.
We started doubling down on SEO and guerilla marketing tactics to increase traffic to our website. In other words, we focused on the “consumption” side of the platform. I was thinking that if I could increase the number of people who visit our website, the third-party designers will be motivated to capitalize on that traffic by putting even more of their designs on our website.
More users -> More consumption -> More creation -> More growth
It seemed like I was doing the obviously rational thing. Designing solutions is an easy thing to do. But, identifying whether our designed solutions take us a couple steps towards or farther away from the problem at hand takes a lot of thought, analysis and iteration.
It didn’t take much time before we realized that this was a bad idea. What was really going on was that creators weren’t inherently motivated to create content for my platform. They were neither getting paid nor getting guaranteed, certain level of traffic. It was a matter of design flow and not a poor interface that kept our platform from growing.
Here’s how most creators or designers thought about this opportunity — “Alright, so I have finite amount of work and resources. I will obviously put all my work on my owned properties like my website, blog and social platforms. Now, additionally, I’m getting an opportunity to put my work on this new platform. More exposure wouldn’t hurt. They are not paying me though. And, I am not sure how much revenue I might be able to make from it. But, putting some of my design collections on it doesn’t hurt. I will obviously not create new content for them. I would rather invest my time and effort in doing work on the platforms I own. So, I would try putting some of my content on it to test it out. But, I wouldn’t want to out my best content on it. Ultimately, I want to get people back to my owned digital properties where I control the branding, experience, and marketing and sales funnel. I wouldn’t want people to go to a third-party place for my work. I won’t be spending much time on that platform as is. I don’t even know if this platform will last for a long period of time.”
The uncertainty of the platform’s future and lack of control discourages a creator from doing her best work on that medium. The lack of short-term, guaranteed financial incentives only add fuel to the fire. The cost of doing the best work does not outweigh the benefits. But, since free distribution doesn’t hurt, the creator puts mediocre content on the new platform. The cost of putting out low-quality work is justified by benefits of some extra distribution.
Imagine a large portion of the creators thinking about a new platform this way. The average quality of content is bound to be mediocre at best. This leads to stagnation in user and platform growth.
Two main issues that result in such mindset are -
- Lack of any financial arrangements. In other words, getting paid to create content.
- Lack of guaranteed level of traffic. In other words, if one is surely going to get a lot of exposure, it might make up for lack of financial pay-outs.
There are two ways of fixing the problems of low quality and growth —
The tempting way to solve this problem would be to get into the trap of thinking that we should increase the level of traffic so as to guarantee the creators some exposure to their content. And, who doesn’t like wider distribution? This line of thinking leads to all sorts of growth marketing hacks to get more and more people to visit your platform. And, doing so would get you exactly that. People would visit once, but never come back. The content creators are putting their mediocre work on your platform for the first-time visitors to consume. The platform won’t become sticky. There won’t be any word of mouth. People would rather bad mouth the platform. As a result, we got ourselves a leaky bucket. Such an eye-ball arbitrage almost never works.
A classic classic chicken and egg problem. For users to stick around, we need good content. For creators to create good content, we need more users.
The second way of solving the problem is having financial arrangements with creators for content creation from the very beginning. When a creator gets paid, here’s how they tend to think —
“Alright, this new platform is willing to pay me for creating content. I think I can divert some of my time and efforts from my owned properties to this new platform. Even if the platform fails, I would still have gotten compensated for my work. But, if it takes off, the upside would be huge. I better put my best work on it so that people come back to consume my content. Embracing the platform early on would help me grow my following early on.”
The costs are justified by the combination of short-term, periodic payments and future prospects of platform growth.
Paying content creators seems to be the best approach to developing a sustainable platform. When the creators are incentivized, they would put their best content. The average quality of content on the platform would be decently high. Once the content resonates with your first-time audiences, they will tell all about it to their friends. This will lead to a long-term growth of the platform based off of user evangelism and not some top-of-the-funnel marketing tactics. The bucket won’t be leaky anymore. Having a creator-friendly mindset would encourage creators to give glowing recommendations about your platform to other creators. This will increase both the quality and quantity of content on the platform. More creation leads to more options for consumption. This brings in new users.
Both these approaches lead to a vicious cycle. The former tends to put the platform in a rabbit hole while the latter sets a platform up for long term success.
My design platform might have not become the next Musically or Vine or Instagram. But it did teach me important lessons —
- When it comes to platforms, we need to have creator-first mindset. This does not mean that we give our consumers a crappy experience. This only means that once you have a good enough UX, it is important to focus more on creators in the beginning.
- Paying creators not only gives them a financial incentive but also helps create a connection and a sense of trust between platform owners and them. The payment is a strong signal of platform owners’ commitment to the long term growth of the platform and the creators’ community.
Facebook is paying creators to focus on their live product and not of their competitors. Yes, Facebook can afford to do that. But, Medium, too, is focusing more and more on publishers with its infrastructure, tools and financial support. Vine just recently started paying the creators. We all know how that went for them. Instagram has been lately shipping a lot of features that are creator-friendly. Musically, despite being young, has started thinking about monetization for its creators. YouTube succeeded for a reason.
Some problems go undetected when analysis is done using only quantitative data. The metrics for my website would have led me to think that either people were finding it difficult to navigate the platform and consume content or the creators were finding it difficult to put more content. This conclusion would have been a direct consequence of seemingly poor overall engagement on the website. I had identified the right problem but designed the wrong solution. It wasn't until I gathered qualitative data through interviews with creators ( not consumers) that I realized what the ideal solution needs to be.
When it comes to platforms, at least in the early stages, it is all about the Benjamins. 🤑🎶
