08 The Passion Economy
Now Learning From Li Jin
Li Jin coined the term Passion Economy to describe how “work is being unbundled from traditional employment”, giving individuals the opportunity to convert their passions into sources of income through differentiated services and building loyal user bases.
[In the Passion Economy], users can now build audiences at scale and turn their passions into livelihoods, whether that’s playing video games or producing video content. This has huge implications for entrepreneurship and what we’ll think of as a “job” in the future.
-Li Jin
The Passion Economy represents the future of work, where people are able to earn a livelihood by monetizing their skills and knowledge (rather than their labour) through digital products.
This is partly a transition from the Gig Economy, where labour is commoditized by ‘marketplace’ digital platforms like Uber and AirBnb. While these platforms provided a path to self-employment for millions of people, they also homogenize the variety between service providers, prioritizing consistency and efficiency - at the cost of their individuality.
GIG ECONOMY
Allows people to monetize their time through specific services (Uber, AirBnb, FoodPanda, Taskrabbit, etc).
Limited ability for consumer engagement.
Earnings scale linearly with time spent / tasks done.
Growth can only be achieved by spending more time, doing more tasks, etc. Not scalable.
PASSION ECONOMY
Allows people to monetize their creativity, knowledge, and relationships through (mostly) digital products (Substack, Shopify, Patreon, OnlyFans, etc).
Platforms encourage direct interaction and loyalty between the service provider and consumer.
Earnings are less predictable.
Growth can be achieved by expanding audience and offering a differentiated service or product. Scalable.
New digital platforms enable people to earn a livelihood in a way that highlights their individuality - by providing them with a greater ability to build customer relationships, increased support in growing their businesses, and better tools for differentiating themselves from the competition. There are two types of platforms:
Vertical - which are focused on a particular industry (i.e. Substack helps writers specifically earn an income from writing, while Playbook helps fitness instructors run virtual businesses.
Horizontal - which support creators in an industry-agnostic way (i.e. Patreon allows any type of content creator to set up a membership subscription).
The benefit of platforms which focus on a particular vertical is focus. These platforms are able to align execution to a particular type of work and provide greater value for workers in a specific industry. A vertical approach also means more focused marketing, sales, and user acquisition strategies.
Podcasting - Anchor, Glow, Supercast
Writing - Substack, WordPress, Medium
Courses - Teachable, Skillshare, Podia
Personal Shopping - Instacart
Fitness - Playbook, Fitplan
Coaching - HireClub, Mentorpass
VERTICAL (focused on a specific industry)
They turn non-producers into producers (i.e. actually expand the market)
They provide deeper value in helping the worker to manage and grow (“business-in-a-box” model)
They can re-introduce services that workers lose when they are unbundled from companies
They foster vertical-specific network effects: discovery of new creators or fan-to-fan interaction
Employment at a company is itself a bundle of various services to support their employees. By tapping on horizontal platforms to fulfil those services, self-employed people in the Passion Economy are able to piece together their own combination of tools specific to their needs.
Production - TikTok, Twitch, Zoom
Distribution - YouTube, Instagram, Spotify
Income - Patreon, Buy Me A Coffee
Admin - Karat, Moe Assist
Benefits - Catch, Better Tax
Team - Influence, Reddit, Telegram
HORIZONTAL (focused on a specific service)
They act as a discovery destination for consumers (i.e. YouTube audiences still prefer diverse content)
They benefit from fragmentation of creator tools (gives flexibility instead of prescribing a solution)
There are economies of scale (made possible by tapping into creators across many verticals)
They provide common infrastructure or services needed across verticals
Thanks to the availability of supporting digital platforms, creators are better able to monetize their passions directly from their fanbases, without having to only rely (solely) on brands or advertisers. They also can monetize their time and access (Community-as-a-Service).
Step 1: Cultivate a large, free audience on horizontal social platforms or through email.
Step 2: convert some of those fans to patrons and subscribers.
Step 3: Leverage some of those buyers to higher-value purchases (i.e. extra content, exclusive access, or direct interaction).
This represents a move away from the traditional donation model—in which fans pay to benefit the creator—to a value model, in which fans are willing to pay more for something that benefits themselves.
100 SUBSCRIBERS & HIGH-VALUE PURCHASERS
Revenue per fan: $1000/year ($83/month) from 100 fans
Motivation for purchasing: Self-interest
What fans are paying for: Desire for improvement, transformation and/or exclusive access
1,000 DONORS & PATRONS
Revenue per fan: $100/year ($8.33/month) from 1,000 fans
Motivation for purchasing: Altruism or fandom
What fans are paying for: Desire to donate or support the creator
There is a substantive difference between monetizing through 1,000 True Fans (at $100 a year) and 100 True Fans (at $1,000 a year). Whereas a creator can earn $100 a year from a fan via patronage or donations, collecting $1,000 a year per fan requires a wholly different product. These fans expect to derive meaningful value and purpose from the product.
Premium content and community - The online hub Advisor Growth Community charges financial advisors $2,000 per year to collaborate with colleagues and learn how to grow their practices. It currently has nearly 100 members, with a yearly career development masterclass charging upwards of $3,000 per seat.
Delivering tangible value and results - The Chinese audio course platform Dedao sells paid audio courses that appeal to people’s desire for self improvement and lifelong learning. The best selling topics include study skills, management, and public speaking - which can reach up to $28 per class.
Accountability - The more people pay up front, the more invested they are in achieving their desired outcome. The premium version ($699) of Tiago Forte’s Teachable class on digital note-taking and productivity includes expert interviews, note templates, advanced tutorials, and access to a members-only blog.
Access, recognition, and status - The comedy podcast This Might Get Weird offers a limited number of $69 per month subscriptions, which provides a monthly livestream, access to a Discord community and extra content. But the highest-priced $500 per month tier also grants fans personal coaching sessions with the podcast hosts.
The abundance of subscription services for high-quality premium content (i.e. Substack for newsletters; Knowable & Luminary for audio), coincides with audiences’ desire to have a greater control over how they spend their attention.
The subscription model incentivizes creators to provide their audiences with as much long-term value as possible. This is contrasted with typical advertising models, which aim to win short-term attention at the cost of their audience time and trust.
Supporting platforms are also aligned in this direction (i.e. Substack only makes money when their writers make money).
NEWSPAPERS
Basis of competition: Breadth of coverage, trust in publication’s brand, frequency and recency of content
Business Model: Advertising and subscription bundles support production, and distribution costs
Examples: New York Times, Washington Post
PAID NEWSLETTERS
Basis of competition: Trust in a particularly writer, curation, alignment to niche interest, convenience
Business Model: Direct user payment to the author
Examples: Substack, Memberful, Stratechery
HORIZONTAL SOCIAL MEDIA
Basis of competition: Breadth and volume of content, cost (free to users)
Business Model: Advertising, which goes mostly to the platform
Examples: Facebook, Twitter, Instagram, YouTube
CREATOR-SPECIFIC SOCIAL NETWORKS
Basis of competition: Curation, trust in a particular creator, alignment to niche interests
Business Model: Direct user payment to the creator (subscriptions and/or tipping
Examples: Discord, Circle, Mighty Networks, OnlyFans, TopFan
HIGHER EDUCATION
Basis of competition: Credentials, trust, breadth of subjects
Business Model: Tuition for a bundle of community, network, credential, curriculum
Examples: Harvard, Yale, Stanford
CREATOR-LED ONLINE COURSES
Basis of competition: Trust in a particularly instructor, alignment to specific interest, lower cost
Business Model: Direct user payment for a specific course
Examples: Teachable, Podia, Thinkific
By understanding how the Passion Economy will impact work, media, and community - we are better able to anticipate how people will be spending their time and attention, as well as how the ways they relate to one another might change in the near future.
-Mark