Written by: Daniel Koss
Chapter 1: How Facebook Lost Creators
Reason 1: No reach? No Creators.
Every Creator with a big Facebook page remembers the time when Facebook pages lost their reach. Suddenly pages often only reached 1-2% of the audiences they used to reach. Even though Facebook's stock did amazing during these times, for Creators who cared about reach (that's 99% of all Creators), Facebook became a "dead" platform. The reach was gone and with it the incentive to post content.
Reason 2: Loss of trust
Many Creators built their Facebook page following over many years by investing their blood, sweat, tears and in many cases even their capital. Until it was gone. For Creators this was more than just losing reach, they also lost their revenue source and job. As a result, many Creators lost trust in Facebook and no longer felt comfortable building a living that depends entirely on Facebook's algorithm.
Reason 3: 0% revenue share
Other platforms like YouTube always had built-in ad revenue-share models. On YouTube, Creators get 55% of the ad revenue from their content. Facebook did not give Creators any revenue share for years.
Facebook's value proposition to Creators became unattractive as organic reach went down. Facebook launched multiple initiatives to win Creators back, but it was too late. Creators didn't want to be active on Facebook anymore.
Chapter 2: Competition?
Instagram - If you can't beat them... buy them!
Facebook knew that it never successfully made the transition to mobile-first. Meanwhile, Instagram, a dangerous mobile-first potential future competitor was getting a lot of traction.
If you can't beat them, join them. Or the other way around, make them join you! Especially if you have the financial means to do so. In 2012 Facebook acquired Instagram for $1bn. which seemed like a ton of money back then. Today Instagram generates $47.6 bn. in revenue, in one year (2021)! Well done, Facebook! That was one of Tech's best acquisitions ever. Facebook proved its long-term vision and strategic understanding of the competitive landscape.
Snapchat - If you can't buy them... copy them!
Facebook also saw Snapchat as a potential future competitor and reportedly offered to buy it for $3bn. But Snapchat declined the offer. So Facebook copied Snapchat's most popular feature. Snapchat's "Snaps" became Instagram "Stories". A Feature that was wildly successful. So successful that it completely revolutionized Instagram Influencer Marketing. Most people today would probably think the now popular feature across almost all Social Media platforms, was Instagram's invention.
While Snapchat continued to become a very successful company, currently valued at almost $24bn. it never came even close to Facebook, currently valued at almost $459bn. (that's roughly 19 x more valuable than Snapchat). I have many thoughts and feelings about where Snap made key strategic mistakes, but let's save that for another day.
The learning? Copying features worked out.
Chapter 3: Competition!
TikTok - If you can't beat or buy them... you have to improve?
Investors were already decided that Social Media (as an investment opportunity) was over. Almost no new Social Media startups would get funding, because the entire Tech industry seemed to be convinced Facebook and Google would run their platforms (Facebook runs Facebook and Instagram, Google runs YouTube) for all of eternity and just crush new players. They were wrong. Out of nowhere comes TikTok!
Apparently against all odds, TikTok proved that there was still room for a new Social Media platform. TikTok understood Product and innovated massively on the Tech front. TikTok brought low-effort video editing to every smartphone, for free! Suddenly everyone could be a Creator. The barrier to creating is gone.
TikTok was also the first Social Media platform that successfully built a Creator community. I remember a few years ago, when I still worked as a Creator Manager, TikTok was still relatively unknown. But they used to host amazing events for Creators in multiple countries all over the world. These events stood out.
While the public eye didn't hear much about that, TikTok was strategic about absolutely everything they did. Their acquisitions, incentives, buttons, marketing, hiring, everything was just done brilliantly and with a long-term vision that it's almost creepy how clearly they knew what they were doing.
Will to win
Few other Social Media players run with TikTok's level of operational excellence. Whenever you talked to somebody who worked at TikTok, you instantly noticed they were busy, really busy. Working at TikTok is probably tough, because the company holds the controversial belief that performance and winning matter.
TikTok made the impossible possible and a new Social Media platform was born.
You know how it played out over the next years. TikTok slowly went from a "stupid lip-sync app for kids" to the home of the internet's most entertaining, exclusive short-form content and a serious rival to Instagram and YouTube for Creator and consumer attention.
Copying is not enough
Facebook and even YouTube quickly started to copy. To compete with TikTok, Facebook launched Instagram Reels and YouTube launched Shorts. But they both failed to crush TikTok. TikTok is still thriving, growing and taking over Creator, audience and ad revenue market-share. Building the TikTok culture, community and creative network paid off.
Facebook finally has to compete directly
Think what you want about Facebook, but they are strategic geniuses and their leadership always reacts quickly to threats in the market.
Over time it became clear that copying a feature will not be enough.
TikTok is still growing. For the first time in Facebook's history, a new player forced their hand.
Facebook is getting Creator friendly again
- Facebook pages suddenly generate reach (again)
- Facebook now offers Creators ad revenue share (55%)
How amazing for Creators!
How will this play out?
The space is too dynamic to know what can and will happen next. What seems clear is that the competition between the big 3 Social Media platforms and hopefully even more in the future is great for Creators in multiple ways.
The product quality now matters. Creators have a choice and can switch.
The revenue shares now matter. If it's too low, Creators have alternative income streams.
I want to share an interesting fact I just learned: Today, a Creator told me he has a CPM of $11 on Facebook and a CPM of $3 on YouTube, for the same content! We're talking about platform-native content monetization. That's a crazy high and unusual difference. While it's clear Facebook CPMs will adjust to market standards over time, the short-term incentive for Creators to get back to posting on Facebook is clear and strong. This will simply work. Long-term retention is of course a different game.
It's only a question of time until one platform will allow its Creators to own their data as a competitive advantage. If not an existing platform, then a new player.
The power of caring
Most importantly: platforms have realized that they need Creators. Finally, they care about Creators and meeting their expectations. If a platform screws Creators over, the internet will remember it and the platform will suffer for many years or die and get replaced by newer, more Creator friendly solutions.
Let's grab the popcorn and watch how this movie plays out over the decade.
At Creable we're platform agnostic. We help you as a Creator or Manager to manage your Creator business across whichever platforms you want to use. But our recommendation is clear: use multiple platforms. Never rely on a single platform for distribution or monetization. Changes can, will and constantly do happen and we've seen Creators lose everything over and over again.
If you have questions about platform diversification, feel free to reach out to us, we're here to help and give advice (for free)!