What is the Influencer Business Model?

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Part 1 of 3 in the series: You Don’t Have to be an Influencer

This kicks off a 3-part series talking all about how you don’t have to be an influencer. That’s right! You don’t!

Maybe you’re breathing a sigh or relief at hearing that, or maybe you are puzzled as to why anyone would ever think they needed to be an influencer.

Regardless of which response you’re having, this model for earning: being an influencer, is currently ubiquitous to the point that it’s seeping into all kinds of different businesses, marketing strategies, and even our private lives. Very much our private lives! So it’s worth an investigation.

In fact, I got the idea to do this series of episodes because I work with many people in the healing arts, aka the health and wellness fields, and I heard from so many people in these fields who ran solid service-based businesses (think therapists, nutritionists, bodyworkers, movement educators) who felt like the only way their business would be viable long term is if they hopped onto the influencer train and forced themselves to take that on.

In their cases, it felt like forcing themselves to do something they did not want to do, so they feel relief when I tell them they don’t have to be an influencer.

If you’re listening to this and you want to be an influencer, or already are a successful influencer, godspeed! My intention in this episode is not to judge the business model of influencer, but rather to discuss it exactly as that, a business model. And in fact, I'll talk about some of the very human reasons why it’s become so prevalent in recent years.

But the business model of being an influencer is one of many options, not the only option. Some of us were born to be on stage with a mic in our hands, and for those people the influencer model can be a perfect fit.

That’s what we will discuss here in episode 1 of this series: What actually is the influencer business model?

I will differentiate between the influencer business model and using social media for marketing, in the second essay in this series, so we will talk about using social for marketing as a separate thing next time.

But first up- let’s look at being an influencer as a business model: A business model, for a brief definition of terms, is about the way you provide value to your clients or customers, and how you receive income back in exchange for providing that value. In other words, no income, no business. And plenty of people create content as a hobby (meaning it is unpaid labor that they do, presumably, for the love of it, or for some other reason, but they’re not making money on it).

Ok, so just wanted to clarify that we’re talking business here, and businesses need revenue, i.e. income.

What does an influencer business model need in order to bring in revenue? They have to be influential! In other words, lots and lots of people need to be tuning in to their content. So it’s really important to understand that this is a business model based on celebrity. Or another way of saying that is that it relies on a large quantity of attention being directed the influencer’s way (or their content’s way specifically.)

Some will argue that, in fact, these are service based businesses because the content influencers create provides a service. Depending on the influencer’s content- this can be true about the utility of the content.

They are definitely providing a service to the platforms they make content on. On a social media platform- no content creators publishing stuff, no platform.

And their content is can also be information-as-a-service for those who follow their feed.

But a business model is about the way you earn income. And all influencer revenue options, which we will talk about soon, rely on a large number of people paying attention to their content. Without many, many eyeballs on that content, it’s not going to be the influencer model. I’ll repeat: it’s a business model that relies on a form of celebrity. It can be niche celebrity, but it’s still celebrity.

We are familiar of thinking about celebrities within the field of entertainment: famous musicians and actors for example. They are famous for their skill at their artistic field and because we like watching them be so skilled; We marvel at their talents.

In addition to their talents, they are also gifted entertainers; meaning the kind of charismatic people you just want to watch. Lizzo, as one example, has an amazing voice and is a classically trained ultra talented flutist, but she’s also got the most charismatic stage presence imaginable. How can you watch a Lizzo performance and not smile? Think David Bowie, Dolly Parton, Aretha Franklin, Mick Jagger… all super super talented sure- but also total fire on stage in their own individual ways.

Fast forward to our social media times, and people can be a different kind of celebrity, an influencer. These are people who are charismatic and compelling, and are creating content on platforms like YouTube, TikTok, Instagram, Facebook, etc. We like to watch them perform on our tiny screens! In fact, so many of us like to watch them perform, that these people become considered “influential”.

Repeating myself, there is a significant numbers component here, just like with old school celebrity. In celebrity you would have to have many fans to be considered a star. In the influencer business model you have to have many followers to be considered a star.

In the old school celebrity model, your stardom meant you get to make and get paid for your art: for example by getting a record deal, or landing top leading or support roles in film or television, getting the 7-figure book deal because the publisher knows everyone will buy whatever you come out with next… The labels, studios and publishing houses know people want to see you, they want to interact with your work, so you get good contracts with them to produce work.

In other words, your income comes from the art you make- you’re paid to do a movie, release an album, write a book, etc.

In the modern influencer model, influencers earn income one of 3 ways:

1: They have a large enough audience tuning in that the platform itself pays them.

2: They have a large enough audience tuning in that a brand or several brands pays them to advertise to that audience.

Or

3: They have a large enough audience tuning in that they can create their own products and services to sell to that audience.

A wise teacher once told me that you always wind up working for who pays you. Meaning, be mindful of who is actually paying you because ultimately, they are the ones who determine what the work is that you get to do.

In self-employed service-based businesses we get paid by our clients- which is nice and straightforward. I love it. They want the service you provide, and they pay you for it. Easy peasy.

In US healthcare, to give another example, which is privatized, if you are a healthcare provider, your patients want the service you provide, for sure, but the insurance company and corporate structure of the hospital or medical center is who pays you. So they pull the strings of how you get to practice. Which means that both healthcare providers and patients lose out- and insurance and hospital executives follow the path of extract and hoard capitalism.

I digress…

In the 3 influencer models I gave above, let’s look at who pays you, meaning who pulls the strings of the work you get to do, in each example:

In the first example, the platform itself pays you.

When influencers get paid by the platform they are on, this comes closest to the old school celebrity model. They just get to shine doing whatever it is they do for content, and because so many people tune in, YouTube or TikTok- which are currently the two main platforms that pay influencers directly- pays them because they are bringing eyeballs and delivering the content for these platforms. Without creators making content, dead air on the platforms. It’s sort of like getting a movie or album deal, except without traditional hierarchical red tape. Goodbye to middlemen telling people who can perform; You just perform and if it’s good (or interesting or provoking enough) you will win at the business model called being an influencer. (Meaning, it’s not a hobby because it pays your bills).

More soon though on what “winning” can feel like when a platform pays you… even though you don’t need an agent to let you behind the velvet ropes so you can make your work, instead you wind up with different red tape. Algorithm red tape.

The second way influencers get paid, by brands who notice that they are attracting attention, is more like a celebrity sponsorship deal. If you have millions of listeners to your podcast about horses, Mane and Tail shampoo (which is for both horses and humans) might want to pay you to place an ad on your show. If you have hundreds of thousands of Instagram followers for your cooking IGTV show, grocery stores and chef supply companies will pay you to promote their brand on your channel.

More often than not though with social media platforms and advertisement endorsements, the algorithm of the platform is the one determining what ads get shown, and the platform is also the one getting paid by the sponsor. So if you have a horse-related Facebook page with half a million followers, you can bet that the algorithm will show those who are members plenty of related ads (maybe even Mane and Tail shampoo!), but Facebook gets paid for it.

The third way, creating a product or service you can sell to your own followers, comes closest to the service-providing model because your customers pay you directly. This also comes closest to using social media simply as a marketing tool, rather than following the influencer business model, and we will discuss that plenty more in the next episode.

By now I think I’ve made it exceedingly clear that what all of these revenue options within the influencer business model have in common is that to have a celebrity-based business model succeed, it’s a numbers game.

And that while it initially seemed like these platforms gave anyone the ability to make their art, i.e. content, free of the traditional middlemen, in reality, they became a new version of the middlemen. Instead of agents, publishers, etc, etc it is one mega algorithm at one mega company that was created by a small handful of people, (usually) men who work in tech. Thereby hiding the middlemen, and also putting the middleman power in far fewer hands. Those who determine the algorithm determine the fates of a whole lot of people.

And let’s say the algorithm loves you; Still, getting lots and lots of people to pay attention to you and then keep paying attention to you is hard work, even if you are a natural performer and/or content creator.

For a fantastic read about this, you can read the New York Times article by Taylor Lorenz titled: Young Creators Are Burning Out and Breaking Down.

Here are a few choice quotes from the article from the mouths of influencers

“I feel like I’m tapping a keg that’s been empty for a year.”

“This app used to be so fun, but now I’m depressed.”

“When creators do try to speak out on being bullied or burned out or not being treated as human the comments all say, ‘you’re an influencer, get over it’.”

And as a perfect example of the wisdom of always paying attention to the “you work for who pays you” mantra, and knowing what your relationship is like with the person or entity who ultimately sends you a check, Taylor Lorenz reports:

“Many large YouTube creators began stepping away from the platform, citing mental health issues. Their critiques centered on YouTube’s algorithm, which favored longer videos and those who posted on a near-daily basis, a pace that creators said was almost impossible to meet.”

But if YouTube pays your bills, you certainly feel like you have to keep racing on the production treadmill to meet the whims and demands of the algorithm if you’re going to make rent this month!

And, just briefly because this could certainly be a whole fresh historical essay (maybe I’ll get to that some day!), let’s glance at where this business model emerged in the first place. We know it emerged with social media platforms, that part is clear (certainly influential people- the town crier, the town gossip, the oracle or seer, old school celebrities- influential people are as old as humanity, but here we are talking about this monetizable attention that comes from using a tech platform). This emerged at the same time as the 2008 financial crisis. So at the same time we got these new tools- for example Facebook debuted in 2004 and YouTube debuted in 2005- we also got this mass financial wreckage.

And when the chips are down human beings are ever resourceful, creative, scrappy folks. So at this time of a long, slow-and-low economy, hustle culture was born and became glorified.

As Martina Mascali writes in an article on Monster titled What is Hustle Culture: “In the 21st century, thanks in part to the Great Recession of 2008, overworking became popular among younger generations who felt like they needed to work long hours and start a side business to achieve success in a tough economic climate. Positive depictions of ‘rise-and-grind culture’ (especially on social media) quickly normalized working harder, faster, and longer.”

In many cases this was, and is, directed at getting or holding onto a job. In other cases, people looked around from within the wreckage and noticed these new platforms winking at them from the sidelines: Facebook, YouTube, Blogger, Twitter… and they decided to apply their creativity and hustle to these new tools by becoming a content creator.

If you were a part of using these tools at that time, it’s probably a familiar memory that all kinds of advice floated around about having to post every day. Sometimes the advice was to do this on every platform. And sometimes that’s still the advice you will hear.

You had to make sure you were growing an audience! Some people knew what the audience was for; For example writers, musicians, intellectuals or chefs who didn’t want to wait for Penguin publishing house or the Food Network or whoever to tell them they got to publish their work in the world.

Others, taken by the anxiety of the moment, just applied themselves to growing an audience simply because the advice was that an audience would some day turn into money and this would be a good personal flotation device to use in the waters of the recession.

Of course, audiences don’t always turn into money. And hustle doesn’t always deliver more than burnout.

But as the platforms evolved they became less focused on publishing work (though of course many still do focus on that- like Soundcloud and Substack for two current popular examples) and more focused on publishing self.

So let’s say you’re riding the rapids of the recession: Using the new social platforms to grow an audience, using your hustle to try and earn some money and overcome the financial challenges, and looking for what you can grab on to for earning. And then it seems to occur to many people at this same moment here in late capitalism, while looking around for things to sell, hey I could monetize Me. What if my face and musings and daily life get enough attention that I make myself into a celebrity? Could I then hustle my way into making money off of being an influencer?

And ta-da, we wind up with people who are famous for being famous, like the Kardashians.

At the time, beginning with the 2008 Great Recession, it made good sense to give it a good solid try. The economy sucked. If you live in the United States you have very little social safety net (a trip to the emergency room can bankrupt you), and along comes these new tools and a new entrepreneurial category called influencer which only takes you deciding to apply your grit and hustle! You don’t need to wait around to get a book deal or a movie deal, why wouldn’t you hustle in hopes of finding that elusive security we’re all really feeling the lack of in the modern world?

And for some talented, ambitious, hard-working early adopters it worked! It’s also why you hear stories of the breakout successes that got their starts on social platforms (Billie Eilish on Soundcloud, Andy Samberg from his YouTube channel… there are plenty of other stories).

Just like conventional celebrity, you’ve got to have drive. And in some cases (yes I’m being snarky here) talent, and from there it’s a lot like playing the lottery: Some people manage to win.

So if that’s you, if you have lots of drive and talent and ambition these platforms can truly help you create your influencer business or to be noticed by the mainstream folks who sign talent (Billie Eilish got signed by Interscope records, Andy Samberg got on SNL and loads of other things from there- so they both ultimately partnered with mainstream studios and would not be considered people using the influencer business model- they crossed over into the traditional celebrity model).

But celebrity models, as I’m sure you can hear, take a lot of energy. So if you are not naturally inclined to a celebrity business model and the volume of energy and attention that requires, please, do not believe that forcing yourself into that mold will deliver financial security to you. Now that we are many years away from the birth of all this in the early 2000’s, what we’re seeing in a saturated market is that more often than not it delivers burnout.

To circle back to how I started the episode: the influencer business model is one teeny tiny business model out of many, many options.

Here at Simple Prospering we focus on service-based entrepreneurs. Meaning you have a business which delivers something needed and of value to your clients. This is a much simpler, easier, faster to grow and, yes, easier to earn from model.

You don’t need to make sure hundreds of thousands or millions of people know you and your offering exist- just the few in your corner of the world who would benefit from the service you provide. And when you provide a good service to people, they want to tell others about it, so the word of mouth factor grows over the years you are in business, so that you have less and less marketing to do as the years go on.

I’m not trying to promise that you will be marketing-free, it is usually a part of any business, but the lift will become lighter over time. Rather than the lift becoming heavier because you are trying to hold onto people’s attention. Celebrity has a much more fleeting quality than service does.

At the very least, don’t believe the hype that in order to have a reliable and successful service-based business that you need to also grow an influencer business first or at the same time. Totally different models, totally different trajectories, and just too much energy to burn which will take you away from earning revenue in your actual business.

In the next episode in this series, we’ll talk about social media when applied to marketing, and how marketing on social media has come to pervade our private lives as well.