#3: How gen AI will reshape the creator economy

Economic power will shift to those who control distribution & social influence. Human exceptionalism in creativity will persist but AI will take over routine creative tasks.

This is a newsletter on AI, entrepreneurship, creativity, and mindfulness. Season 1 breaks down Generative AI and its impact on creative jobs and industries. Post #1 is here.

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In my last post, I discussed how Generative AI will expand the creator economy and unleash new forms of creativity. In this post, I will discuss downstream implications of these changes.

Wage pressure

This increase in supply of creators combined with their higher productivity will make creative products cheaper for consumers and increase the variety of content out there. This reduction in cost and increase in product variety will help grow demand for creative content. For example, there will likely be many more subscribers of music, video, and other subscription services as they become more affordable.

While demand-side market expansion is inevitable, I believe that growth in the supply of creators will likely dominate the demand-side growth. This will lead to wage pressure as creators compete with each other in a more crowded market. Median creator earnings may reduce while wealth is concentrated in a handful of top creators.

Premium on Discovery/Influence

Another implication is the resulting premium on content discovery and influence. With so much new creative content, it will be increasingly difficult for even the best creators to rise through the clutter. Platforms and their recommendation algorithms will play an even bigger role in determining content success. Already, they drive most of the content choice on YouTube, Netflix, and Spotify (and almost all of it on Tiktok). When creation costs drop and we are inundated with 100X more content, we will be almost exclusively dependent on algorithms for content discovery and selection. Outside of algos, influencer creators will have an edge over those who are less familiar with how to build a social audience. You might have better content but it won’t matter if you don’t have influence. Creators of all kinds will need to learn how to build and manage an audience if they want to succeed in this new landscape. [This is at least 1 reason why I decided to launch this newsletter.]

Workplace Implications

As Generative AI becomes more mainstream, it will allow workers with low to moderate skill levels to produce professional-quality work for a range of creative tasks, including writing, design, software development and more. However, this will lead to a shift in the skills that are most valued in the workplace, with a greater short-term emphasis on prompt engineers – those who can craft the prompts/instructions that generate the best output from AI. [In the long run, I suspect prompt generation will itself be highly automated.]

Will authentic human-created content survive?

It is unlikely that authentic human-created content will be used for routine creative tasks at the workplace due to the cost advantages of AI-generated content. For example, commissioning a writer or musician for an ad jingle would be more expensive than using AI to generate a range of options from which to pick (or at least pairing a writer with AI). There is one caveat to this claim — this view only considers the cost advantages of AI but ignores consumer preferences. My Wharton colleague Stefano Puntoni and his coauthors have shown that consumers prefer human-made over AI-made especially in settings where products have high symbolic value (e.g. “when a product expresses something about one's beliefs and personality”). No doubt, we will (and should) prefer human creativity in many settings. Their study, however, does not explicitly compare cost differences between AI and human made products and I feel that these cost advantages will be overwhelming especially with routine creative tasks.

That said, authentic, high-quality, human-created art will not only thrive but will command a premium as it becomes rarer in the marketplace. Exceptional creativity comes from a deeper place that includes the ability to feel emotion, among other things. For example, AI-generated music is unlikely to evoke the strong emotional response that Billie Eilish's music does for her fans, and the story behind her music is important for her fans. AI-created music is unlikely to have an emotionally compelling backstory. The story behind art is just as important as the art itself (a point that newsletter reader Sudev Sheth also brought up).

In short, exceptional human creativity requires tapping into the intuitive side of our intelligence, which is often buried under routine thought processes. But becoming exceptional creators will require us to adapt. As someone who has made a living out of being able to logically break down problems, I find it hard to reconnect with that intuitive side (which was likely more accessible to me as a child but less so now). In his book The Power of Now,” Eckhart Tolle says "All true artists, whether they know it or not, create from a place of no-mind, from inner stillness. The mind then gives form to the creative impulse or insight. Even the great scientists have reported that their creative breakthroughs came at a time of mental quietude." He goes on to suggest that "thinking plays only a subordinate part in the brief, decisive phase of the creative act itself."

The assertion that high-end human-created art will survive and be even more valuable assumes that we will have a way of determining which products are human-created versus AI-created. If Generative AI can pass a Turing test for content and we have no way to differentiate between content created by AI and humans, then the role of humans in creativity will be redefined forever. Even if consumers prefer human-created art, we might end up with a lot of AI-created art in the marketplace masquerading as human art, such as successful musicians who are mostly a front for AI-generated music.

Generated using Lexica.art

Personalized interactive content

Bandersnatch, an interactive film in the Sci-Fi series Black Mirror. allowed viewers to make certain choices that influenced the ending of the film; your classic 'choose-your-own-adventure' story. The variations and alternative endings had to be carefully scripted, filmed, and edited by the creative team. What if you could create variations costlessly based on text input by a designer or by viewers themselves? Could you then create one version for each viewer? If you can do that, you can probably also monetize the content multiple times with the same viewer by letting them see multiple versions of the same story.

Imagine AI creating a musical collaboration between your two favorite artists who might never actually join forces in reality. This is not unlike the song "Heart on My Sleeve," an AI-generated “collaboration” between Drake and The Weeknd, which many fans initially believing to be a real collab. We should expect to see more of this.

(To be clear, I am not advocating for a hyper-personalized world because of the undesirable consequences of being in information bubbles. I am merely noting a likely result of a massive decrease in the cost of creating personalized content.)

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Upcoming posts:
#4 how ChatGPT works
#5 Privacy and IP concerns with its use (a reader request)
#6 Writing prompts for AI