TL;DR
- New academic research presents a comprehensive analysis of the influencer economy and its impact on the digital economy.
- “A Model of Influencer Economy,” by Lin William Cong and Siguang Li, studies the industrial organization of the influencer economy and how technology affects the bargaining between sellers and influencers.
- The research examines how companies and brand owners increasingly depend on influencers to attract consumers, finding that influencers increasingly value long-term partnerships with brands rather than one-off exclusivity requests.
READ MORE: A Model of Influencer Economy (Lin William Cong and Siguang Li)
While the creator economy continues to grow into $100 billion industry embracing over 200 million people worldwide, the industrial relations behind it are little understood.
A new research paper aims to address that: The paper by Lin William Cong and Siguang Li, titled “A Model of Influencer Economy,” studies the industrial organization of the influencer economy and how technology affects the bargaining between sellers and influencers.
It examines how companies and brand owners increasingly depend on influencers to attract consumers. Among its findings is that influencers increasingly value long-term partnerships with brands rather than one-off exclusivity requests. They also expect to be compensated more when exclusivity is required.
Many creators and influencers rely on physical attributes (listed as charisma, wisdom, appearance, and style) alone without actively creating content. For instance, Instagram enables brand owners to sell products through idols who attract consumers simply seeking to see them.
READ MORE: What’s Behind the $100 Billion+ Creator Economy (Hint: It’s Not Creativity) (NAB Amplify)
Naturally enough, influencers who can effectively differentiate themselves from others in terms of their style and content are more likely to attract a loyal fan base and generate higher income.
The authors find that more powerful influencers sell better-quality products, but pluralism in style mitigates market concentration by effectively differentiating consumer experience.
Proponents of the creator economy and of Web3 tools such as blockchain and DAOs have theorized that the next generation of the internet could alter the distribution of power and wealth in the labor market from tech driven monopolies to more a more equitable relationship of reward for work.
