Meta Bets AI Will Turn "Hundreds of Millions" Of Small Businesses Into Creators, Too
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Meta CEO Mark Zuckerberg delivered a series of interviews last week for Meta Connect, the annual conference for “developers and innovators who are building AI, mixed reality and wearables.” The biggest source of chatter from his interviews was the surprise reveal of Orion, Meta’s first pair of augmented reality glasses.
The Orion “won’t make its way into the hands of consumers” but it also is not a research prototype. The purpose of the reveal was more a window into Meta’s research and development (R&D) processes, to date.
Video snippets from two interviews with Zuckerberg popped up in my feeds shortly afterward. One clip was of his interview with The Verge where he was asked about the creators’ “frustration” of having “no control or compensation” over Meta’s language learning models scraping their data.
Zuckerberg countered that he believes “individual creators or publishers tend to overestimate the value of their specific content in the grand scheme of this.” It was a boldly bearish take on the value of legacy media content.
The other was a clip of him outlining both the bull and the bear case for Nvidia from his interview with YouTube creator Cleo Abrams. That interview was equally as notable for an exchange about how the developments in AI will intersect with social media, if not change it.
In particular, Zuckerberg highlighted how “social media started out as people primarily interacting with their friends and now […] at least half of the content is basically people interacting with creators or content that's not created by people who they kind of personally know.”
Last Thursday I wrote about how YouTube is proving that “there are more efficient models than traditional theatrical and television production models that can entertain audiences, at scale, in their living rooms.” While YouTube is "blurring lines between the fans as consumers and fans as producers", Meta’s aggressive bet on AI is expanding the definition of "creator" to include "hundreds of millions" of small business accounts, too.
Key Takeaway
YouTube may be focused on creators "becoming Hollywood faster than Hollywood is becoming creators”. Meta's version from Connect seems to be "small businesses are becoming creators faster than creators are becoming small businesses."
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More McLuhan Than Christensen
To date, the story of Meta’s ten-figure ($46 billion since 2021), Clayton Christensen-type bets on AI, augmented reality (AR) and virtual reality (VR)—or, more popularly known as the Metaverse—have been about disrupting its reliance on a declining, more competitive social media marketplace.
But, Zuckerberg described the current opportunity to Abrams is solving for the “big challenge” created by the growing interactions between creators and fans. There are “only so many hours in the day” and a creator’s community “probably has a nearly unlimited demand to interact with” that creator. Moreover, the creator wants to interact with the community because they are trying to grow it.
Meta's “creator-friendly” model aims to leverage AI to offer “super compelling” solutions for a community to interact with a creator when they “can't be there”, like chatbots and avatars.
Notably, Zuckerberg is not pitching a competitive model to the YouTube Partner Program's multiple channels for creators to monetize their communities (Meta's Creator Bonus program is smaller and less evolved). Instead, Meta is more focused on capturing and monetizing attention with advertising, only, because:
It competes with YouTube for consumer attention across Facebook, Instagram, Messenger, WhatsApp and Threads; and,
“Substantially all” of its revenue comes from Facebook and Instagram.
Media Agnostic
I argued in last week that because “creators are becoming Hollywood faster than Hollywood is becoming creators”, YouTube’s model seems more ‘creator-friendly” than Netflix’s.
Zuckerberg pushed this logic to a new extreme in his interview with The Verge. He argued creators’ need for AI to help them interact with their communities 24/7 is similar to the needs of “hundreds of millions of small businesses” to deliver “some combination of sales and customer support” 24/7, 365 days per year.
In other words, the future of creativity over the internet will be shaped by the needs of both “hundreds of millions” of small businesses and millions of creators. But, there is also going to be “this more creative stuff" from creators "that's UGC that people create for better, wilder use cases that they want.”
Meta’s solution is analogous to YouTube’s Partner Program by delivering the tools to drive greater engagement between consumers and creators. It also mirrors how YouTube is shaping consumers' investment in content and creators from something emotional into something financial. But, it is exponentially bigger because Meta is betting that small businesses and creators are the same customer.
The obvious implication is that YouTube and Google may be defining “creator” too narrowly for its Partner Program in the long run. The deeper implication is that Netflix—currently 15% of the market capitalization of Google ($2 Trillion) and 21% of Meta ($1.44 Trillion)—has limited “creator” to production studios.
It will struggle to compete for attention with either YouTube or Meta platforms in the long-run (not good news for its nascent advertising business).
Bearish Vision
The idea that small businesses are content creators is not a new concept. YouTube creator Samir Chaudry of Colin & Samir told me earlier this year that "the media unlocks other business opportunities" for creators.
The YouTube Partner Program and online shopping platform Shopify have made these two models increasingly interchangeable, both in partnership and separately. Jimmy Donaldson aka MrBeast has a bigger business in chocolate bars (Feastables) than in YouTube videos. Prime Hydration, a sports drink business co-owned by creators Logan Paul and KSI, jumped to $1.2 billion in revenues within two years (though it has recently seen its sales dip).
In Hollywood’s “new business of living room content”, YouTube creators are proving that “there are more efficient models than traditional theatrical and television production models that can entertain audiences, at scale, in their living rooms.” These models do not eliminate the need for streaming services delivering legacy media. But, they are forcing both Netflix to shed more of its legacy media DNA and legacy media to consider alternatives to subscription streaming, including cloud-usage streaming models.
Notably, Zuckerberg is not arguing that “premium content” from the linear, theatrical and book publishing mediums has zero value (Meta is currently navigating a potential class action by authors Sarah Silverman, Richard Kadrey, Christopher Golden, Ta-Nehisi Coates and others). Rather, he imagines “there are going to be certain partnerships that get made when content is really important and valuable.”
Otherwise, as he told The Verge, over the past 20 years, platforms have been made “richer” every “three to five years” by having more types of content that people can share and different ways to express themselves. “Given the pace of change in the tech industry" he believes that that trend will both continue and accelerate, and that "probably most of the new formats are going to be AI-connected in some way, given that that's the driving theme for the industry.”
Glasses vs. AI
In this light, it is worth asking whether Orion glasses are a noteworthy paradigm shift from Connect last week. Physically, they have more utility than Apple’s cumbersome Vision Pro. Technologically, all reviews point to it being a potential replacement for smartphones. There are few selling points because the hardware is not for sale.
Rather, listening to Zuckerberg it is clear that he is spending $46 billion for Meta to become “the invisible ‘groundrules [sic], pervasive structures and overall patterns’ of the internet that McLuhan writes about. Meta is focused on building those to help hundreds of millions of businesses In many ways, Meta's family of apps already is one architecture because it serves over 3.27 billion daily active people.
YouTube may be focused on "creators becoming Hollywood faster than Hollywood is becoming creators”. Meta's version from Connect seems to be "small businesses are becoming creators faster than creators are becoming small businesses."
It is a fascinating distinction that is more Marshall McLuhan than Clayton Christensen. It offers a deeper lens into how the architectural changes in the internet are driving the structural changes in the media away from traditional “premium” content.