Pola Böhm is a Berlin-based yoga teacher, one that made her passion and her work the same thing since a long time. She is also one of the many fitness trainers that joined the Urban Sports Club (USC) in the last couple of years.
Urban Sports Club is a platform start-up launched in Germany in 2012, which is now the market leader among European providers of fitness flat rates. In Berlin only, the platform works with almost 1400 studios and trainer from various sports that customers can access with just one membership.
From the consumer perspective, USC is a champion of the “platform economy”: it offers an almost infinite choice and great convenience by matching demand and supply and making all that simple to use, simple to manage, simple to understand.
For providers like Pola, the story is different, and the value of joining platforms like USC very questionable.
Most marketplaces like this base their value proposition for suppliers on helping them to reach more customers and increase occupancy. They belong to a wave of startups that have been trying to “Uberize everything” in the last few years.
But for a yoga teacher like Pola, joining USC is a double-edged sword:
To provide so much convenience to the end customer, platforms must control the full experience and the relationship with customers.
The experience is highly standardised, and suppliers have little way to differentiate themselves.
Taken to its extreme, suppliers become commodities – more gigs, fewer professionals, independently from service provided.
Suppliers become dependent on the platform and compete against each other to get visible (whether on Deliveroo, Etsy or Amazon or YouTube or Facebook… there is not so much difference: you optimise for the platform and for the algorithm, not for your individual customers. With social, you think eyeballs, not persons, since you work for a system that earns money with programmatic ads).
The contractual terms might be transparent for the end customers (like the USC monthly flat fee for which you can access to a capped number of visits to fitness studio and classes), but not for the suppliers, each of them receiving a different kickback based on their individual contract with USC, often less than the 50% of a normal class price.
A cooperation with the USC is only worthwhile for yoga teachers if they can compensate the lower income per visit for with a significantly larger number of customers. As a result, large studios benefit, while smaller studios and self-employed teachers struggle – that is most Berlin’s yoga providers.
But there is more to frustrate yoga teachers like Pola: platforms like USC might change the yoga culture. For the worse.
Platforms are designed for growth above all: they reward to hold bigger yoga classes with dozens of participants, forty, fifty, constantly changing. How can you help them in making progress? How can you develop the trust you deserve as a talented trainer, if you do not even know the names of your trainees?
Pola took action. She founded the “Fair Yoga Initiative” as a commonplace for yoga teachers that are abandoning Urban Sports Club and exploring alternative ways to come back to their roots of their yoga job: a personal, individualised and relationship-driven discipline.
A new paradigm is emerging, showing that there is life beyond the platform economy.
When I found the story of Pola on a Berliner newspaper, I thought there was not a better moment to surface it now, to introduce you to what can come after the platform economy.
For Pola and many other professionals providing non-commodity services based on knowledge skills, 20202 is showing that there is life beyond the “Uber-like” marketplaces.
Fresh alternatives are coming up that allow to make a living out of your talent, or at least to develop a side hustle, with no need to be a slave of the platforms algorithms.
They allow creators of all kinds and walks of life – professionals, individuals, artists – to develop and monetise smaller audiences and customer groups: mostly in the form of subscriptions and membership fees.
What are these alternatives?
You might have heard the names of these new tools and platforms:
– Substack is a newsletter editorial tool for running free or paid newsletters. It is getting a name among journalists worldwide, for its ease of use and the prime quality of content published;
– Supercast is one of the growing number of platforms that help creators to develop, record, publish, distribute and monetise podcasts, without being bound to one only podcast publisher;
– Coachub is a coach-matching platform where professional coaches showcase and manage their 1-2-1 or 1-2-many coaching programs;
– Patreon offers to creators to support their work with monthly membership programs (think a Kickstarter, but ongoing): among its 200,000 creators are musicians, gamers, fitness trainers, non-profit organisations, visual artists, podcasters, writers and hyperfocal journalism ventures.. just to name a few. They are supported by more than 4 million patrons (paying fans).
A new ecosystem gets its name: welcome to the Passion Economy.
Patreon is the original champion of a new ecosystem that has been popularised in the late 2019 by Li Jin a former investor at Andreessen Horowitz, and Adam Davidson, an American journalist working at the National Public Radio, under the charming name of “Passion Economy”.
In this ecosystem, passionate individuals and knowledge professionals can make money out of their talents and turn passions in a livelihood by developing a direct relationship with their audience and customers.
They do not need – and rarely want – to serve millions of customers and reach millions of eyeballs: individuality lies at the heart of the passion economy. The creative tools and the matchmaking platforms of this new ecosystem allow creators to match with a narrow audience that might want badly your unique product.
The better you cater for a smaller audience, the more you will get value out of that. That is the promise of the passion economy: making the long-tail profitable for the long-tailers, not for the marketplace owner.
The pandemic, a propeller of the passion economy.
The passion economy has found its defining moment with the global Lockdown of March-April 2020: it jeopardised the gig economy in the USA, it converted all of us into workers-from-home, and – with events cancelled, fitness studios shut down, writers laid off and musicians without a stage – urged many to turn to online platforms to make money for their expertise.
One of the most shared news about the passion economy involves Patreon, the subscription service for creators. In March, 50,000 new artists joined the platform resulting in an unprecedented spike in patrons of 36% month on month across the US, the UK, Canada, Germany, Australia and Italy.
In the same time, thousands of individual writers, experts and journalists launched new podcasts and newsletters. Paid “buddy-gamers”, a phenomenon until then mostly confined to Chinas Weibo, became a viable job also for younger Americans and Europeans. Fitness studios trainers virtualized their services going on Zoom together with their existing customers: once online, they discovered they could reach many new customers. Learning platforms like Outschool, offering small online chat classes for K-12 students taught by independent teachers in the USA, had their best months ever.
The creators and the knowledge workers that embraced the passion economy during the Lockdown were not only moved by necessity.
They were already exploring ways to follow their passions and turn them into a job. They were already, like Pola, fed up with the Uber-like platforms. They discovered at their expense how poor and unstable the gig economy is.
On the other side, new customers subscribed to creators not only for lack of alternatives, but because they felt they could make better use of their attention, instead of doom-scrolling their social feed.
They discovered they could spend more fulfilling time consuming media, and also nurture a sense of connection: virtual Yoga classes became mainstream, music lessons on Teachable were popular like never before. Some people were just looking for something different from coronavirus news. Some wanted to find purposeful ways to keep their kids busy, while they were trying to master the new work-from-home setup.
During the lockdown, we discovered that the endless niches of human interest can be filled by endless creators. Add to this the growing attitude to pay for digital subscriptions and you see that the passion economy is still nascent, but not small.
What’s in it for all of them? What is the passion economy made of?
The passion economy ecosystem is a combination of platforms and tools that cover the whole spectrum of the creative value chain: from simple creative management tools (think: Canva and Kapwing) to subscription management (think: Patreon and Memberful) to content delivery (think: Tinyletter, Substack, Overcast, Podbean) to experience management, including live (think: Run-the-world).
New platforms give creators control over the relationship with their customers.
Those match-making platforms create a space for creators, but they have to bring in their audiences and recruit their customers.
Creators have greater freedom to define how the relationship works: what, how much, how often and how long to pay and receive the service.
The monetisation models are many: from the “pay-me-a-coffee” models, multiple subscription tiers, to freemium and membership-community models, there is great flexibility and room to try, pivot and iterate on better models.
Owning the relationships means that customer data are portable: like for newsletters, you can export/import your subscriber lists and move to a different service. The platform does not bound you and your customers.
The business model between platform and creator consists typically in a percentage kickback on the earnings from customers.
Some platforms, like Podia and Teachable, work like SaaS, with fees segmented by tiers based on type of features needed and volumes of customers/content.
The key differentiator from traditional marketplaces is the willingness to reward individuality.
Standardisation has been a mean for older platforms to grow exponentially and serve efficiently millions of customers worldwide. But standardisation made more difficult for suppliers to be distinctive.
Platforms like Etsy, sometimes celebrated as an early pioneer of the passion economy, fell in this trap: it tried to differ from Amazon, but to grow it had to adopt similar mechanics. As a result, if consumers seek there for something unique, they might be frustrated. Suppliers that think they have something unique to offer do not find a way to display that uniqueness and find the right customers.
The new platforms make room for creators to develop their offers more freely: teachers can develop their unique curriculum with no limitations; podcasters are not limited to a specific creative format, frequency, length, storyboard structure; musicians can decide to deliver live or on-demand gigs or even try out collective playing experiences.
Tools simplify the tech stack for creators and help them manage their new business end-to-end.
Since the age of the web 2.0 we have seen the rise of “prosumers”: with YouTube, the wikis, the blogging platforms anyone could become a creator.
The new ecosystem takes a step further by making all creation tools simple and accessible. Take the case of video and graphic editing: it is an almost zero barrier to creative work (apart from the need to think creatively). An incumbent like Adobe had to run after this evolution by developing lower tier tools such as Adobe Rush and Adobe Spark.
But there is more to offer then easy, cheap creative tools. The new platforms create bundle tools into a simple stack that helps creators manage their work end-to-end: from putting up a landing page to showcase your content, customising in few clicks your newsletter appearance, setting up a mailing list, defining the subscriber tiers, promoting the newsletter and scheduling new issues, you can do all of this on Substack. Literally, in a matter of minutes.
When developing their stack, those platforms work by reduction, à la Michelangelo: they start from what enterprise suites well; they reduce features to the ones they assume matter most to creators; they develop a creator-friendly experience; later, they add features as long as they see a common need by creators maturing. So did Substack, when it launched a podcasting beta in 2019.
Thanks to the limited standardisation and the creative freedom granted to its users, new platforms can grow indefinitely into any creative directions, knowledge works or still-to-be-invented job.
More important than expanding exponentially along one only vertical, those platforms make room for horizontal expansion into as many verticals as you can imagine. There are no limits to the jobs you can invent: it can be the paid-per-hour buddy gamer, the paid-per-session job interview trainer, the mindfulness course of the daily meditation classes, the Q&A monthly sessions with a topical expert.
Therefore, you cannot estimate a market size for the passion economy, and you should not try to do that (as Christensen taught us in the disruptive innovation theory). The territory is limitless.
The passion economy ecosystem is not per se anti-social, but it is not dependent on social media to grow and thrive. And that is, let me say, some of the best news.
Often, creators start their paid service having developed a pre-existing audience on social platforms, but many new creators jump in straight to the platforms and patiently build their customer base from there.
Sometimes, like yoga teachers, they expand from physical into digital, bringing their on-site customers with them on the new platforms: this happened during the global lockdown.
Once on the platforms, new social graphs develop that Facebook & Co. cannot easily duplicate. Highly specific creator-led offerings, such as professional coaching, develop into networks that are a reason to stay and renew the subscription: “come for the creator, stay for the network”.
Back to our yoga teachers that virtualised their courses during the Lockdown. You might think the whole thing about the passion economy can grow only if it stays digital-first.
Sure thing, the passion economy has more to offer to digital native creators or professionals that can virtualise their in-person offers.But the long-term opportunity here is to develop hybrid models, where virtual and on-site can live together: the first helps creator to develop larger audience/customer cohorts, the second can be a super-premium experience or the physical side of a knowledge work that makes you keep everything together, online and offline, physical and digital experience.
Our Berliner yoga teacher, Pola, can find inspiration from what is happening 9.000 km west from Berlin, in California. There, the yoga studios, converting to digital classes during the first lockdown, have stayed hybrid and reinvented their business model with the help of platforms like Teachable. Many customers appreciated.
How much disruptive is the passion economy?
Per se, none of those tools and platforms represent technological breakthrough, rather the opposite: emails and podcast belong to the early Internet story; any CRM system has way more features than most of the passion economy platforms; video sharing and live streaming, well, they are the norm and the driver of the biggest time spent online.
But, once assembled to explore fresh ways to serve new customers, these tools can disrupt existing markets, and create new ones. How?
They simplify things and innovate business models, creating a monetary incentive for creators to produce stuff and value incentive for consumers to get things that better respond to their needs and resonate with their taste.
On the supply side, the new tools make two things:
1. they innovate business models (think: subscription and membership management for many services) giving to creators the perspective to monetise their knowledge creative work, instead of putting stuff online for the benefit of the platform owners that run advertising and some likes on a video.
2. they deliver subsets and simpler versions of enterprise class tools to create and deliver stuff. Not everybody needs the full Adobe Creative Cloud. Not everybody needs Salesforce to manage their prospects and customers. Not everybody needs to run a full website on WordPress or Drupal.
On the demand side, the new ecosystem does three key things.
1. It improves the discoverability by creating thematic verticals that match with current attitudes and behaviours. In theory, you could assemble by yourself a catalogue of fitness courses by browsing YouTube and the Internet, but it takes time and – unless you are very disciplined – it will not help you create a routine and check progress.
You could go here and there and collect a catalogue of digital books, videos and online resources to teach yourself Python and Data Science… but what if you find a teacher that can give you the basics, assign exercises, help you find the best resources, and this with no need to pay for an online University course?
2. It develops offerings that are cheaper, or more convenient than the traditional one: you can access services that otherwise you would not take because of the high cost. This is, for instance, the case of many professional coaching and courses online.
3. It unbundles content that you would not consume as a whole and lets you to pick up only the stuff that interests you.
On that side, I am a kind of extreme user of information sources. In the analogue age, I used to read three newspapers a day. Today, being still an omnivore news freak, I have the chance to unbundle my information needs. I have six news apps on my phone, three of them on a premium subscription, and I have subscribed to +30 newsletters and podcasts that cover both my personal and professional needs with very targeted, top quality sources in English, German, Italian. Some of them come from established media, some from individual experts. Substack is for me a place where I publish my stuff, but also a place Where I subscribe to the stuff made by others.
“The most powerful, radical industry change happens when non-production is matched with non-consumption.Through this combination, the Passion Economy creates the potential to give rise to both new-market and low-end disruptions. Because new producers enabled by Passion Economy platforms enter the market, previous non-consumers and over-served consumers in various sectors have a wider range of choices than ever before”
The journey of the passion economy has just began.
It is unlocking creativity and giving birth to new media categories for creators to fill, as Twitch has done for video game streaming. It is giving rise to nonexistent labour by offering new outlets for creators to share expertise. It inspiring people to create never seen types of jobs, like the “buddy gamers”.
It is correcting some drawbacks of marketplace and letting people find their place outside of social media, and outside of the annoying rules of the attention economy.
Potentially, it can help people to let the gig economy behind their back, and go for more self-fulfilling work. Still unstable, still lacking a safety net, but promising. For people looking for a side hustle, the passion economy has everything to offer, provided you use your brain to create and deliver value and find the people craving for it.
We can expect that the creative power unleashed by the current platforms will go into all directions: we will see more vertical platforms, more domains, more knowledge shared than ever.
I can imagine new platforms disrupting even LinkedIn, that – as of today – mimics more and more social media and fosters less and less genuine connections. I can expect to see tutors for all specialties, and a new field for mind coaches, psychologists, personal development mentors.
I also think publishers and passionate creators can learn a lot from each other, since they share a common challenge: develop content and experience that people want to pay, driven by proven life-improving value, and free from the obsession for eyeballs, focusing back to the real people publishers want to serve, and creators want to make happy.
When Andreessen Horowitz embraced the passion economy, their investors stressed the potential of the passion economy to define the future of work. I see also a potential to define the future of publishing. It is not by chance that so many journalists have been among the first to join the passion economy platforms.
It will be a long journey, whose direction is not set. I will follow it in the next weeks and months, covering some topics I have outlined in this post, including the champions of the passion economy, the world of newsletters and podcasts, the verticals being reinvented by passionate creators.
If you want to join me on this journey, you can
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