Social media content creation has become an increasingly lucrative venture in recent years, and the number of full-time content creators is growing rapidly. A new arrival in the social content space is Passes Inc., which wants to help influencers reduce their reliance on brand deals and sponsorships by monetizing fan engagement.
To further its growth, the West Hollywood-based company recently closed $40 million of series A funding.
According to eMarketer Inc., U.S.-based creators are expected to bring in almost $16 billion in revenue next year. Still, most creators don’t make enough money to comfortably rely on platforms such as Patreon Inc. or TikTok. for a full-time job – a 2022 survey by LinkTree found that only 12% of full-time influencers make more than $50,000 per year and about half make less than $1,000 per year.
Passes functions as a social content platform, but chief executive and founder Lucy Guo said it also uniquely operates as a consumer relations management system. Since launching in 2022, Passes has built a community of about 1,000 creators and more than 500,000 users. The platform is built for users to access “exclusive content” from their favorite creators, with the option to pay the creators for more personalized and curated content.
Creators operate as small businesses
Guo said that she sees creators as small businesses with the potential to become “unicorns.” She said that when looking at the top creators who are making their own product lines, or otherwise are heavily monetizing their content, they usually have a large base of “super fans.”
“The best way to get super fans is to create an exclusive content platform … where we can make these mass interactions feel very one on one and help creators optimize their time,” Guo said. “This is really why creators that join our platform have such a large earnings difference versus other platforms, because of the tools that make it like Salesforce for your direct messages.”
The intention is to allow creators to post more intimate and personal content that might not appeal to a general audience feed on TikTok or X (formerly Twitter). Creators can monetize their fanbases through paid content and subscriptions and access analytics tools to track user engagement on posts and messages.
“Let’s say an influencer’s TikTok content is all about them in a medical field … on Passes, they could just show themselves like casually cooking, or drinking a smoothie,” Guo said. “Super fans want to see this, but creators can’t just post it on Instagram or TikTok because their engagement would just tank.”
While Passes is a few years younger than competitors such as TikTok and Youtube, Guo’s name is not new in the tech world. After working as a program designer at Santa Monica-based Snap Inc. and Mountain View-based Quora, Guo founded data platform Scale AI Inc. in 2016. San Francisco-based Scale AI is now valued at more than $7.3 billion and manages machine learning data for giants such as Meta and OpenAI.
Passes users can pay to have a direct video or one-on-one call with a creator, subscribe to a channel and or tip creators to incentivize a personal direct message. Passes caps these tips at $50,000. Guo said the company tried to make the cap “as high as possible,” but that the largest tip processed to date was about $2,000.
Passes either takes 10% of creators’ earnings with a fee of 30 cents per transaction, or takes 20% of earnings with no transaction fee. These cuts and fees depend on whether the creator opts in to Passes’ more processor-heavy features, such as anti-screen-recording technology. By comparison, Patreon takes between 5% and 12% of creators’ income, depending on when the creator joined and whether they opt in to premium features.
Positive ‘parasocial’ relationships between creators and viewers
Some Passes creators are also popular on TikTok or Meta’s Instagram Reels, meaning users can access their content elsewhere for free. Brendan Gahan is the co-founder and chief executive of Ventura-based Creator Authority, a marketing company for LinkedIn influencers. Gahan said that the “parasocial” relationships that some users develop with their favorite creators are often very deep and can easily quantify a user’s decision to pay for more content access and interaction.
“Oftentimes, the relationships that the fans have with the creators (transcends) being a fan; they feel like they’re friends … so paid access is an emotional decision,” Gahan said. “The level of investment and commitment that those fans have is just wild.”
In order to register as a creator on Passes, individuals must have at least 100,000 followers across their social media accounts. Guo said that while some of its creators have “millions” of followers, the individuals making the most money typically have between 100,000 and 500,000 followers.
“My hypothesis for this is that they aren’t getting as many brand deals (elsewhere), so they’re spending more time creating content on Passes,” Guo said.
How influencers get paid
Gahan said that unless a creator is “wildly not brand safe,” having a few hundred thousand followers would most likely be enough to get brand deals. To that end, creators don’t need to have a large following to generate “a lot” of money through either sponsorships or through the creator’s own products.
Whether the income from those partnerships can support a full-time living is another matter, he said. Making a livable income as an influencer can take time and requires a sizable amount of work per week, which could be difficult to accomplish if an individual has another job to make ends meet. According to LinkTree’s 2022 survey, 68% of part-time influencers make less than $1,000 per year off their content and 59% of creators did not monetize their content within their first 12 months.
“In general, I think it’s a good move for creators wherever possible to generate their own lines of revenue that’s not reliant upon a platform,” Gahan said. “Because then, you’re totally at the mercy of whatever changes are happening. Your (platform’s) creator program revenue could decline and burn your ad revenue, brand integration revenue could decline. So, diversification, and diversification early on, just makes a lot of sense.”
The creator economy as a whole is well funded and growing – just not as fast as it once was. eMarketer reported that influencer marketing spending totaled $5.1 billion in 2021, up more than 44% from 2020. While social media marketing spending is expected to balloon to $9.3 billion in 2025, the rate of spending is predicted to grow by just 14% year over year.
In a recent report on social trends, eMarketer analyst Jasmine Enberg wrote about 23% of U.S. social media users prefer to monetize their content through subscriptions, where users pay to access premium content or features. Enberg added that while subscription revenue is more sustainable than ad revenue, it isn’t always as lucrative.
Guo said that Passes has “tens of millions of dollars” going through the platform to creators and it hopes to increase that to “hundreds of millions” by the end of the year. The company is also working to develop wealth management tools that help creators invest their earnings, and plans to release a mobile app in the second quarter of the year. Passes currently operates as a desktop web browser only.
In Gahan’s experience, what creators want most is more revenue. In addition, they want to post on a website where there’s a high level of transparency about potential changes to the platform’s revenue model and how the creator receives their earnings, as well as a high level of predictability about their earning potential. For creator-economy companies, he said that it’s difficult to manage and serve the enormous variety of interests, needs and content types that different influencers have.
“The creator economy is not just one thing … and I think that makes it very difficult to make a large-scale business within the creator economy,” Gahan said. “(Influencers are like) craft workers with really healthy businesses, but they all have sort of different, nuanced needs. With the Patreons and the Passes of the world … undoubtably there will be some huge winners, but I think that’s a big challenge.”
