Merchants and creators shift the internet landscape

More creators and merchants move to independent platforms and build businesses that come without the aggregator tax.

The outbreak of the Covid pandemic had ripple effects that are only slowly coming to light. I’m privileged that the biggest change in my life was permanently working from home, which I wanted to do for a long time anyway, and missing my family a lot more than usual. Many weren’t so lucky.

Today, 50 million people around the globe consider themselves creators and ~2 million say they are professionals. Etsy alone has almost 8 million sellers in 2022, a +63% jump from 2021. This is in part the result of a large number of people who used the pandemic as an opportunity to stop and question what they want to do for a living and how they want to spend their time. [1]

The effect on social, commerce, and publishing platforms is strong. April 2020 marked a pivotal time that jump started web searches for platforms like Twitch and Tik Tok or terms like “online store” and “make money online.” A whole class suddenly found itself staying at home explored new ways of entrepreneurship, which is really just another word for opportunity. However, one important decision to make along the way is renting vs. owning.

Twitch and Tik Tok on Google Trends

Platform or aggregator?

Essentially, creators and merchants can choose to build their business on an aggregator or a platform. Instagram, Youtube, Tik Tok, Amazon, Etsy and Medium are aggregators that offer users an existing marketplace of buyers but also more competition. They already have the traffic and attention but take a tax for it (totally legit) and will also place your result next to 40 others. Their users have a variety of selections but merchants and creators have to compete for price and attention. Even publishers like the NY Times, Business Insider or Conde Nast are technically aggregators that bundle writers and journalists.

Ghost, Substack, Shopify, WordPress, Wix or Squarespace are platforms that allow merchants and creators to build their own business and own the customer relationship but also force them to establish their own distribution channels. If they want to change the platform, they can take export and import their customer data but they need to use organic marketing, advertising, referrals, or events to get it in the first place.

At the end of the day, both options come with up and downsides. It’s the same decision as renting vs. owning. Renting gives you greater flexibility but owning can increase your wealth if you time it right.

The CMS landscape

In the middle of 2020, a few months into the pandemic, the CMS landscape shifted. The number of sites using no CMS (think: custom CMS or social network) dropped significantly and accelerated its decline. At the same time, the number of sites using WordPress, Wix, and Shopify soared (shoutout to Joost who was the first to write about the CMS market share). Today, about 45% of the web runs on WordPress.

% of sites on WordPress vs. non-CMS sites

Excluding WordPress and non-CMS sites, we see that Shopify, Wix, Squarespace, and Webflow are growing and taking more market share, especially since mid-2020.

CMS market share comparison

When companies grow, the first question you want to ask yourself is whether they grew with the market or despite a stagnating/shrinking market. In this case, the question is whether platforms like WordPress grew because more people came online or because they gained more market share? Looking at the number of internet users since 2010, it doesn’t seem like growth has accelerated due to the pandemic but keeps running linearly. CMS platforms gained more market share.

Internet user growth

The window of opportunity

Every aggregator provides a window of opportunity for those who want to build an audience or customer base on it. In the beginning, the aggregator aims to get as many users on their app as possible. Early adopters carry the highest risk that the platform doesn’t succeed but also the highest upside because if it does, they’re first in line. Once a platform has reached critical mass, meaning it carries a significant amount of your target audience, there is an open window of opportunity to get a lot of attention without paying for it.

Then comes a point at which the window closes. The aggregator holds too much information for users to grok it all and it starts to filter content by user relevance or recency. Most aggregators provide a hybrid. That applies as much to Facebook, Instagram, and Co as to Zillow (homes), Uber Eats (restaurants), or Medium (articles).

At the same time, aggregators start charging for more exposure. Probably the most popular case is when Facebook axed organic reach on its feed in 2018. Amazon, Google, Instagram and Co all started to become more pay-to-play over the recent years.

The window seems to be most open on Tik Tok right now but creators and merchants need to be careful when choosing between renting and owning. The recent trends toward more independent platforms make me hopeful that more entrepreneurs and creators get to make a significant paycheck. More successful (independent) merchants and creators are better for the web.

Tik Tok can keep the window open for a long time if it’s able to crack revenue share. More revenue for creators means more creators. My prediction is that Tik Tok will significantly increase the number of money creators can make and kick Youtube off the creator platform throne. More creators will eventually build their own destinations, get off the aggregator drug, and build a home on platforms because they get tired of renting.

The key to success is outlasting and outperforming competitors but that’s harder when your available reach is squeezed. Half of the battle is consistently showing up. Growth Memo just crossed 6,500 subscribers, which is small compared to other newsletters but large compared to most. Not every email I sent out is great but I’ve been showing up consistently every week for the last 2 years. And I don’t need to worry that Ghost will place links to other blogs next to my content. I’ll own it for as long as I last.