Paul Melcher is the founder of Kaptur and Managing Director of Melcher System, a consultancy for visual technology firms. He is an entrepreneur, advisor, and consultant with a rich background in visual tech, content licensing, business strategy, and technology with more than 20 years experience in developing world-renowned photo-based companies with already two successful exits.

The following perspective piece is republished from our Visual 1st media partner, Kaptur.

On one side, an economy exponentially craving for content. On the other, a static, unprepared landscape ripe for disruption. The stage is set for a redistribution of value in a vibrant and volatile environment: Witness the formation of a new visual content ecosystem.

With an estimated 50 million creators and an ecosystem about to generate $14 billion in 2021, the creator economy is bigger than Brunei’s GDP. One of its defining features is its grassroots involvement. A recent study reveals that ”58% of users say that, in the next 12 months, they would pay a monthly subscription fee between $1 and $15 to access their favorite creator’s exclusive content”. Content is directly paid for by those who consume it. But it’s not alone.

Multiple epicenters fuel the rising demand for visual content. Social media platforms, obviously. They have, not surprisingly, realized that only 3% of the content submitted is responsible for 90% of their traffic. But that 3% is not infinite, and worse, it is volatilely unfaithful. It will jump from platform to platform on a whim, or rather, following latest trends—thus the necessity to offer more substantial incentives than just popularity—cash for now and undoubtedly lucrative exclusivity contracts for others.

But Social Media is not the only igniter of the demand. The explosion of interest in NFT and the associated increase in marketplaces is another. According to CNBC, “NFT sales top $2 billion in the 2021 first quarter, with twice as many buyers as sellers”. It’s predominantly visual content, and any iteration is fair game. While compensation is currently self-generated- It’s a simple buyer-seller market- it is not long before some marketplaces offer “creator funds” and other incentives to attract and retain their three-percenters. And even if success here currently feels more like a lottery game, the promise of riches is irresistible for content creators, including newcomers.

In addition to NFT and social media, businesses are also fueling the increase in demand. As commerce brutally accelerated its transition to digital, they are faced with the reality that without visual content, they are completely invisible. Whether created with internal resources or via freelancers, brands are acutely aware that their content must be exceptional to succeed. The path to successful marketing goes via agilely surfing content creators’ influence. So while they might not have yet launched creator funds directly (the question here is why not?), they are certainly powering those they feel can be beneficial for their success.

On the other side, those who should be the primary beneficiary of this massive increase in visual content demand are ill-prepared. Legacy content farms, like stock photo/video/music agencies and video production companies, seem to have missed the boat. Their antiquated business model- licensing consignment content for pennies- is and has been painfully unfit to this changing economy. While their longevity should have made them experts in creating highly impactful visual content, it is ironically the opposite. When one thinks of stock photos or videos, it is never associated with going viral. Unless, of course, if it’s to make fun of it. The reason for this inadequacy is primarily rooted in the industry reliance on third-party producers whom they purposely block from accessing any market intelligence. They thus produce and provide content without any knowledge of its performance. The result is that most of it, unsurprisingly, is useless and individual creators here make an anemic living. Interestingly enough, the trend in the stock space is heading towards offering more and more free content, opposite to what is seen elsewhere.

Thus, the new creator economy is bypassing legacy content farms and reaching out directly to visual content producers. The new middlemen and poised to benefit greatly are both curators and tool providers. Companies that have a history of licensing UGC content, like Catch & Release, Barcroft Media, or JukinMedia, are well-positioned to become significant players. If they build on their ability to spot talent before anyone else, they could, in turn, become highly successful feeders. In parallel, creation tools platforms are also poised to benefit significantly from this increasing demand for visual content. As the saying says,” during a gold rush, sell shovels.” Canva has shown the way with still content. Invideo, Vochi, Kapwing have followed for video. Anything and everything that helps creators make content creation faster, easier and cheaper is a guaranteed winner, especially if for mobile. Video editing, Broadcasting, and streaming, Sound Editing, Visual AI, File management, storage, and transfer. Mixing and repurposing content. The success attribute here is any tool that helps bypass the technological learning curve and helps to empower new creators quickly.

Opportunities in the visual content space are at an all-time high. Compensation channels are being recalibrated to better fit a shift to direct to consumer model. Content creators, long being taken advantage of, are now becoming the market darlings. Successful start-ups will be those helping to bridge the gap between creation and consumption.

Phhhoto vs. Facebook. The introduction of phodeos – a case worth lawyering up for. Take your pick: "Facebook & Instagram destroyed Phhhoto as a viable business" vs. "this suit is without merit." 

Ready for some pre-holidays “what else have the evil guys done that we didn’t know yet” reading? The summary is here. But make sure to download the alleged juicy details here, including the fact that Mark Zuckerberg and Kevin Systrom were among the early users of Phhhoto, Facebook initially wanted to partner, but then mimicked Phhhoto’s features with their Boomerang app, and subsequently cut off API access so that Phhhoto users couldn’t find their Instagram friends.

At stake: fighting for market share in the early days of a segment around what we’ve coined as phodeos (a hybrid format between photos and videos). 

Of note: Phhhoto was an offspring of Hypno, to which its founders returned after Phhhoto shut down (Hypno was first demoed at Visual 1st in 2018, and Capsule, a subsequent offspring of Hypno, was demoed at our inaugural DIY Video Summit a few weeks ago).

Zenfolio & Format. Acquisition. Visual 1st sponsor Zenfolio acquires website building platform Format. Format offers a range of template-driven website design tools as well as a photo print product marketplace aimed at professional photographers and artists. 

Vimeo & Wibbitz & Wirewax. Acquisitions. DIY Video Summit fireside chat presenter Vimeo acquires Wibbitz, a makers of an easy video creation web app for business teams, and Wirewax, provider of interactivity solutions for videos that include the options to make objects in videos “shoppable” or linkable to other outside content.