By Andrew A. Rosen

Good morning (PT)/afternoon (ET)!

The Medium delivers in-depth analyses of the media marketplace’s transformation as creators, tech companies and 10 million emerging advertisers revolutionize the business models for “premium content”. 

[Author's Note:With the New Year fast approaching, I have decided to run a survey about the seven entrepreneurs or "builders" I interviewed this year, all of whom sit at the intersection of Artificial Intelligence (AI) and media. How could I go deeper with them in a new offering for readers like you?

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My latest Medium Shift column for The Information went live last Tuesday. In “Armed With AI, Small Businesses Also Challenge Hollywood”, I wrote about Don Allen Stevenson III who is both a creator publishing content using AI tools like Meta's Movie Gen and also the owner of a small business.

Don Allen has built his own hybrid model for the AI era.

My favorite “a-ha” moment from the interview with Stevenson happened when he told me that 80% of his videos will be made with AI and require little or no additional labor. Social media audiences will watch, usually for free (he has paying Instagram subscribers). The followers, likes and views of the 80%—aka “vanity metrics”—will help attract the “luxury audience” who will pay to consume the other 20% of his content. 

Normally we think of the 80/20 rule—or, the Pareto Principle—as 80% of outcomes come from 20% of causes. Stevenson’s business model flips that logic on its head: 80% of his work helps him monetize 20% of his work better than he could do with advertising or sponsorships alone. 

This math is bread-and-butter business logic for marketers and retailers: Stevenson generates and captures attention with AI-generated content, first and frequently. He then drives those audiences down various buyer’s journeys—or conversion funnels—where he converts a smaller percentage of those audiences into paying customers with other content and services.

As Stevenson told me, “Three years ago I would have assumed that if you wanted to make stuff that looked like cinema-quality, feature-ready you would need a large studio. That’s not how I feel anymore.” In other words, visual effects (VFX) professionals no longer need to rely on the TV or theatrical mediums, only.

As consumer demand evolves away from traditional TV shows, movies and even console games, creators like Stephenson and platforms like Meta seem best-positioned to capture and shape that new demand.

Key Takeaway

There may be at least 100,000 Don Stephensons out there with direct access to audiences at scale who will not have a business need to monetize all or almost all impressions in order to break even. The implications seem terrifying for Hollywood and traditional media.

Total words: 1,100

Total time reading: 4 minutes