The CEO of the firm that manages MrBeast and other top internet stars says creators should limit their investments on TikTok ahead of the 2024 presidential elections, warning of increased regulatory risk around the Chinese-owned social media platform.
In a letter to clients about the “state of the creator economy” published on Thursday, Reed Duchscher, the CEO and founder of creator talent agency Night, advised creators not to become overly reliant on TikTok. And while the advertising rates that creators can command on YouTube is down this year, Duchscher said that the Google-owned video site remains the “centerpiece” platform for building a brand.
“TikTok-first creators will face challenges as they navigate the potential impact of regulation and the constantly changing algorithm,” he wrote.
Duchscher published this letter as VidCon, the most prominent global gathering for the creator economy, draws thousands to Anaheim. In addition to MrBeast, Night’s roster of clients includes popular influencers Dream, Safiya Nygaard, and Hasan Piker.
Duchscher cited challenging economic trends and dampened advertising spending, but pointed to signs of an expanding market for creators in the long term. “Major multinational CPG brands have taken notice” of creator-driven brands, and the “rules are being rewritten,” said Duchscher in the letter.
Advertising rates, known as CPMs, on YouTube are down roughly 10% year over year among Night clients due to uncertainty in the macro market, according to Duchscher’s letter. In turn, he said, brand deals with creators are down as consumers, rather than brands, drive creator economy growth, reasons the CEO.
Even so, Duchscher said that YouTube remains the most important platform for building a brand and a company. “This does not diminish the importance of other platforms and the role they play in your stack but, currently, YouTube is the centerpiece for top creator businesses,” Duchscher said in the letter.
TikTok has shifted to specific “niches,” Duchscher wrote, causing legacy TikTok creators to see declining audience numbers on the ByteDance-owned platform. And with ByteDance’s home base in China causing regulatory problems in the U.S., including the newly passed law banning TikTok in Montana, the platform is an increasingly risky bet for creators.
“While there is still a massive audience and meaningful opportunities on TikTok, we believe that creators can not be overly reliant on TikTok for long-term business building,” he wrote.
Austin resident Duchscher started Night in 2015 with the idea that creators need managers to emulate the careers of Hollywood stars who cross into entrepreneurship. Since signing MrBeast in 2019, he’s helped the YouTuber produce content, ink deals, and craft the strategy for his consumer brands MrBeast Burger and Feastables. These elements have elevated MrBeast from 14 million subscribers when he signed with Night to 162 million subscribers in less than four years. In the process, Duchscher has made millions and built a full management company for some of the largest digital stars in the world including Unspeakable, Jesser, and ZHC.
In his letter on Wednesday, Duchscher advised creators to embrace new artificial intelligence tools. “This is an if not when proposition for all of us. Integrating A.I. Tools can enhance various aspects of the creator stack, such as thumbnail creation, scripting, data analysis, animation, pre-visualization, editing, dubbing, and more,” he writes.
Similarly, investing in high-production-value content—like that of MrBeast, which can cost upwards of $1 million per video—is worthwhile in terms of both audience growth and opportunity to translate that into CPG brands, according to Duchscher. Drawing on the success of Feastables, he writes: “Content is now becoming the initial investment to build a brand, community, and distribution, which enables successful scaling of a CPG company.”