The 1 thing that makes community valuable

Here’s the Dictionary definition of “community”:

That’s too broad - it doesn’t help us understand what makes a community valuable, and therefore won’t help you make money (my goal for this newsletter).

So - let’s take a step back before we zoom in to the answer: what are the other types of cohorts Creators can aggregate?

Audiences are people who consume a Creators’ content. They might do it once or a few times or a lot. They might like it, love it, or be indifferent to it. It’s a catch-all term.

Fans are people who love a Creator’s content. They might share it, talk about it, and consume a lot of it. They might spend money on it or on products emerging from it. 

So now…what about community? Here’s a preview:

Kevin Kelly’s 2008 essay 1000 True Fans introduced the idea that Creators could make a living by having 1000 true fans who generated $100 in profit each per year. To accomplish this, you need to have an audience big enough that 1000 of them become fans willing to spend meaningful dollars.

Then, in 2020, Creator/investor Li Jin introduced the 100 True Fans theory, upping the ante:

It’s here that she introduced the concept of community augmenting the value of content.

People are willing to pay high prices for exclusive, differentiated content and access to a network of like-minded individuals…Frequently, premium content and community are bundled together to enhance the student experience by providing valuable social reinforcement and support. 

In this case, Li was talking about educational content/community, but the takeaway applies across all Creator categories: community is a multiplier on the value of other offerings.

None of these concepts are mutually exclusive - in fact, Creators can and should monetize all three. Think of monetizing these three customer categories as a pyramid (or funnel), where:

• Audience can yield $10+ each through ad revenue and sponsorships

• Fans can yield $100+ each through subscriptions and product sales

• Community members can yield $1000+ each 

If you’ve been reading Creator Logic for a while, you’ve seen a number of examples of this logic bearing out. My favorite example, though, is Jay Clouse’s The Lab.

I love Jay’s community because it makes him over $500,000 per year from <300 members, each of whom pay $2000-$4000 per year. That’s expensive by any standards, and he has courses available with the same actual content for 5x less…so what could he possibly be offering via the community that you wouldn’t get otherwise?

Here are some of the testimonials from The Lab (and no, this is not a sponsored or referral post):

What do all of these have in common?

It’s not Jay. It’s everyone else in the community (the “Labmates”).

The Lab’s members are finding tremendous value in each other. That’s why they’re willing to pay, and continue paying (Jay’s wait list is a mile long - I’ve been on it for months, because churn is so low).

Jay can’t possibly deliver $2000+ worth of value to 300 people each on his own, through a course or as a community manager. 

A $2000 price tag means people expect bespoke, high-quality service. The more you dilute that service across a large group of customers, the lower the “quality” and less valuable that service becomes. There just isn’t enough time in the day to provide high-touch service to everyone. 

So what provides enough value for 100 people to spend $1000 (or, in this case, 300 people to spend $2000-$4000)?

Here’s what Jay’s price tiers look like. Notice what’s included in the four-figure tiers:

Valuable interactions with other like-minded people.

Jay’s community provides value to each other in a way that he just can’t as one person with 24 hours in a day and 365 days a year.

What’s the flip side of this?

I’ve seen a few communities (that I will not name) shut down for the opposite reason. 

These amazing Creators had fans who were willing to pay $1000 for the right value, but the Creators just couldn’t deliver that amount of value themselves - and their subscribers weren’t supplementing. Without members providing value to each other, a community isn’t a community.

And therein lies the definition that will make us money.

For Creators, community is a fandom that has consistent value-adding interactions with each other regardless of the Creator’s engagement.

If you have a group of fans that doesn’t interact with each other in a value-add way, they aren’t a community, they’re a fandom. They’re valuable, to be sure, but they are very unlikely to spend $1000 a year recurring on your business. 

I’ve seen this definition bear fruit over and over. For example, my team at Patreon realized that one way to identify Creators who were likely to make a lot of money from membership was if their fans had gone and launched a Discord or subreddit without their involvement.

If your fans love you so much they want to talk about you with each other when you’re not around…

If your fans have learned so much from you that they can (and do) share your teachings with each other…

If your fans find meaning and purpose in sharing knowledge, insights, and perspectives with each other…

Congratulations! You’ve built a community, and you’ve got a good shot at making a lot of money.

In a future issue, I’ll cover how you can monetize communities, including some of the new platforms and business models that are emerging in the community space. Until then…

Thanks for reading!

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