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The 3 Stages Of Monetization (Why Most Creators Are Actually Broke)

I wanted to become a creator because I wanted to do what I want.

Plain and simple.

That explains why 30% of children and 54% of adults in the US said they wanted to become a creator / YouTuber as a career in Harris Poll and Morning Consult surveys.

Most people would tell them to “get a real job” or to “be realistic” but I think the opposite.

We all have an innate drive to do something that fulfills us.

Something that we want to do.

Something we can progress at (and not get trapped in the same mechanical tasks day after day).

Something we can become skillful at to the point of having more control over our main resources: time, money, and choice.

There are a few problems that spring up here:

  1. Everyone wants to be a creator, nobody wants to accept that it’s a business, and because of that, you have to learn every single skill necessary to run a business (cc: The One Person Business).
  2. People think it’s as easy as just posting “authentic” content without putting any thought into persuasion, marketing, or sales. People hide behind the term “authenticity” – which many don’t seem to understand – so they don’t have to improve their communication in writing, videos, designs, etc.
  3. When they finally figure out that social growth is relatively simple if you don’t rely on the algorithm, they don’t know how to monetize the audience they’ve built.

The result?

100% of people start.

1% of those people continue because their audience is growing.

1% of that 1% actually becomes in full control of how much they make.

Most people quit because they lack the ability to solve their own problems. If they aren’t growing, they blame “reach” and “the algorithm” rather than their content quality and ability to get their content shared by manual effort.

Then, when they grow, they complain that niches like self-improvement or spirituality “aren’t profitable” rather than testing marketing angles until they are profitable.

(Nobody wants to “unlock their potential” bro. Target an actual problem in someone’s life.)

None of those are true, you just aren’t an entrepreneur yet. You can’t call yourself out on your own bullsh*t, learn the skill that solve the problem, and continue that process until you are as successful as you want to be.

The “skill issue” meme is a blessing because it exposes the fact that any problem can be solved with sufficient skill and practice in a world where people whine and complain about life being unfair.

Let’s dig into this.

We’ve already discussed how to grow multiple times in the past, so we’re going to focus on the mistakes people make to monetize.

There are 3 stages of creator monetization.

What most people don’t know is that they can jump to stage three.

At the end of this letter, I’ll detail exactly what skills I would learn first, what I would build, and the exact steps I would take to skip the pain 99% of beginner creators go through.

Stage 1) The Content Creator That Took The Name Too Seriously

I’m grateful for the business environment I learned in.

I didn’t read business books. I didn’t pay attention in college business classes. Business as a concept never really made sense to me.

What most people would immediately write off as a “scam” (or at least be extremely skeptical about if they weren’t already in the online business space) is where I learned almost everything about business.

I bought sketchy eBooks about the alchemy of sales and gaining freedom with freelancing. I bought courses on how to start a 6 figure ad agency. I bought an e-commerce brand-building course. I bought a twitter mastery course.

This was closer to 2017-2018 when the market sophistication was quite low. Now this knowledge is readily available almost everywhere.

What’s funny is that I didn’t see results immediately… crazy, I know. It took a few years of failure for my awareness to expand enough to make sense of all of the teachings. But when it all clicked, that’s when things took off.

I recently discovered that most creators didn’t go through this same phase.

I don’t know what people are teaching nowadays (I just don’t pay attention) but supposedly there are a large amount of creators who think only building an audience is the key to their success.

So, they do whatever it takes to build an audience. They follow the trends, cater to the algorithm, and before they know it, they have a massive audience without any monetization knowledge.

The result is that they remain dumb to their potential as a creator.

The novice monetizes with:

  • Sponsorships
  • Affiliate offers
  • Platform revenue

Unless you have a huge, dedicated following, then these are almost always a bust. Forget about making anything worthwhile as an account with under 100K followers.

My question for people in this stage:

You do understand that you can just create your own version of the sponsorship or affiliate offer and take 100% of the profits?

And if you can’t, you can create a profitable product based around the sponsorship and affiliate offer and move that to the backend to make even more money?

As an example, if you were an affiliate for my software Kortex, a second brain – you could build an audience solely around the software and make us a lot of money.

Or, you could create a digital product, like a writing course, take all of the profits, and promote Kortex as the software you use to write with leading to recurring affiliate revenue on the backend.

You don’t need experience to build a product. I can build a launch a planner without having a PhD in neuroscience. I can just buy a few planners off Amazon, create my own template in Notion with what works best, sell it, get results, and that’s how I build credibility.

Stage 2) Building Yourself Into A Second 9-5 Without Realizing It

A lot of people skip the first stage (thank goodness) because they come across someone teaching a service-based model, such as freelancing, coaching, or agency work.

These are the common promises they hear:

  • You can replace your income with 2-3 clients paying you $2000+ a month.
  • You can monetize your skill set without a large following.
  • All you have to do is learn a skill, do free work to build a portfolio, and start reaching out to prospects.

These are all true, and I occasionally teach and recommend this option, but beginners are often let down with the reality of this business model.

You don’t realize how much outreach is required, so you send 20 cold DMs and call it a day. Even if you send more, 90% of them are ignored, 5% of them respond telling you to get a life, 4% are tire kickers, and 1% buy from you just to be disappointed in your work and ask for a refund (and refunding your first few thousand dollars isn’t fun).

Of course, this is the worst-case scenario for the majority who start from scratch, and you get better at this process as you practice, but after 3 months, I understand why you think online business is a scam and why you’d rather go back to the last job you hated. As with most things beginner related: skill issue.

I’ve realized that most people who read my content are not ready for the kind of commitment required to run a service business.

Many people that come to me are in a situation where they need to make money in 3 months or else their life explodes. I’ll tell you right now: don’t even think about starting a business. Get a better job that allows you some mental clarity to build in an ethical way.

If your only goal is to make money by any means possible, you will lose. You will spam customer acquisition strategies, land a few clients, fail to get results, and hurt the initial reputation you were trying to build if you do this on social media.

Your mind is so narrowed by stress that you selectively listen to what people are saying online. They give you everything you need, but you only listen and implement the parts that are fast and easy, so of course you fail.

Other people who come to me are in a better situation, but I still wouldn’t recommend this monetization path to most people.

Most people start freelancing or coaching because they’re passionate about a certain skill, but the passion for that skill fades fast when they realize they weren’t passionate about the skill alone, but the ability to build what they want with that skill.

Client work leaves you devoid of meaning because you are still assigned projects to work on. You don’t get to choose, create, and iterate on projects you assign yourself. Your mind is still locked into another person’s dreams, not your own.

Keep in mind that I am talking about creators with the goal of staying as one person and having full control over their time. Agency work is fine, but that will have to take close to 100% of your focus until it runs like a well oiled machine, which most people don’t have the management skills to do.

Becoming a freelancer or coach is a great option, but it has a few similarities as the job you just left.

First, monetizing with a service business is an incredible way to learn the skills necessary to make more money (marketing, sales, audience building, offer creation, fulfillment, operations, content writing, funnels, etc). Like how a job teaches you the real world application of the skill you learned in college, that’s a positive.

Second, once you have 4-6+ clients, your income is capped and your time is limited just like your job was.

Even further, you were told to niche down to land clients, so now you:

  • Have a niche that’s difficult to pivot out of.
  • Have client work to fulfill that takes up half your day.
  • Have outreach to do if you want to survive (because clients can leave at any time leaving you down thousands of dollars a month, very volatile).
  • Have to try to gather the mental clarity to come up with content ideas so you have an audience you can leverage when it’s time to get out of client work, but this is a last priority in your mind when it should be first.

Your only option is to increase your prices, start hiring people, or nearly start from scratch and productize. I’d rather you not go through that pain, because you don’t have to in the state of today’s digital environment. We don’t live in the 2016 clickfunnels era anymore where the only people on social media were massive influencers. Smaller creators have a chance because the industry has evolved.

Stage 3) Taking Full Control Of Your Income

Most people start with stage 2 – client work – because that’s the dominant online business paradigm at the moment.

As mentioned, there’s nothing inherently wrong with client work. It’s a great fit for some people. It’s not as great a fit for beginners as most make it believe. But for those who have similar goals to myself – full control over how much I work, how much I make, and exactly what I work on – there’s a different way.

  • Communities
  • Courses
  • Cohorts
  • eBooks
  • Other digital products that can sell while you sleep

Many people are turned off by these things.

For some reason, they see client work as more feasible. “Most people do it, so I should too.” They’ve been learning and working for someone else their entire life so it’s difficult for their mind to comprehend how they can earn more by doing less work for others.

Why do I believe monetizing this way is better than most?

1) Most people would rather learn things than have it done for them. High level entrepreneurs buy information all the time for themselves and their team.

Anyone who is looking to have work done would probably benefit more from learning the skill themselves and then hiring someone if they want to.

2) 99% of the people I’ve taught and worked to don’t want to work with ultra rich people. They want to do what they enjoy with people they enjoy.

In that case, you’re better off not wasting your time trying to charge high-ticket to people who can’t afford it.

Working with rich people is incredible advice. It works very well. But I don’t care to work with them. I want to work with interesting creatives who know they are meant for more.

3) Most people want to sell digital products as an end goal, but start with client work first.

It makes sense… start with client work > build an audience > productize your service and start to transition out of client work.

People don’t realize that with enough skill, you can monetize with digital products from the very start. I’ll show you how in a second, but one last thing.

I do not recommend starting with a community like most people try to do.

With Skool becoming popular and huge creators having communities, most people forget the advice, “do what they did at the start, not what they’re doing now.”

You probably don’t have the marketing ability to fill a community to the monthly revenue you want.

And if you do, you probably don’t have the time to maintain that or hire moderators.

Just build a cohort, charge higher prices, get results, iterate to get better results, turn it into a standalone product if you want, repeat the process, and turn those products into bonuses of a community a few years down the road when you have a full value ladder built out.

I’ll talk about this in another newsletter.

Exactly What I Did To Monetize From Scratch

This section is a bonus module from my new product, Mental Monetization (how I build, launch, and sustain sales with a product rather than a service).

Most people don’t know this, but I was making around $3000 a month when I first started selling a digital product with 300 followers.

Yes, I was freelancing with web design as well, so I was making a bit more than that, but I realized that I didn’t have to stick with client work for very long.

Let’s break all of this down starting with mindset:

If I want to replace my salary, assuming it’s the average US salary of $56,000 a year:

That means I have to make around $4,700 per month.

With a service, that means you need a few clients at $1,500 to $3,000 per month… sounds easy, right?

Instead, let’s say I sell a $150 digital product.

I have to sell around 31 of those products in a month to make $4,700.

So about 1 a day.

If I have a landing page that converts at 2.5% (which is difficult but possible with an audience you’ve nurtured with content as opposed to paid ads to people you don’t know)…

This number is just for explanation. All of this varies.

That means I need 1240 people to view that landing page in order to make 31 sales at $150 to equal $4,700 in that month at a 2.5% conversion rate (how many people buy after visiting the landing page).

With me so far?

Even further, you need more people to view your actual content in order to visit your landing page.

When I first started out, I had experience in direct response marketing so I understood this.

I only had 300 followers… so how was I going to get 1240 people to visit my landing page over the span of a month?

(In my case, it was more people than that because I was selling my product between the $27 and $97 price point).

Those people definitely weren’t going to come from my audience, so they had to come from someone elses.

I had a few options here:

1) Hope That I Go Viral

On some platforms, it’s very possible to have a viral reel, video, thread, or carousel.

It’s difficult to plan for this, so I wouldn’t bank on it, but be sure that if and when you go viral, you have a product that you can promote to get people to the landing page.

The times you go viral are when you are going to have big spikes in revenue.

The worst thing you can do is go viral and not have anywhere to send that audience.

2) Form Mastermind Groups

I’m not talking about engagement groups or pods.

I’m talking about forming group chats with friends you make on social media. It’s called social media for a reason.

You can do this in one of two ways:

Form group chats with people you like and trust. This is like being in a video game lobby with your friends, where you share strategies. Occasionally, you ask for help sharing a piece of content you wrote.

Talk to people 1 on 1. Keep friendships alive by sharing resources and strategies you come across to your friends. Occasionally, ask them to share a post you wrote. Be sure to tell them to send you something in return to share.

You are trying to form friendships with people that are around your level. This means that if you are a beginner, you won’t get a ton more traffic, but you will get some.

Something is better than nothing, and everything counts to get more people to your product.

3) Network With The Right People

People overcomplicate networking.

Networking as far as we are concerned is making friends.

My first product was a freelancing course for web designers.

I found 2 other creators on Twitter who talked about web design and development.

Both of them had around 15,000 followers. They weren’t “so big” that I would get ignored, but they still had a large audience with more than enough people to get 1240 of them to my landing page in a month.

By getting on their good side (by commenting on their posts to make myself known and DMing them with compliments on their content) they were willing to help me.

One of them became an affiliate for my product because they had an audience that could benefit from learning to freelance.

The other shared my content occasionally which got me more impressions and views that could be funneled to my landing page when I promote.

This can result in the occasional large boost in traffic that I can send to my product.

If I write up a Twitter thread or Instagram carousel based on the topic of my product, and they go on to share it, and I promote my product, and the thread gets shared by more and more people, I don’t see why you can’t get hundreds of thousands of impressions a month without a large audience.

If your product and marketing are good, as we will learn in this course, those hundreds of thousands of impressions can turn into tens of thousands of dollars.

4) Pay For Shares

This one is rather “hush hush” but we will talk more about it later.

In short, if you have the mind that paying for shares is bad, frankly, you’re an idiot.

I’ve seen the crowd that virtue signals about not doing it, but they usually have no idea what they’re talking about. It is a viable marketing strategy that massive brands and agencies use all the time. If you hire a social media marketing agency (that is actually worth their weight) they will be doing this.

Most people that talk bad about paid marketing from brands on social media (vs paying a platform an insane amount to run ads) are usually talking about the futility in paying theme pages for shares, and they are right about that, but they lack nuance about the rest.

I’ll leave it at that for now and you can sit with your thoughts.

Summary) How I Made $3000 A Month With 300 Followers

  • I wrote content
  • I had a good product
  • I leverage other people’s audiences for traffic by getting my content shared to their audience
  • I promoted my product on content relevant to the topic of the product
  • I stayed consistent, because traffic fluctuates every day, and reviewed my progress after a month

When you view traffic generation and conversions on a month long time horizon, turning a few hundred thousands impressions into a few thousand dollars is quite doable as a beginner (without spending a ton of time on client work).

This newsletter is getting long.

We still need to talk about what type of product is best to start with, how to sell it, and everything else.

In the coming weeks, I’ll be breaking down everything related to operating a minimalist business model like this. The skills, the mindset, the routines, the habits, etc.

We will talk next week.

– Dan

Who Is Dan Koe?

I am a writer & brand advisor for 7-8 figure creators, influencers, and social media brands. I am obsessed with dissecting human potential, lifestyle design, and one-person businesses.

When You’re Ready, Here’s How I Can Help You:

The FOCI Planner

Goals are important. If you want help reverse engineering your vision into bite-size goals and tasks — order The FOCI Planner.

The Art Of Focus Book

Find meaning, reinvent yourself, and create your ideal future. Now available on Amazon.

The 2 Hour Writer

Implement Our 2 Hour Content Ecosystem To Learn High Impact Digital Writing, Boost Your Online Authority, & Systemize Content Creation For Rapid Growth

Mental Monetization

Monetize your creative work with a digital product that sells while you sleep. Turn your knowledge, skills, and interests into a meaningful income.