Lucy Guo, co-founder of Scale AI, now leads Passes, a California-based platform that helps influencers and celebrities monetize their fanbase through exclusive content.

Launched in December 2022, Passes has raised US$50 million and focuses on creators popular on TikTok and Instagram, positioning itself between Patreon and OnlyFans.

The platform pays around 90% of revenue to creators, with over 1,000 influencers receiving payments as of February 2024.

Passes acquired Fanhouse in 2023 and has offered income guarantees to attract influencers from rival platforms, but faces legal challenges including a Fanfix lawsuit and a class action over alleged child pornography distribution, which it denies.

The company now bars creators under 18, reports millions of users, and plans to expand its offerings and staff to drive further growth.

🔗 Source: Bloomberg

🧠 Food for thought

1️⃣ Creator monetization platforms face intense competition despite growing market size

The creator economy represents a massive opportunity, with influencer marketing spending reaching approximately $8.5 billion annually 2. However, establishing a profitable platform remains challenging due to fierce competition and high acquisition costs.

Passes enters a market where established players have significant scale advantages. For example, OnlyFans has over 2 million creators and 170 million users, while Patreon has around 200,000 creators and 6 million users 3.

Despite raising $50 million since December 2022, Passes had only about 1,000 creators as of February 2024 1, demonstrating how difficult it is to gain meaningful market share even with substantial funding.

The competitive intensity forces new platforms to offer expensive creator guarantees. Passes reportedly offered some creators as much as $500,000 to switch platforms 1, which can strain unit economics and delay profitability.

This challenge reflects a broader issue in platform businesses, where network effects create significant advantages for incumbents, making it expensive for newcomers to compete against established players with large user bases.

2️⃣ Trust and safety challenges intensify as platforms expand creator demographics

The creator monetization space faces mounting regulatory and safety challenges as platforms expand beyond traditional adult content into mainstream influencer markets.

Passes’ recent legal troubles, including a class action lawsuit alleging distribution of child pornography and policy changes restricting creators under 18, highlight the compliance risks platforms face when operating in content-monetization spaces 1.