There’s a lot of worry about AI disruption. Personally, I think many of these fears are overblown. Many businesses that are supposedly going to get “disrupted” will actually benefit from the cost savings that new AI technology provides.

It’s the same thing that happened with computers in the 1980s and 90s, a time when Peter Lynch astutely observed that companies such as Automatic Data Processing would benefit from the tech revolution because it made their input costs cheaper. In the ADP example specifically, the firm could process payroll for clients faster and more efficiently, saving money and increasing profitability.

One sector that I do believe AI will completely disrupt, however, is content creation.

More specifically, the glut of computer-generated content will drive many YouTubers and social media influencers out of business.

Here’s why this is important for both investors and business owners.

Did you know that a YouTube channel went public in 2022 and was worth almost $1 billion? FaZe Clan began as a group of YouTubers who uploaded Call of Duty sniping and multiplayer videos. The group eventually expanded into esports competitions and even created its own line of private-label supplements marketed toward gamers.

In 2022, FaZe Clan went public as FaZe Holdings Inc. and traded on the Nasdaq. Its initial valuation was $700 million.

In 2024, FaZe Clan was acquired by GameSquare Holdings, Inc.

At the time of writing, GameSquare’s total market cap is less than $29 million.

FaZe Clan is now worth less than 5% of its IPO value.

Most entertainment is disposable. Additionally, the entertainment industry is built on creating bigger and bigger spectacles.

Here’s how MrBeast described his success on YouTube: “The thing is, to go viral, you have to do something that’s never been done before.”

Elaborating further, he said: “When you’re scrolling through social media to find a video to watch, there are things that have been done before. You’ll scroll past them, and you’ll never think about them again.”

Interestingly, this ties in with something MrBeast is currently experiencing: a massive drop in viewership.

MrBeast’s YouTube channel views are down approximately 50% over the past 12 months.

One reason for this is AI-generated content. Content that previously took hundreds of collective hours to produce can now be created in minutes with a few creative keystrokes. Even content that isn’t novel or mind-blowing is still free and nearly instantaneous to produce. For many casual social media scrollers, this is “good enough.”

The glut of AI-produced material has also drowned out many traditional creators. That’s not YouTube-specific, either. It’s a phenomenon happening across every major social media platform.

How does this connect with investing?

In a few ways.

First, oversupply of content dilutes ad rates. In tech, there’s often a “first-mover advantage,” where simply being early almost guarantees a certain level of success.

Tucker Max wrote a handful of blog posts in the early 2000s and landed a major movie deal. $#*! My Dad Says became a CBS sitcom starring William Shatner, and it was based on a popular Twitter account.

When there’s a seemingly infinite amount of content, competition becomes fiercer and advertisers can pay lower rates because they have greater optionality. This creates a negative feedback loop where lower pay incentives lead to lower-quality content. It’s the same thing that happened when digital media replaced print media, causing many publicly traded newspaper companies (such as The McClatchy Company) to file for bankruptcy.

As an investor, it may be wise to simply avoid stocks that will obviously lose market share to AI-generated videos of dancing dogs or talking cats.

This leads directly into the second point: “The Velvet Rope Economy.”

Several books discuss this concept, including Dan Kennedy’s No B.S. Marketing to the Affluent and Nelson D. Schwartz’s The Velvet Rope Economy. The idea is that mass-market commoditization creates a smaller splinter group of high-paying customers who want to do things “the old-fashioned way.”

Quartz and digital watches put many traditional watchmakers out of business, but they also led to a niche luxury industry of premium timepieces priced for their heritage and old-fashioned craftsmanship.

A $10 bargain-bin Casio has more functionality than a $50,000 Patek Philippe.

However, Patek can command a premium because its watches are handmade, use automatic movements, and require months of production time.

If you are a business owner, antiquated technology (like email newsletters) may become the winning platform as AI continues to inundate social media. People who genuinely want to learn about a subject will move away from low-quality platforms, meaning email newsletters or private membership groups could see increased demand.

And as an investor, it may be better to focus on companies that make money selling products instead of collecting ad revenue.

It could also be worth investigating what kinds of premium “splinter businesses” may emerge, and prosper, as AI continues to dominate mainstream online entertainment networks.

AI stocks. Metals. Crypto.

Surprise, surprise; gold crashed 16%. Silver plunged 34%. Bitcoin dropped to 1 year lows.

All supposedly "uncorrelated" assets moving in lockstep largely because of overleveraged margin.

JPM strategists warn that the same leverage is still a risk.

Those markets may be recovering now, but cascading liquidations could trigger quickly across several asset classes simultaneously.

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Disclaimer: This article is for entertainment purposes only. It is not financial advice, always do your own research.