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How would the world look if Facebook, Instagram, Twitter, or TikTok were owned and operated by their users? What if these users also vote on issues such as data collection and content moderation? That is the imagined future of what the creator economy should be like.
What is the Creator Economy?
The creator economy attracted over $1.3 billion in funding in 2021. But who takes the big share of the money generated by these platforms? Not the creators.
The creator economy is defined as the class of businesses built by more than 50 million independent content creators, curators, and community builders, such as social media influencers, bloggers, and videographers, as well as the software and finance tools designed to facilitate their growth and monetisation.
The term ‘creator economy’ is used today in any context that involves the commercial aspects of content creation online. Many companies now work in this space enabling creators to monetize various types of content that is produced.
Creators can make money through:
These platforms solved the distribution challenge for content creators, and they could now amass huge followings. However, there are limited avenues of direct monetization that these folks can explore. YouTube was the only exception in the old days as it allowed creators to enjoy 55% of the ad revenue.
Vine was a perfect example of a platform that failed to motivate its users. The short video-sharing app was acquired by Twitter in 2012 and attracted more than 200 million active users a month by 2015. Creators left the platform in droves when they realized that Vine didn’t have any infrastructure to support creators.
Platforms like Patreon and Twitch introduced new monetization features allowing creators to benefit directly from their content. However, only the top creators bring in six-figure incomes. As seen on various platforms, the ‘middle-class’ is struggling. The top 1% of creators on OnlyFans get a third of the profits, while the ‘middle-class’ get less than $145 a month.
Social media platforms lay the foundations of the creator economy today. Through platforms such as YouTube, Facebook, Instagram, Twitch, and Medium, creators established big followings. These foundational platforms help content creators get discovered, and they also invest heavily in curation and recommendation algorithms.
These platforms aggregated the creators and equipped them with various audience development tools. To help polish content, these platforms created multimedia editing tools. However, these foundational media platforms don’t always have the best interest of the creators at heart. Innovative creators diversify their presence on various platforms and cross-promote to ensure that they aren’t at the mercy of the platform owners. Such an approach ensures that creators don’t suffer much when the owners decide to change priorities, a platform loses its market share, or reduces some of the monetization features.
The foundational media platforms allowed some creators to attract huge followings. At this point, companies realized they could use creators with huge followings to promote their brands. Some platforms, such as YouTube, started splitting ad revenue with the creators. On the other hand, some like Facebook and Twitter initially left the creators to decide how to monetize their content. The latter arrangement bred sponsored content and led to the creation of companies like Niche that brokered such deals.
Future of the Creator Economy
We can now see hundreds of companies in the form of influencer agencies, talent representation companies, and sponsorship marketplaces. The influencer market was worth $8 billion in 2021 and is expected to hit $15 billion by the end of 2022.
Creators in this space work with brands that match their personal brands, so they don’t have to change their content to push corporate messages. It has become evident that some creators make their followers lose trust in them with every paid/sponsored post. These creators now have to find a way out, which brings us to stage 3.
We are at a level where creators are seen as businesses. Creators have now created setups where their fans follow them off-platform. These creators have multiple revenue streams beyond the standard ads on traditional social platforms.
New companies have come up to help these creators create more money by selling products such as merchandise, premium content, ebooks, and newsletters. Companies also offer coaching, speaking engagements, consulting, and fan engagements. Content creators can focus more on serving their biggest fans rather than chasing high audience levels that may never convert.
The creator economy is all about handing financial control to the content creators, where they reach out directly to their followers for funding. It presents an opportunity where these creators bypass traditional ways through which they made money through ads, placements, and sponsorships.
Why have creators not been in complete control of their careers? They had to represent brands. These creators also have to act in a certain way to maintain their incomes. Even with millions of followers and influence, creators have to bend or conform to the companies that fund them. They are not fully controlling their brand, personality, and image.
Creators at this level create content for fun or as a side hustle. More hobbyists are joining the race as technology makes it easier to create content. For instance, tools such as Anchor makes it easy for anyone to launch a podcast.
Hobbyists either don’t have the resources or the time to invest in their craft. Such creators sometimes lack marketing or distribution channels and struggle to reach certain quality content or production value levels. Unfortunately, many creators at this level remain hobbyists and don’t earn a living off their content.
These creators can support themselves with income from their creative works. You will often come across platforms that host these creators sharing their success stories. Full-time creators are steps ahead of hobbyists as they have sustainable cash flows.
One of these creators’ significant challenges in managing a business’s ups and downs. Managing can take much of their time, making it hard to become productive. Marketing their work can also eat so much into their profits if they are not strategic.
Creators at this level can form partnerships with various external brands such as record labels, media companies, and publishers. Maintaining relevance and fame are some of these brands’ biggest challenges. There are also possibilities of brand crises that may cost creators at this level their partnerships. Level 3 creators face an uphill task as they try to leverage their brands to become a business.
Content creation has changed a lot in line with the development of relevant platforms and tools. In the past, video creation was in the hands of a few people who had expensive equipment. Publishing houses could only publish books, and it was also expensive.
This changed with the introduction of the internet in the late 90s and the rise of platforms such as YouTube.
YouTube allowed amateur video creators to upload videos, and they were no longer at the mercy of media houses. Low internet speed affected the usage of platforms such as YouTube in the past. However, the situation has changed, and tools have also been developed.
By owning a direct relationship with their fans, creators become less susceptible to changes in the priorities of tech giants or their algorithms. Regardless of the specificity of their style, each creator is capable of assembling a unique mix of revenue streams.
It’s a win-win situation, as creators who cater to each of our niche interests can build a sustainable career. Instead of homogeneous, lowest-common-denominator primetime sitcoms, we receive content tailored to every subculture in the spectrum. Now there are sufficient creators to support an entire ecosystem of startups that help them turn their passion into a career.
Also Read :
3 Examples Of The Flourishing Creator Economy In Today’s World
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