Creator economy this, creator economy that
Since my next space will be focused on the creator economy, I figured it was an excellent time to dig into the topic. I remember reading an article titled “the creator economy is a scam,” so since in web3, we’re experts at scams — is it really sensible to combine these things?
My attempt at making sense of both sides. Also, this will be a two-part piece, so if you want thoughts on how web3 will save (or not) the creator economy, stay tuned.
Read on if you’re up for learning about the current state.
A few stats
200 million creators are creating content worldwide. That’s a steep increase since Forbes reported 50 million creators in 2020. Of course, we all know that in the meantime, we had a pandemic that came with the side effect of increased screen time. And Tiger King — if you still remember those early days. 🐯
While you might associate creator with someone doing funny dances on tik tok or unboxing videos on youtube, the statistics also count people selling their craft on Etsy (7.5 million active sellers) or sharing their writing through Substack (1 million paid subscribers).
Especially with platforms like Etsy, it’s easy to see what’s happening more broadly in the creator economy: lines between being a creator and entrepreneurship are blurring.
But anyway, what exactly is the creator economy?
It refers to businesses run by online creators who monetize their audience. Creators have captured the pipeline that used to belong to studios, large media companies, and publishers to interact with their fans more directly. The creator economy in its current state is primarily enabled by Big Tech, including Social Media networks which often build the top of the funnel, down to streaming platforms like Twitch and places like Shopify that give anyone the tools to set up their own merch business. Oh, and did I mention Shopify even does NFTs?
One could also see the creator as the tool extracting (financial) value from human connectivity, aka monetizing your audience.
Who is a creator?
This brings us to the next question, what even is a creator? One could argue that Leonardo da Vinci was a creator, and so was Galileo Galilei — his conflict with the church would have been great entertainment. I’d probably have paid for that.
Of course, modern-day creators are different from their middle ages counterparts. Anyone can be a creator now, thanks to social media. All it takes is creating content that resonates with an audience online — or enrages them enough to make you (in)famous.
Ok, but are the pretty girls on Instagram selling us their insta-perfect life and the insanely expensive beauty products creators? Or are they influencers?
Creator vs. influencer
Some say that anyone creating content is a creator. But often, these people also can influence their audience to buy, try or learn more about certain things. You see, the lines are blurry.
I, for one, hope no one buys coins or NFTs (for profit) because I talk about them because my trading history is bad. I know past performance doesn’t negate future luck, but it doesn’t look good.
In many ways, the distinction between influencer and creator results from the division between art and mass culture. The term creator brings with it very different associations than an influencer. Influencing people can even have some negative connotations and sits close to where advertising and propaganda might cross —. In contrast, creator is someone like Mozart or Monet, who created amazing art we still value to this day. Creator has an air of wholesomeness to it.
Interestingly, youtube seems to have been the first to start using the term “creator” as an alternative to youtube. Guess they did not value their brand that much 😏
In that sense, the girls on Instagram selling you stuff are more in the category of influencers, whereas someone sharing their art is a creator. But as I said, the lines aren’t clear-cut.
With that out of the world, let’s move on to the more crucial question:
How did we get here?
Advertising has existed for a while, and influencers in one sense as well if you consider royalty some influencer in the middle ages. Creators existed in abundance; only a few are still remembered.
The current creator economy has been growing for a while. Its first stage can be traced back to the early stages of Web 2. For the first time, network platforms made everyone a creator. You could easily start generating content simply by uploading pictures to Facebook. In fact, it became the norm, and people began creating diaries of their lives online.
Soon platforms figured it was a great idea to sell the audience things. Et voila, we had advertising, and soon companies didn’t just want to use models but “real” people.
In 2019 the word influencer was added to the Oxford Dictionary. In 2020 Tik Tok launched a $200 million creator fund, and one year later, YouTube did the same with $100 million for shorts.
Platforms now are moving to introduce further features that let people pay or tip creators. Instagram continues working on making its shopping experience more seamless, and Pinterest also wants to add purchasing to its digital boards soon.
We’re all expected to buy, and creators are partly facilitating that since their main way to monetize what they do is through ads, sponsorships, and brand deals. How do they actually make money?
Monetization
Getting paid is a major concern for creators. If you still thought ads are the main revenue driver, you’ll be thoroughly disappointed.
According to the Influencer Marketing hub, brand deals make up 77% of the highest revenue sources. Subscriptions rank lowest with just 1%, and NFTs aren’t even featured… 🤷♀️
On average, it takes creators 6,5 months to earn their first dollar; not really a get-rich-quick scheme. And if you’re wondering how much you should get paid if you are one, the Influencer Marketing Hub also has some numbers:
- Nano influencers (1000–10,000 followers): $10 — $100 per post
- Micro-influencers (10,000–50,000 followers): $100 — $500 per post
- Mid-tier influencers (50,000–500,000 followers): $500 — $5,000 per post
- Macro influencers (500,000–1,000,000 followers): $5000 — $10,000 per post
- Mega influencers (1,000,000+ followers): $10,000+ per post
I reckon for crypto, depending on whether we are in a bull or bear market, rates can look very different ^^.
Youtubers’ rates hover between $0.01 and $0.03 for an ad view, but it ain’t so easy, especially when your audience contains a lot of adblocker users.
It would seem that the lavish lifestyle you might associate with creators is more of a myth. The majority of creators have to diversify their income through ads, subscriptions, tips, events, online stores, or maybe even getting a “real” job.
So what does the reality look like?
Gary V suggests we should probably all be some sort of creator. In a recent interview, when asked what business ideas had the biggest potential for growth, he said:
“Becoming someone who can create content — written, audio, or video — for the Internet contextually. Because there will not be a human nor a business on earth in a decade that isn’t in need of a substantial creative department of making — not thinking — making [great content].”
A bunch of kids probably agree. A 2019 study found that children in the US and UK were three times more likely to aspire to be a Youtuber or vlogger than astronauts when growing up. Another study asked what the best things would be about being a YouTuber (I mean free samples, right? — turns out no).
- Creativity
- Fame
- Self-expression
- Money
Money only coming in 4th is great news because then we put them in the same box as the other creative jobs that we consider “brotlose Kunst” in German.
Yes, an art that does not make you money; we call it “breadless.” 🍞If it’s just about being creative, amazing. But we still have to buy bread.
On Spotify, 0.8% of artists gain 90% of the royalties. And only 0.2% of artists make more than $50,000/year. Is that enough for bread? Yes, depending on where you live.
Maybe the creator economy is like all creative endeavors, prone to have some hyper-successful people and then a vast sea of lesser-known creators. But even if we accept that as such, there are some more problems with the existing setup.
- Platforms have too much power. Creators heavily rely on big corporations for their livelihood. Similar to how Uber drivers have to figure out all their needs themselves, creators have to figure out their marketing, health care, and insurance without the employee status. Some liken it to the gig economy.
- Being found still heavily relies on social media. You don’t go on substack to randomly find someone. You go there after you’ve found them on Twitter. Social Media is often the first touch point, and therefore anyone wanting to “make it” as a creator most likely has to engage in it in some form or another to funnel people to whatever you can monetize.
- Creators don’t own their audience. If you lose access to your youtube account tomorrow, that’s it if that’s the only place you had your subscribers. Some platforms like Substack enable you to export subscribers, but they are more of an exception than the norm.
- And then, sometimes, like every hyped industry, it will create scams that will probably get their own Netflix documentary like this podcasting hype house of hell. Where there are young people lured in by the prospect of fame and money, there you will also find others looking to exploit that. Sad violin noise.
Maybe, we shouldn’t all become creators. If we are all creators, who will be the audience?
But, I do believe there is space for a variety of small creators with an audience of maybe a few hundred or thousand people that can make a living.
The question is just, how do you distribute more power to the actual creator? And that’s one of the things web3 can be quite good at. What that could look like, I’ll explore in my next post. 👀
And, of course, in my Twitter space!
