Creating a Creator Economy
The economy of micro-entrepreneurs – currently valued at about $20 billion – could burgeon to almost $104 billion by the end of 2022
Social media currently boasts about 50 million independent creators on their combined platforms, according to research from California-based SignalFire. Here are some interesting facts:
- Instagram influencer Eleonora Pons (Lele Pons), currently boasting a shade under 50 million in following, pockets close to a hundred thousand (in USD) per post.
- Top-performing YouTube artists reaped over $200 million between June 2019 and June 2020 alone.
- The top writers on analytics newsletter service Substack earn up to $1 million annually.
Create, explore, expand, conquer
The creator economy, in itself, chiefly refers to independent businesses set up by self-employed individuals who make money off their skills, knowledge, or following. The rise of digital platforms such as YouTube, TikTok, Vine, and Instagram have been instrumental in birthing this particular phenomenon – “from sponsored posts (sometimes even fake, for clout) all the way to Instagram Story shout-outs to branded wedding engagements.”
The niche has been absolutely booming the past few years, receiving a record $1.3 billion in funding in 2021 alone. Companies have spotted the opportunity – and have started cashing in heavily on transforming this self-monetisation boom, creating new value propositions for investors, creators, and platforms alike.
US market intelligence firm CB Insights writes: “Whether they’re busking with hot tub or gaming streams, pay walling analysis on niche internet memes, or selling feet pictures, these creators are pursuing alternative ways of monetization. A flourishing ecosystem of start-ups is emerging to meet that demand, from app-specific editing tools to multi-channel analytics to merchandising tech.”
A volatile workspace
Big tech platforms today are fighting to ensure native creators stick to their platform as a means of driving engagement whilst creators continue to look for ways to monetise posts and earn a bigger slice of the revenue pie. “With the internet and YouTube, there’s always the concern of being demonetized and having your channel cancelled, so people are always looking for alternative ways to earn money,” says YouTuber Joshua Wanders in an interview with the New York Times. “You never know where the platforms are going to take you at the end of the day.”
Image: Revenue sources for creators; Source: CB Insights
Most social media platforms did not allow creators – even with massive followings – any scope for direct monetisation. YouTube remained a notable exception, allowing creators 55% of ad revenue rather than no sharing at all, having paid out over $30 billion in the last three years alone. CB Insights reports:
“The now-shuttered short video app Vine was an early example of this. Vine, which was acquired by Twitter in 2012, drew as many as 200M monthly active users at its height in 2015 and helped incubate top creators like Thomas Sanders, Zach King, and Shawn Mendes. But lack of product direction and infrastructure for creator support caused creators to leave the platform in droves.”
“Three and a half years is a long time to have us posting on your platform for free,” a top Vine creator told BuzzFeed News in 2016. “We’ve had a lot of our top creators find a lot of success on YouTube, a lot of success on Facebook right now.”
The Monetisation Train
Today, indirect monetisation is proving insufficient. Ad deals and brand endorsements, which form the bulk of creator income, are highly volatile and force creators to cater to much broader audiences – often forcing them away from their niche demographics. Now more than ever, newer platforms are trying to supplant media giants in providing better monetisation to their creators. Substack currently allows writers to take home 90% of subscription revenue; Patreonalmost 90% of their subscriptions, whilst OnlyFansallows creators 80% of their earnings.
According to CB Insights:
“Creators have mostly had to cobble together a variety of tools to manage diverse revenue streams. Traditional B2B and B2C companies have yet to fully address these micro-entrepreneurial needs: B2C apps like TikTok aren’t primed for collecting revenue, nor are B2B tools like HubSpot or Zendesk suited for supporting individual creators.”
Major corporates are today also realising the missed opportunity for earnings, with Meta CEO Mark Zuckerberg announcing that Instagram would create a suite of influencer tools, including creator shops, native affiliate links, and a marketplace to connect influencers with brands, to capitalise on these opportunities; while Twitter has rolled out a ‘super follow’ feature allowing avid tweeters monetise exclusive tweets and paid ticketing to audio chat rooms. YouTube too has created a $100 million fund for its new ‘Shorts’ category.
The future of the creator does indeed look brighter than ever before.
