November 29, 2021
For the past 18+ months, the term “creator economy” has been thrown around willy-nilly. Then came NFTs and brought with them an explosion. You cannot scroll down any social without reading or hearing about the creator economy. Yet, so few understand the extent and scope of it.
What is the creator economy?
The foundation of the creator economy began with social media but it was Creators, and influencers who built it. They found a following via these platforms and converted them into sales or monetary benefits by generating and marketing content.
Slowly the fabric of the creator economy expanded beyond even creators using their skills, expertise, or following to monetize their social media handles.
Today the creator economy is formed by creators of different niches, platforms and apps that help them grow and the brands they associate with, together.
It is the advent of creator-first companies that helped the industry gain velocity. So much so that some of them even gained unicorn or near-unicorn status. According to CB Insights, the funding of startups that support the creator economy tripled from USD 464 million in 2020 to USD 1.3 billion in 2021.
How large is the creator economy?
The creator economy has around 50 million creators, and that’s a conservative number. The majority of them are from YouTube, Instagram, and Twitch and divided into two categories:
Creators who work full-time or professionally:
Currently, there are 2 million active professional creators who’ve built either full-time careers or businesses on social media. Of these, around 200k are active on Spotify, WordPress, and Pinterest. The rest are on:
- Instagram: Around 500k influencers. These are accounts that have more than 100k followers. Therefore, fall under active influencers.
- YouTube: Around 1 million influencers. These are accounts that have over 10k subscribers.
- Twitch: Around 300k influencers because they either have a partner or affiliate tag.
Transforming into entrepreneurs:
Once a creator gains widespread popularity on social media, they hire a team and launch their own business, or at the least, establish another revenue stream. The reason being, social networks do not have a stable direct income option. And earnings from brand collaborations are not consistent and fluctuate.
Creators who work part-time or are still amateurs
The biggest chunk of the creator economy is held by small creators, who either do it as a side-hustle or are still growing, numbering approximately 46.7 million. Of these, over 2 million creators from various niches are active on numerous platforms. The rest are on:
- Instagram: 30 million Instagram accounts with 50–100,000 followers fall into this category.
- YouTube: 12 million channels with subscriber numbers ranging between 100 and 10,000.
- Twitch: 2.7 million accounts on Twitch don’t have partner or affiliate status.
Why should the creator economy focus on uplifting the middle layer of creators?
When it comes to attention and wealth, the creator economy is skewed towards the top few. The numbers we quoted above make that abundantly clear.
Mega celebrities enjoy creamy benefits such as more brand deals, lucrative collaboration offers, and higher sponsorship cheques. While the bulk of creators — the middle layer — are somewhat lost in the mists of anonymity, scraping by a hair’s breadth.
For reference, RedSeer estimates that short-form video platform influencers with 10M+ followers earn around $20,000 – 40,000 per month, whereas those with 1M+ followers earn only $40 – 200.
Why only a few creators (and far between) rocket into stardom?
It is not because they are the only ones producing quality content or have a massive following. Small creators may not be household names, but they have immeasurable potential, talent, and the makings of an astronomical, aggregated following.
What they lack is the knowledge and guidance to make that upwards move and reach the next rung of the ladder. Given the right tools, they can be uplifted. And that brings us to the vital question of why?
The consequence of creator economy disparity: the algae bloom effect
When algae first blooms in water, the ecosystem welcomes it because it acts as food. But over time, the algae growth overwhelms and syphons away all the oxygen from the water, leaving behind starving inhabitants and a decaying environment.
This is called the algae bloom effect, which says that the “over-concentration of one species undermines the health of the entire ecosystem.”
Creator ecosystems, like natural ecosystems, must be balanced.When growth accrues to a few, it can topple the entire system. So, for the whole creator economy to flourish and be sustainable, we must empower the mass of creators and give them an equal opportunity to succeed.
Strategies to provide a thriving environment for mid-level creators:
- Find different means of content monetization and make it independent of follower numbers.
- Provide support for ancillary services such as legal.
- Facilitate not only brand collaborations but also creator-creator collaborations.
What does the future hold for the creator economy?
There was a time when brands held sway over consumers. That’s gone with the wind now.
Today, and more so in the coming time, people will want to follow people – the average Joe or Jane who has a face like theirs and a personality that resonates.
It’s this shift in consumer behaviour that tilted the negotiating power towards content creators, and the economy their building.
Yes, the creator economy is still at its nascent stage, taking baby steps. But it’s well on its way to gaining a strong foothold in the digital world.