The Advent of the Creator Economy
With the surge of social media into our daily routines, especially during the pandemic, the economy faces a significant change as the world progresses into a new way of living. Gone are the days when scrolling for pleasure on TikTok was just a means to avoid your ‘real' work. Today, any ordinary person can transform into a globally known public figure with just one click of a button, financially relying entirely on sponsorships and advertisements on their social media platforms. According to a report published by SignalFire, around 50 million people already claim themselves as a 'creator' online, and this number continues to rise every day.
Personalized content has risen to prominence, with a growing number of creators stepping forward to capitalize on the new Creator Economy Model. The content market thrives on the need for more varied content, with consumers devoting more time online. The value for developing your niche and independent community is finally being realized by not only emerging creators but also companies and businesses who plan to use this value for their profit. The creator economy has reportedly observed $1.3 billion in investment funding in 2021 so far, nearly three times the funds it received in all of 2020. This concept has aided people in turning their passions into full-time jobs, increasing the number of people who can work for themselves. On the other side of the coin, it has paved the path for the Attention Economy, the ad-based revenue model, to fade away. This paradigm shift should serve as a wake-up call for established businesses as market entries will increase the need for companies to innovate their commodities to keep up with new competitors.
As an alternative to marketing, creator-economy companies have devised a variety of revenue sources. Creators have taken over multiple avenues to earn money, including advertising revenue stocks, sponsored content, product placement, paid memberships, digital content and more through platforms like YouTube, Instagram, TikTok, Snapchat, Twitch, Patreon, and OnlyFans. Non-fungible tokens (N.F.T) like Foundation and SuperRare provide marketplaces that allow creators to sell valuable digital art pieces in return for commissions using cryptocurrencies. Upcoming creators and astute businesses are also utilizing these possibilities. Etsy, a worthy contributor to our economy, sold $346 million worth of masks between April and June 2020. Some mask vendors are literally generating millions of dollars. Another platform, YouTube, has been preparing for this moment for quite some time. We are not confined to a strict number of television channels anymore. We have access to over 30 million channels, with 500 hours of content uploaded every minute. According to YouTube, channels making five and six figures are increasing by 40%, while the overall number of new channels are also increasing by 40%.
However, in many aspects, this burgeoning profession is similar to a gig economy for online content. Creators still remain vulnerable workers who rely on these platforms for their incomes. They must maintain a decent audience and market their online content while also taking care of their health care and tax. Most of the time, these social media platforms do not provide their creators with any legal or financial safety or special stock options which are normally offered to employees like engineers, managers, and designers of an organization. However, social media companies are also establishing their own model of the creator economy to ensure that users resist retreating to newer sites. TikTok introduced a Creator Fund last year to compensate its members for popular content. Snapchat created a similar scheme called Spotlight, which pays creators millions of dollars per month. Additionally, Facebook also stated that by 2022 it would provide creators all over their networks with more than one billion dollars.
Social Media platforms also need to realize that it is vital to democratize opportunities for everyone to succeed. When money is not entrenched in the top 1%, countries can be more sustainable, and platforms can be more viable. In the physical world, a thriving middle class is essential for fostering societal stability, ensuring a steady supply of demand for goods and services, and providing innovation and entrepreneurship. Lower wealth inequality on platforms reduces the likelihood of a would-be rival capturing top creators and jeopardizing the entire enterprise. When platforms provide everyone with the chance to grow and achieve, they prosper. For instance, despite pioneering the short-form comedy video form, Vine's creators migrated to platforms like Instagram, YouTube, and Snapchat, where they could eventually earn more, grow larger audiences, and have a wider range of creative tools. Other platforms offered more opportunities for audience development and financial success, contributing to Vine’s downfall. Therefore, even though there might be the occasional lucky video making a person go viral and become a worldwide phenomenon, there needs to be a protocol in place to ensure that everyone has equal opportunities to go viral in the first place.
The Creator Economy's business plan is presumably clear. The money and influence are shifting from the Attention Economy to the Creator Economy, from the audience to the community, with talent restructuring giant corporations in the creative space. We return to a world where creators and their audiences are more connected if we reclaim our attention and engage directly with the people behind the content and services we adore. We have made supply and value chains so intricate over the last century that we have almost forgotten there is a creator behind the content we enjoy. There is also a definite link between the amount of time spent building relationships with a creator's community and a platform's profitability. This becomes true, especially, if the platform is not owned by a corporation, but rather by a group of people that share a common interest. Therefore, the more sincere and genuine a community is, the greater the probability that its users participate with it. Brands may achieve meaningful value in the communities they have advanced by providing an option to reset, retrieve and replace. Overall, the market appears to be headed in the right direction. Though it is still in its early phases, the new creator economy model appears to be taking advantage of the connection between the creator and their audience, monetizing the interactions, rather than the actual goods and services they might be offering. Although the technological infrastructure and knowledge required to effectively implement these ideas are still in incipient, many creators are already finding great success on these platforms. The prospects for creators will only proliferate in the future, while the rewards to viewers will be countless.
By Divya Mittal