For many decades, "big media" ran the world of entertainment and news. A relatively small number of companies controlled what most of us read, viewed, and listened to. To contribute to the conversation, we had to be employed by one of these media conglomerates, or at the very least, be significant enough to feature in the stories they told. We watched scheduled television programs, listened to radio slots, read newspapers written by journalists following their editors' orders, read books and magazines from large publishers, and spent evenings at the cinemas, watching films distributed by a small number of studios.
However, the internet changed things. It was a slow, almost insidious process, but over time, media decentralized. We found many different types of content that we loved. More importantly, much of this content isn't owned by traditional media companies. Much if it is written, spoken, or filmed by ordinary people like us. And as a result of this, we gained the confidence to make content ourselves. Now people are happily consuming content that we make and distribute without the need for the traditional companies. This is the era of the creator economy, and it is markedly different from what went before.
What is the "Creator Economy"?:
- The Stages of the World Economy
- What is the Creator Economy?
- Is the Creator Economy People Performing Their Dream Jobs?
- Most Influencers Are Part of the Creator Economy
- Ways Creators Can Earn Money Online
- There are Now Many Vertical-Specific Work Platforms
- It Takes Only 1000 True Fans to Make a Living
- Live Streaming Has Created New Opportunities
- Social Media's Role in the Creator Economy
- Is the Creator Economy Broken?
The Stages of the World Economy
A century ago, we lived in an industrial economy. It was the age of manufacturing, and most people (men at least) earned money demonstrating their physical prowess in some form of a factory (or in "modern" agriculture, taking advantage of improved farming practices). Most people earned their living by making "stuff."
By the 1950s, however, we were turning into a consumer economy. People had been through a depression and a second World War and were looking at new ways to spend their cash. People began to earn income by performing services for others. Trade became more globalized, with people wanting a wider variety of 'stuff" from around the world. Traditional media, television, in particular, showcased the latest and greatest, and repeatedly encouraged people to spend more on consumer goods, to "keep up with the Jones."
In the era of the internet, however, we entered the knowledge economy. Technology wiped out many traditional jobs, particularly in manufacturing and, before long, also in services.
This developed into the creator economy, where people found a way to earn money by marketing their inane skills, hobbies, and interests online.
What is the Creator Economy?
Eric Freytag of Streamlabs summed up how media consumption has changed in an article he wrote for VentureBeat: "Rather than ten TV shows consumed by billions of people, we now have hundreds of millions of shows that cater to billions of people. You could be only one of ten people in the world interested in a niche topic, but chances are you'll find content for it. Additionally, the people who are creating content for that topic are truly and authentically passionate about it."
The Creator Economy doesn't totally coincide with the invention of the internet, however. It took a while before people discovered the internet's true potential. Indeed, you can say that it matches up with Web 2.0 – a point when the basic paradigm of the internet changed. People stopped it being simply for information gathering and storage and discovered new potential uses, such as social media and video sharing. Web 2.0 offered numerous opportunities for people to express themselves online, and the Creator Economy grew from this.
Is the Creator Economy People Performing Their Dream Jobs?
In many ways, the creator Economy consists of people performing their dream job. It gives people a chance to specialize in their passion. A generation ago, you might have had to go to work in a traditional shop, office, or factory. At night you could come home and engage in your preferred leisure activity. You might have secretly hoped that you could become a professional in your favorite activity. Some actors, musicians, and sportspeople succeeded in their dreams. But most people simply played their games, engaged in their hobbies, or passively consumed content in their leisure time, unpaid, often losing a considerable sum of money to their leisure pursuits.
Now many more people can make money from their passions. Who would have thought you could earn a living from sitting at home playing computer games, commentating as you make your moves. How many amateur writers would have expected that they could earn an income from their craft, or teenagers thought they could make money from making funny videos in their backyard? Two decades ago, a generation watched enthralled at the antics of the Jackass crew, unaware that their future sons and daughters would be sharing similar videos to larger audiences just by using their phones.
Most Influencers Are Part of the Creator Economy
All of this has created a new kind of celebrity. The modern celebrities are no longer the stars of the latest blockbuster playing at your local multiplex, or even the leads in a high-ranking TV program. They are the teenagers or twenty-somethings who make funny videos on YouTube or the gamers who stream through the night their progress playing Fortnite. And while many musicians whose music plays on the radio still have fame, so do youngsters who lip-synch to their favorite video clips on TikTok.
The new celebrities are the content creators. And not coincidentally, many of these are also influencers. There is a clear correlation between influencers and creators.
However, there is one proviso here. The term "influencer" is often bandied about and misused, particularly in the mainstream media they have tended to usurp. As we wrote in one of our first posts:
An influencer is someone who has:
- the power to affect the purchasing decisions of others because of his or her authority, knowledge, position, or relationship with his or her audience,
- a following in a distinct niche, with whom he or she actively engages. The size of the following depends on the size of his/her topic of the niche.
Not everybody who thinks they are famous online is an influencer. An influencer needs to establish a genuine following in their niche, just as most good content creators do.
Today's younger generations, however, look to these content creators as their influencers. They don't follow traditional movie and television stars because they don't waste their limited time going to movies or watching scheduled tv. They would far rather be entertained by someone like Ryan Kaji, a nine-year-old who shares videos on YouTube where he reviews his toys. The 29.6 million subscribers to his Ryan's World YouTube channel must be the envy of all traditional television networks.
Ways Creators Can Earn Money Online
The internet has generated many opportunities for creative people to make money online. Writers, musicians, filmmakers, and other content creators can all share their creative visions with an appreciative audience. There are also new niches, such as livestream gaming and podcasting.
In the past, you generally had to work with traditional publishing houses, film companies, or record labels if you wished to earn a living from your creative endeavors. Now creators can make money themselves without the need for managers or long-term watertight contracts with "Big Media."
There are numerous marketplaces now where you can sell your creative talent online. There are obvious sites like Amazon Publishing, Etsy, and eBay. However, other platforms can also benefit creators, such as Tumblr and WordPress (for bloggers), Twitch and Mixer (for live streamers), Instagram and Pinterest (for photographers), and YouTube and TikTok (for filmmakers).
There isn't a set way for creators to earn money online, but in most cases, they revenue-share with the platform on which they operate. So, if you are a popular Medium blogger, for example, you can generate income that comes from the money Medium earns from subscriptions. You share that money with Medium and the other popular bloggers.
If arts and crafts are your thing, you are likely to make products you can sell on Etsy. Etsy charges sellers three types of fees:
- Listing fee – 20 cents per listing
- Transaction fee – 5% of the listing price per sale
- Subscription fee – Etsy Plus costs $10 per month
Etsy sellers can then keep the remaining proceeds from their craft sales as profit for themselves.
Popular YouTubers play ads on their channels and get to keep a portion of the advertising revenue. You revenue-share in some way with all the other creator marketplaces.
There are Now Many Vertical-Specific Work Platforms
Li’s Newsletter from Substack created an interesting diagram summarizing the multitude of vertical-specific work platforms that have sprung up in the age of the Creator Economy. Many of these began as start-ups over the last decade. Li argues that these verticals originated from Craigslist. Once Craigslist operated as an overarching marketplace where people could offer their niche services and find interested customers. At that stage, there really was only space for one platform. However, with the growth of the Creator Economy, there was sufficient demand for these services (and in turn increased supply) to warrant the creation of many specialist, often niche, platforms.
Li argues, however, that we have moved on much further than merely unbundling Craigslist. “Work is being unbundled from traditional employment.” She observes that we ae now seeing “the rise of “micro-entrepreneurs,” or free agents, creators, freelancers, and independent workers who utilize digital platforms to make a living by leveraging skills and knowledge in the absence of a traditional employer-employee relationship.”
It Takes Only 1000 True Fans to Make a Living
Kevin Kelly in The Technium makes the astounding claim that “To be a successful creator you don’t need millions. You don’t need millions of dollars or millions of customers, millions of clients or millions of fans. To make a living as a craftsperson, photographer, musician, designer, author, animator, app maker, entrepreneur, or inventor you need only thousands of true fans.” He wrote this back in 2008, indicating that the Creator Economy has evolved rather than simply appearing overnight.
His theory is that a true fan is somebody who will buy anything you produce. Most successful creators can probably recognize their own true fans. As Kevin says, “ diehard fans will drive 200 miles to see you sing; they will buy the hardback and paperback and audible versions of your book; they will purchase your next figurine sight unseen; they will pay for the “best-of” DVD version of your free YouTube channel; they will come to your chef’s table once a month.”
If you can build a following of 1,000 of these “super fans”, spending $100 each per year, you can probably make a living from their purchases, regardless of any other sales you may make.
You might look at the followings of the more famous influencers, and despair at the millions of followers they have. Your following may be paltry in comparison. Yet that doesn’t matter, if you have sufficient “super fans.”
There is nothing special about the figure of 1,000 true fans. It all depends on how much they spend on your product or service. If you manage to charge higher prices, you need fewer “super fans”. For instance, if you can generate $1,000 income per year from your true fans, then you only need 100 of them for that six-figure income you’re craving.
Live Streaming Has Created New Opportunities
One of the newer forms the Creator Economy can take is live streaming. This has to be one of the ultimate ways for talented people to express themselves to a broad audience.
In the distant days of personal computing (the 1970s), personal video gaming entered its infancy, after a few experiments as far back as the 1950s. Atari released Pong in 1972 as the world's first arcade video game. They released a home version of that game in 1975. Yet in those days, games were single-person, with some expanding to two or even four-player, before long. However, even then, you were limited to playing friends physically in the room with you. This meant that games were intrinsically private. The biggest audience you might have would be standing watching you in an arcade if you were skillful enough to attract onlookers.
Today that has changed that system. Any gamer can sign up for an account on Twitch and live stream their gameplay. Most of these streamers play multiplayer games against people from across the globe. While there are a few streaming superstars, most are everyday people who just like to play in a public setting. They may not even be good gamers. Yet they have viewers, in some cases, millions of viewers. Why? Because people find their games fascinating. Often it is the quality of their commentary and self-analysis that attracts viewers, more so than their expertise at playing the game.
Social Media's Role in the Creator Economy
Social media has fueled the creator economy. It provides marketplaces where creators can make their living. Successful creators also use social media to build a following and then share their latest creations with them.
The average US adult spends 38 minutes per day on Facebook. Indeed, 16-24-year-olds devote a median of 3 hours a day to social media. Internet users, in general, spent an average of 2 hours and 22 minutes per day on social networking in 2019. That is a serious amount of time spent on social media, and this gives many opportunities for creators to promote what they produce to relevant, targeted types of people.
Social media is hugely linked to a small number of platforms: Facebook, YouTube, Twitter, Instagram, TikTok, and a few more. These platforms use algorithms that truly dictate what any individual will see. People who choose to advertise on these platforms have a larger audience than those who try an organic approach.
However, social media requires content. The platforms need people to upload posts, pictures, videos, and the like. Therefore, they make it easy for the best creators to make a living from their content, usually with a revenue-sharing model as described above.
Is the Creator Economy Broken?
The creator economy is a "dog eat dog" marketplace. Some people, mainly influencers, perform amazingly and make considerable sums of money. The bulk of people, however, make very little. They struggle to gain enough of a dedicated following to achieve economies of scale. For example, only the top 3% of YouTube creators yield more than $17,000 per annum in advertising revenue, and to do that, you need to average 1.4 million views per month.
YouTube at least shares advertising revenue. Many of the others, such as Pinterest, Twitter, TikTok, and Snapchat, don't. Creators on these platforms have to find alternative ways to earn an income, such as influencer marketing or sponsorship deals. Facebook shares ad revenue with some creators, but only a select few.
But this doesn't necessarily mean the creator economy is broken. It has led people to innovate. Sites like Patreon have sprung up to make it easier for creators to earn an income and facilitate an exchange of money.
The creator economy is the ultimate way that talented people can express themselves and receive an income. It is evolving, however, and just like changes in technology and society left behind traditional music companies, platforms who don't make it fair for creators may well find themselves relegated to being a history article in Wikipedia.