The creator economy has created a buzz over various online platforms. In the past decade, we’ve seen a steady and noticeable shift from the attention economy to a more creator-focused market.
With the advent of the internet, the creation of platforms such as YouTube, Instagram, Patreon, and TikTok, and a rapidly changing digital landscape, we’re seeing more and more content being generated by ordinary individuals like us. No longer are we focusing on the traditional ad-based revenue model from big corporations that has come to define previous generations.
As a result of this shift, more and more individuals are getting into the creator economy, a subset of the “passion economy,” with around 50 million people worldwide who consider themselves “creators.”
But what does it mean to be a creator? What possible repercussions can this shift have in marketing trends? What’s the driving force behind this economy? Where is it headed, and what more can we expect?
Let’s do a deep dive and explore the different facets of the creator economy.
Embracing the Shift: Moving Toward an Increasingly Creator-Focused Economy:
A Primer on the Creator Economy
While you may be unfamiliar with the concept of the creator economy, chances are you encounter some form of it on a regular basis. Subscribed to a YouTuber’s channel? Signed up for tutorials on Patreon or Teachable? Following your favorite influencers on TikTok? These are only a number of iterations that make up the whole gamut of the creator economy.
In the content economy, skilled individuals and creatives have access to several online platforms where they can share their talents, passions, and skills, often in the form of consumable content, such as videos, tutorials, music, podcasts, and written works. Through these platforms, creators get paid via their monetized content, subscriptions, or donations, creating their own economy in the process.
The creator economy, over the years, has become more accessible to people worldwide, giving us a growing number of creators and an equally growing audience. This brings us to the question of whether or not anyone can become a creator.
In a very loose sense, yes, almost anyone can come up with niche or quality content nowadays. We can also say that, to some extent, almost anyone can have their dream job, in the context of the creator economy.
But there’s a tendency to romanticize the notion of earning from creator-generated content. Yes, it seems easy, but this sense of ease and accessibility belies the effort and hard work that comes with being a creator. Like any other job, creating content, especially the type that resonates with your target audience, entails a lot of hard work and dedication.
In this set-up, you can be one of the best creators, have top-of-the-line equipment, and churn out high-quality content but still only have a handful of viewers. Some get lucky and become popular or viral within a short amount of time. For many others, achieving this milestone can take them up to several years.
Attention Economy vs. Creator Economy
To further understand what the creator economy is, you need to first know what the attention economy is.
How is attention measured and utilized in a typical attention economy set-up?
In the attention economy, an individual’s attention is basically commodified. Treated as a currency, it’s being exchanged within the context of an influx of information. Picture this: you’re paying attention to a YouTube video while simultaneously putting off or ignoring your other duties. While it may be near impossible to measure attention, its value can be inferred from how much time a person spends on focusing on a certain thing.
In the late 1990s, Michael Goldhaber posited the shift from a material-based economy to an attention-based one, which heralded our separation from the industrial economy to the more aptly-named attention economy. While this new economy is commonly referred to as the “information economy,” Goldhaber argues that attention, not information, is a scarce “commodity.”
With the birth of various social media platforms and the rise in the amount of information in the 2000s, this scarce and valuable resource was utilized as a currency. You get free or limited access to a bevy of digital products and services, but the catch is that you’d have to pay for it with your attention and, to some extent, your personal information.
It used to be that content creators were dependent on the platforms’ audience. However, with the gradual shift from an attention-based economy to a creator-centered one, we can observe a few notable changes:
- The rise of content creators and the increase of their leverage over platforms
- The decrease in the barriers to micro-entrepreneurship brought about by this influx of creators
- Individuals are able to discover their niche interests and connect with like-minded individuals who then proceed to go against what is deemed as mainstream
These changes brought about a palpable power shift, with online platforms scrambling to give creators tools that can help them monetize their views or audience engagement.
Creator Economy and Engagement
This economy puts an emphasis on engagement, community engagement to be precise. A creator who is able to command their audience’s engagement is more likely to succeed in this economy.
How Do Creators Make Money Online?
There are a number of ways creators can make money online. Here are some of the most common means:
- Shares from advertising revenue
- Creating or publishing sponsored content
- Paid subscriptions
- Selling their own merchandise
- Digital content sales
- Independent businesses
Other popular niches include livestreams, podcasts, and, most recently, NFTs or non-fungible tokens.
The content economy subverts the traditional means of earning money. No longer do these creators have to work for a boss or be tied to big companies or labels. Nowadays, there are many avenues where creators can market their talents and skills online. Artists, for example, can showcase their crafts on sites like Etsy or Shopify. Gamers can do livestreams on platforms such as Twitch and Mixer.
Creators can even diversify cross-platform. They can have a channel on YouTube for time-lapse painting videos or short tutorials while simultaneously running a page on Patreon where their patrons can pay for a full-length video tutorial on the same subject.
How It Alters Marketing Practices
We can still see the prevalence of adverts in some of our favorite creators’ content. You’re very much familiar with ads in the middle of videos, ads that can’t be skipped, or pop-up ads that sometimes appear before an article.
These ads break consumers’ engagement with content, interrupting the experience and creating a sense of disconnect between the creator and the audience, and that’s something that needs to be improved on. This, in turn, signals a need for change in the advertising industry.
Jiri Kupiainen, the CEO of Matchmade, suggests that creators should have control over the advertising that goes with their content for them to preserve audience engagement.
Well, what about the big social media companies?
Social media giants like Facebook, YouTube, and TikTok make money through ad exchanges. However, according to Kupiainen, this business model won’t work with the creator economy in the long run, the needs of which are primarily: a) focus on the creator and b) audience engagement.
He predicts several landmark changes to how the online ad business model will be conducted within the context of the creator economy:
Focus on creator-powered advertising
In what could be considered a radical suggestion, Kupiainen posits that using reused and remixed creator content as ad content will become a commonplace practice. These kinds of content generate high engagement at a relatively low cost, making them great alternative fodder to feed that traditional online advertising model without losing focus on the creator.
Utilizing creator-based targeting
Picture this scenario: you’ve been browsing for hiking boots a lot lately. When you open a video on YouTube, before it starts, you see an ad for the latest model of hiking boots from your preferred brand.
Now, what Kupiainen predicts is a shift from interest-based ad targeting to a creator-based one. Instead of being shown ads for hiking boots, you’ll be shown ads by your favorite content creators promoting something that you might be interested in as one of their fans.
The rise of different marketplaces
Kupiainen predicts the rise of unique marketplaces for creator media inventory. These marketplaces will, in a way, compete to see which one is able to first bring creators, advertisers, and platforms together.
On the one hand, platform-owned marketplaces, while initially getting some traction, won’t be able to fully address the changing needs of the creator economy. On the other hand, independent marketplaces will thrive on the ambiguous relationship between online platforms and creators.
From these two, there will come a hybrid marketplace that is able to leverage big data and machine learning for efficiency, while still being able to make “human” decisions.
1,000 Fans? Try Aiming for 100 True Fans
Many creators dream of being able to live off on their income from their content. A popular essay by Kevin Kelly claims that for a creator to be successful, they only need thousands of true fans, or fans who are willing to purchase anything that their favorite creator makes.
If you’re able to build a following of 1,000 loyal fans who fork over an average of $100 per person annually, then you, as a creator, may earn enough money to make a living off content creation.
However, Li Jin, a venture capitalist, proposes something more offbeat: making money with fewer fans. She posits that creators can make more money by having only a hundred super fans who are willing to pay them up to $1,000 a year.
How does this work?
Let’s say a creator comes up with quality content that they decide to publish for free online. They can amass a huge following via horizontal social platforms (think general platforms like Facebook or Twitter) or through email lists.
The creator can then leverage some of these fans and turn them into true fans who will patronize the creator’s high-value content, whether in the form of having access to exclusive content or access to value-adding extra content.
So, how can creators earn their share of loyal super fans? How can a creator encourage their fans to spend big money on them?
By giving their fans a product that has meaningful value or purpose.
Creators understand that fans have a desire for self-improvement and transformation. This is why they supply them with exclusive value-adding content that can help transform an aspect of their lives, whether its health and wellness, work, or education.
Think of it this way: in an offline, real-world setting, people are willing to pay for the services of skilled professionals who can help improve their lives. This “value” mindset is being carried over into the online world and has prompted content creators to come up with content following the value model.
Li Jin then suggests a “recipe” that can help creators gain more while having fewer fans: go niche and use their audience’s desire for results as leverage. But, the “recipe” goes beyond that and calls for four core principles:
- High-quality and unique content
- Being able to deliver concrete value and results
- Access to exclusive value-adding content, recognition from the creator, and bringing a sense of elevated social status (pertaining to the audience)
How Creators are Utilizing the Content Economy
How have creators utilized the content economy over the years?
Aside from creating music, videos, and livestreams, creators have become more creative at coming up with content for their audience. They’ve also ventured into the realm of influencer marketing, patronage, fan engagement, online courses, and merchandise.
Let’s take a look at some of the most popular avenues for content creators:
With these platforms come several ways in which content creators make money. According to Virtually Founder and CEO Ish Baid, there are three main ways that creators have utilized the content economy to generate an income: advertisements, donations, and sales.
- Advertisements. Content is monetized via Google AdSense. Online platforms such as Google or Facebook present ads to your audience, the profits from which will be split in half between the creator and the distributor. This avenue works by monetizing the traffic on a publisher’s or a content creator’s website.
Two other popular forms of ad-based monetization, aside from AdSense, are brand sponsorships and affiliate links.
Brand sponsorships give content creators the opportunity to promote a particular brand and get paid for doing it. Many companies are getting on this train as they can expect up to 10 times more return on investment when their brand is endorsed by a content creator, compared to relying solely on traditional methods like pop-up ads or ad banners.
Meanwhile, affiliate links are a double-edged sword. On the one hand, creators can get a cut from affiliate links for successful sales. On the other hand, they might end up promoting a product for free if no one ends up buying products using their affiliate links.
- Donations. Donations are what they are at face value—money given to a creator by their patrons who don’t expect anything in return. Popular avenues for donation include Patreon and Ko-fi.
Donations can be a regular source of income, depending on the platform. However, this may dissuade some content creators as some platforms may incur high transaction fees. Donation amounts can also vary.
- Sales. One of the emerging platforms for monetizing content is through selling merchandise or services. Some of the most popular merch being marketed by creators include apparel, e-books, online courses, and artwork.
Meanwhile, some content creators offer services like speaking engagements or freelance writing. This avenue is growing in popularity because creators tend to get 100 percent of the profits. It’s also relatively easy to get into. However, according to Baid, sales-based income can be time-intensive and may require an upfront investment.
YouTube creators, for example, are able to monetize their content via Google Adsense, sponsorships, and patronage. But before they can start earning from the videos, they need to consider a number of factors such as optimizing their content for the YouTube search engine and creating engaging and high-quality content.
What’s In Store for the Creator Economy?
There’s no denying the seismic shift toward a more creator-focused economy. This new content economy has allowed millions of individuals worldwide to do what they love and to share their skills, all while being able to generate an income from audience engagement. Over the years, content creators have carved a significant presence, both online and offline, creating their own unique economy in the process.
This shift also signals the slow but eventual departure from big corporations dictating and limiting what audiences can see or what they can have access to. Traditional models are being undone, all in the name of being able to meet the needs of this new economy.
What we’re seeing now is an influx of boundless opportunities that come with the creator economy. We can also expect this economy to become more diverse as companies and creators continue to find new ways to reach out to their audiences. More avenues are also being adjusted or made to cater to the changing needs of creators and their audiences.
The creator economy has given us a more democratic take on consumerism, giving creators an avenue where they can do what they love, while enabling the audience to actually have a say in the kind of content they actually want to consume or patronize.