Creator Economy 101:
The What, Why, How of this Booming Space

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What Is a Creator Economy?

The creator economy refers to the monetisation of work created by independent content creators. The creator economy, which includes everything from vloggers to streamers to influencers to YouTube chefs, represents a shift in entertainment power dynamics.

This also includes companies that provide services to these creators, such as brand partnerships, creation tools, and analytics platforms. Anyone who creates or benefits from independent content creation is affected by the creator economy.

These content creators are infopreneurs who use content to engage and communicate with their audiences. The audience, in turn, can financially support the creator by engaging with the content, paying for it, or elevating them to the status of opinion leaders by purchasing from brands endorsed or associated with these creators.

The creator economy is becoming more data- and tech-driven, particularly as the power of entertainment shifts, necessitating the need to innovate and compete. AI modeling can also be used to discover deeper and more granular insights to help platforms grow.

Eric Freytag of Streamlabs summarized how media consumption has changed in an article 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.”

How big is the creator economy?

To begin, consider the number of creators who participate in the creator economy. The number of participating independent creators is difficult to estimate because there is no central location to keep track of them all. In addition, many independent creators work across multiple platforms. According to Influencer Marketing Hub, the creator economy has 50 million creators.

This figure, we believe, is correct. Let’s look at the user bases of some of the most popular platforms to see why. There are, according to reports,

  • 38 million YouTube channels
  • 11 million Twitch streamers
  • 2 million podcasts
  • 1 million Shutterstock Contributor creators

Furthermore, there are many users on other social media platforms such as Instagram, TikTok, and LinkedIn, where some people monetize or generate leads, but the majority of people use them for personal reasons.

There are, however, a number of specific platforms through which people can monetize their content. Some, like Kajabi, are focused on knowledge commerce, or the sale of content related to one’s area of expertise. Take a look at their customer base:

Kajabi has 50,000 Heroes

Patreon has 210,000 creators

Podia has 50,000 customers

Thinkific has 50,000 customers

Udemy has 65,000 instructors

These five platforms have a combined user base of 425,000, and there are many more that aren’t listed here.

According to Influencer Marketing Hub, the creator economy is worth more than $104 billion dollars. When all content monetization platforms and marketplaces are taken into account, the $104 billion figure appears to be reasonable.

How Does the Creator Economy Work?

The creator economy operates on a straightforward principle. Make something and use it to make money – your own economy.

What you create is entirely up to you; it could be funny videos, a blog, a vlog, music, yoga classes, ‘how to’ videos, and so on. The list is endless.

The content is then distributed on one of the many creator economy platforms, such as YouTube, Instagram, Clubhouse, and TikTok.

The content can then be monetized, potentially earning the creator a sizable profit.

The internet has changed everything by allowing content to be shared with a much larger audience. This allowed creators to begin focusing on more specific niche audiences.

Previously, in order to generate enough revenue to be profitable, content had to appeal to a larger audience. To reach large audiences, today’s creators only need to target a small portion of the population.

There are five major players:

Creators: Infopreneurs who create content that their audiences consume are referred to as creators. For example, the content could be educational, entertaining, or motivating.

Consumers: For news and entertainment, consumers engage with expert-created content, financially support them, or follow their opinion leaders.

Platforms : Platforms are third-party services that facilitate the creation, distribution, consumption, and monetization of content. Platforms are used by both stakeholders to communicate with one another.

Businesses : Businesses are companies that want to promote their products and services by using content creators. They target the creators’ audience by working with influencers to create content that is then distributed via the influencer’s channels.

Tools : Platforms and other solutions that enable stakeholders to collaborate on content creation, distribution, and monetization are referred to as tools.

The Creator Economy Business Models

The creator economy has introduced innovative business models that are transforming the lives of influencers into long-term careers, allowing them to focus on what they love most: creating, engaging with their audiences, and monetizing their influence.

Here are some examples of business models:

Subscriptions

Content subscription is one of the most popular business models. By allowing subscribers, your platform enables content creators to create recurring revenue streams with their fans. Creators can sell written content, podcasts, online courses, and other types of content.

These models have grown in popularity among creators because they lower the barrier to entry while increasing direct fan-to-creator revenue.

Affiliate Marketing Model

Affiliate marketing is a revenue-sharing business model in which influencers are compensated for each customer they refer to a partner brand. Content creators can use this model to not only monetize their influence, but also to help businesses generate leads and establish themselves as industry experts through their content.

Creators are given special links or coupon codes to share on their influence channels, and the platform tracks the leads to see if they result in a sale.

Ticket sales

Virtual and in-person gatherings are growing in popularity around the world. A demonstration that the Covid-19 pandemic could not dissuade us from attending live events.

Creators are constantly looking for new ways to interact with their fans, whether it’s through online discussions or live performances. Ticket sales allow fans to interact with creators and compensate them for their time and effort.

It could be the right time for you to launch your own ticketing platform and compete with companies like Ticketbud, Soapbox Engage, or Eventbee.

Donations

Donations, which have been around for over a decade, are another popular form of monetisation in the creator economy. However, it is becoming less popular because you cannot always rely on donations because people may forget or be unable to afford them, which is why most influencers prefer other models such as subscriptions, brand sponsorship, and affiliate marketing.

Brand Sponsorship Model

An influencer is paid by a company or advertiser to promote their brand exclusively by including it in their content. This model is more expensive than other partnerships because it requires creators to sign a contract that clearly states the exclusivity of specific products and services.

Influencers who are extremely popular and have a large following prefer this type of brand sponsorship.

What are the biggest companies in the creator economy space?

The creator economy exploded between January and June 2021, accounting for more than 50 million creators and $1.5 billion in venture funding.

Content creators are no longer limited to producing content for major social media platforms like Facebook, Instagram, or Twitch. There are numerous ways to start and diversify your own content business; a jumble of recurring income streams may offer more options than relying solely on ad revenue from a single platform.

The ultimate goal for many content creators is to be free of platforms and brands, focusing instead on a consistent stream of income based on the loyalty of their fans. This is demonstrated by the three top upcoming trends in the creator economy.

While there has always been an abundance of content creators to choose from, the most profitable ones may be in high demand.

Creator-focused companies featured in our creator economy Collection received $1.3 billion in funding in 2021 alone, nearly tripling last year’s $464 million.

As investment in the space has increased, some companies have risen to unicorn or near-unicorn status, including:

  • Patreon: The membership platform recently raised $155 million in a $4 billion Series F round.
  • Kajabi: With $550 million in funding at a $2 billion valuation, the online course platform is the most well-funded on our market map.
  • Cameo has raised more than $166 million in total funding, valuing the company at $1 billion.
  • Substack has raised a total of $82 million at a valuation of $650 million.

New funds have also sprung up, some of which are solely dedicated to the creator economy. Traditional venture capital firms are interested in getting a piece of the action. Substack and Patreon, two of the bigger names in the space, have received funding from both generalist and consumer-focused funds.

Social Media’s Role in the Creator Economy

Traditional media has been a dominant player around the world for many years, and is responsible for everything we see on television, read in newspapers and magazines, and listen to on the radio.

As the creator economy continues to heat up, social media platforms have been hyper-focused on rolling out the proverbial red carpet to influencers and creators over the last year or so.

The creator economy has been fueled by social media. It creates marketplaces where creators can make a living. Successful creators also use social media to build a following before sharing their latest works with them.

This is closely related to a number of platforms, including Facebook, YouTube, Twitter, Instagram, TikTok, and a few others. These platforms use algorithms to determine what everyone sees. Advertisers who use these platforms reach a larger audience than those who use organic methods.

Content is required for social media, on the other hand. Posts, pictures, videos, and other media must be uploaded to the platforms by users. As a result, they make it simple for the best creators to profit from their work, typically via a revenue-sharing model similar to the one described above.

Platform creator funds and programmes can provide creators with a second source of income while also preparing them to work directly with brands.

One of the key strategies creators are using today is to build a diverse portfolio that engages audiences across multiple digital media platforms. Many are heavily invested in creating content for their websites and blogs and promoting it to their audiences on TikTok, Instagram, and other platforms through engaging and interactive reels, live streams, and Ask Me Anything stories.

What’s Next?

Decentralization is at the heart of Web 3.0, and it is here that the future of the creator economy lies.

Many influencers currently rely on third-party platforms for revenue, such as YouTube or Instagram, but we expect influencer marketing to follow suit as more users migrate to decentralized social media networks powered by blockchain technology, and the creator economy to thrive.

Creators will reclaim financial control in the near future if they have their way. Over $1.3 billion was invested in the creator economy last year, with the majority of it going to social media companies and publishing platforms rather than the creators themselves.

As a result, creators are abandoning such platforms in favour of more advanced business models like getting paid to create custom content for brands. There is no doubt that the creator economy has a promising future.

This post is also available in: English

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