Creator economy

The creator economy is considered part of the "future of work" concept and is understood as a subset of the passion economy. Much of the creator economy involves social media, in which creators monetize their content using advertising and sponsorship, rather than direct transactional revenue from customers. This means a large portion of the creator economy hinges on the individual creator or influencer and relies on platforms such as Instagram or YouTube. Often the creator economy is considered to be a part of the decentralization of media, with more users finding content they enjoy outside of traditional media companies, and creators developing new payment methods and ways of earning money.

The idea of the "passion economy" was largely developed by Li Jin, a former managing partner at Andreessen Horowitz. In 2019, in a blog post, Li Jin defined the passion economy as an economy in which people could earn money on their "passions," while also defining the operations of the economy as that in which revenue is based on audience building, which emphasizes the individuality of creators, has an appeal to a wide range of creative products, and offers creators direct contact with their audience.

The difference between the passion economy and the creator economy comes in the use of social media. The line is often drawn here—members of the passion economy may use social media as a marketing tool, but otherwise do not require social media platforms to earn an income. Whereas in the creator economy, the use of social media and related platform technologies is seen as integral to the overall economy, with platforms such as Substack, Medium, Instagram, YouTube, and TikTok housing the majority of the economy's production.

Similar to the passion economy, the creator economy started with a few verticals, with the platform sites, such as YouTube or Blogger, being limited in number and largely dictating what content was developed. However, with the development of specialist content sites, in the wake of the popularity of the content developed on those early platforms, creators have been given a wider range of spaces to share their work and a wider range of work capable of being shared.

This growth has also seen a reduction in the role played by traditional media and distribution companies. For example, musicians used to need the backing of a music company in order to market and distribute their music. But with sites like Spotify or iTunes, and more powerful software tools and social media, a musician can create, edit, mix, distribute, and market their material without need for a contract with a record label. This has grown a variety of content types in the creator economy:

• Infographics
• Memes
• Videos and vlogs (video blogs)
• Live video
• How-to guides
• Courses
• Photos, illustrations, and other images
• Newsletters
• Blog posts
• Apps
• eBooks
• Comics and cartoons
• Podcasts
• Slideshows
• Games
• Tools
• Webinars
• Literary works
• Wikis

Many give credit to Adam Davidson, staff writer at the New Yorker, for the recognition of the emergence of the passion/creator economy. He outlined the economy in a book of the same name, with the following as main components of the creator economy:

• Digital platforms that facilitate the creation, support, and growth of an individual's services or goods
• Creators who use their skills, talents, and ideas to build viable businesses and brands
• Niche audiences who find value in the products or services being offered by creators

The first, or initial phase, of the creator economy is considered by some to have started in the late 1990s and early 2000s, when companies began selling physical products online. The growth of e-commerce, which in 2020 was considered to be worth over $4 trillion, changed the way people shopped and built trust in the internet dealing with people's financial information. Out of e-commerce came peer-to-peer e-commerce with platforms like eBay and Etsy, in which people could sell goods they are passionate about.

And with the growth of e-commerce came the sale of many services online, including legal services, entertainment, interior design, beauty services, and more, within the B2C market; while in the B2B market there was a similar growth of companies building products to provide services to other companies.

Following this growth of services on the internet came the growth of "platforms," such as social media sites and specialist content channels. These platforms, such as YouTube, Instagram, iTunes, Spotify, Snapchat, Twitter, Medium, Twitch, and TikTok, help creators with the distribution and marketing problem, allowing them to be discovered and establish an audience. In part, this is done by the platforms' recommendations and curation algorithms, which allow people to "discover" creators they are interested in. These platforms also created a phenomenon in which creators who lacked creative skills were able to develop creative skills while creating content.

These platforms further created an aggregation of creators, which equipped those creators with audience, reducing the need for audience development tools that were previously bought for millions of dollars. The platforms also necessitated the creation of multimedia editing tools that helped creators polish their content. Previous to this growth of lower cost and widely available tools, something like video creation was limited by the relative cost of the technology needed, including the cameras or the video editing tools, which limited video creation largely to professional film and television makers, among others. However, with a platform like YouTube, the inclusion of cameras on phones, and open-source and low-cost video editing tools, amateur filmmakers were given the tools to make simple videos. As the creator economy has grown, the sophistication of the content developed has grown as well.

Arguably, the second phase of the creator economy came through the monetization. While some platforms offer ad-sharing and related incentives, with a recognition that the creators are integral to the platform's success, and vice versa, some creators, even in this scenario, were unable to make a significant income, and others wanted still more income. These opportunities came about as brands began to recognize that creators had a captured audience, and the return on investment of paying a creator to harness their on-platform reach to advertise products and services could be greater than traditional marketing strategies.

This led to hundreds of companies in the space, including influencer agencies, sponsorship marketplaces, and talent representation companies—all working to help creators monetize through sponsored content. Also known as influencer marketing, this strategy is anticipated to grow to $15 billion in 2022, making it one of the fastest growing business sectors.

Ideally, in such a scenario, creators work with sponsors that match their personal brand, in order to maintain their content quality rather than pushing a purely corporate message. However, as influencer marketing has grown in popularity and brands have poured more money into, some influencers have noticed that with each paid post they lost some of the trust of their audience, which hurts their overall engagement and growth, and in turn makes them less desirable for future sponsorships.

The third phase of the evolution of the creator economy has largely been seen as the valuation of individual creators as businesses. Having developed audiences willing to follow them off-platform, creators have become businesses with multiple revenue streams beyond ads. Companies have further noted the change and arrived to help creators earn money by selling products such as premium content, merchandise, books/e-books, newsletters, or selling services such as fan engagement, coaching, consulting, or speaking engagements. This allows creators to grow their audiences and make more unique and niche content, rather than seeking the biggest possible audience and making more generic and click-bait content.

One of the more viral growths of the third phase of the creator economy has come with NFTs and the new possibilities for monetization offered by blockchain and cryptocurrency. While not entirely a new concept, blockchain and NFTs offer creators a chance to decentralize from the large platform companies, similar to the initial change from traditional media companies to online platform companies. Further, in terms of monetization, NFTs offer creators a chance to sell their content in a new way and create a new experience and engagement with their audience. And while some of the most well-known NFTs tend to be digital artworks, there remains a possibility to use NFTs to tokenize and sell all kinds of content, from music to video clips to blog posts or newsletters.

The creator economy and the gig economy are related to each other, in their use of technology and the place that technology has played in the relative economy's growth. For example, the gig economy largely grew out of platforms such as Upwork, Fiverr, and TopTal, which allowed people to compete in the marketplace through the internet alone. This opened a door for a range of skilled individuals to earn a living by selling their services online. Out of this growth of the freelance economy grew the gig economy, which involved people being contracted to complete single jobs at a time, often on a temporary basis, which has allowed millions of people living in areas with low employment opportunities to find a way to earn a salary.

While the gig economy is an alternative to a 9-5 job and was seen initially as an opportunity for individuals to either work hours they wish to work or to support a traditional income with extra income, many individuals in the gig economy continue to work a traditional job and a gig job. Often, those in the gig economy end up strapped for time to do anything other than complete the tasks for their clients. In many cases, the gig economy creates a race for the bottom, with some contractors having to lower the value of their skills in order to remain competitive in saturated markets.

For example, on Upwork, a job posting will attract dozens of proposals, and often an employer will select based on the cost of the contractor. The economy also creates uncertainty about where the jobs are coming from, with even those managing to turn gigs into long-term clients seeing sometimes unsteady and haphazard work. As well, the gig jobs lack benefits, which means that while workers tend to choose when and how they work, they do not get paid when they do not work, such as if they are sick or go on vacation or when the demand dries up. And often members of the gig economy suffer from burnout, as working multiple jobs or at all hours does not work, and that as flexible as gig work is, it often becomes stressful and tiring over time.

The creator economy emerged, in some part, to counter the pitfalls of the gig economy. Rather than utilizing their skills or time, the creator economy focused on creators developing content based on their interests and focused more on offering a chance to use those interests to create additional income. That has since grown to offer individuals a chance to build brands, businesses, and communities through digital platforms to share their work and ideas. And the creator economy has provided easily accessible information, experiences, and communities. Some consider a main difference between these economies is that the creator creates for a specific audience and learns what their audience enjoys. Whereas a member of the gig economy takes what work is given, without an audience.

While the gig economy, freelance economy, and creator economy share many things in common, a slightly related economy has also grown in the sharing economy. Often this economy is defined as a peer-to-peer activity of acquiring, providing, or sharing access to goods and services facilitated by similar community-based online platforms. The sharing economy, as the name suggests, puts an emphasis on individuals and groups monetizing unused or underused assets, such as parked cars or spare bedrooms that can be rented when not in use. This involves applications such as Airbnb or Zipcar, which allow users to rent our rooms or cars respectively.

This has since evolved to include the following:

• Co-working platforms, which share workspaces for freelancers, entrepreneurs, and work-from-home employees in metropolitan areas
• Peer-to-peer lending platforms, in which companies facilitate individuals lending to other individuals at rates often cheaper than through traditional lending entities
• Fashion platforms, which allow users to sell or rent their clothes
• Freelance services, including traditional freelance services and services such as cleaning and repairing

While there are similarities between the enabling technologies of either economy, the creator economy and the sharing economy are largely distinguished by their outcomes: creators develop content to entertain an audience and build a business, and the sharing economy sees as a way to monetize underused assets or skills. However, inside the creator economy, sharing initiatives have started, such as economies that have grown around YouTube creators for high-end video and audio gear, which some have taken to renting out to other creators to use for making videos. Or else sharing gear or equipment to several different creators to develop reviews from. Otherwise, these remain largely distinct economies, albeit those which are considered as part of the future of work.

As mentioned above, the creator economy is largely enabled by different technologies, from the social media platforms where content can be shared, to the tools to help monetize their audiences. And while creators have previously needed to gather a variety of tools to manage their revenue streams, some of the platforms have realized there are more avenues to create revenue and have begun offering those tools through the applications to help their creators. This includes Instagram's suite of influencer tools, such as creator shops, affiliate links, and a marketplace to connect influencers with brands. Clubhouse began offering monetization features, and TikTok has developed a native marketplace to connect advertisers with creators.

These platforms include entrenched giants such as YouTube, Twitter, Twitch, and Instagram, and relative newcomers such as Substack, OnlyFans, Clubhouse, and TikTok. All of these platforms, be they in desktop or mobile application, offer creators a chance to distribute their content. Often, the platforms include subscription tools, monetization tools, and community engagement tools, among others. The tools offered by the platform depend on how the platform operates; for example, Substack, which works largely on subscription, offers creators different tools than YouTube, which works largely on shared advertising revenue.

These include the tools and services necessary to create whatever content an individual publishes, be it music, writing, photography, or video. These tools, as noted above, are sometimes embedded within the publishing platforms, such as TikTok's video effects or Instagrams photo filters. However, there remain companies that provide solutions and tools for creating content. One of the most popular of these is Adobe's Creative Cloud, which is a giant in the creator economy.

Community and fan engagement tools can be built into a specific platform and can also be used to grow audiences and communities outside of those platforms. This also includes applications and platforms that allow creators to offer fans more personalized content.

For creators to understood how their content is working, to direct audiences to places to find their work, and to manage their subscriptions and posting and automate some operations, there are various services and companies that provide these creators with tools for analytics and operations.

The ways in which creators can monetize their content has increased as the creator economy has grown. Which method, or methods, a creator chooses will largely depend on the end goal of the creator. For example, a creator intending to be recognized as an authority, or building a product, will not necessarily want to mention or be supported by a direct competitor.

One way of creating revenue outside of the direct content created, creators can create additional digital and physical products and sell them independently. This can offer a chance for a community to wear merchandise, or for a creator to sell premium reports or e-books, all depending on the niche the creator is in.

These tend to be companies and services that help brands find high-performing influencers to reach specific audience demographics, negotiate influencer contracts, and maintain consistent communication with influencers. Further, these companies can allow brands to access large databases of influencers they can filter from, and they offer influencers a chance to gain a new income streams. The companies can include marketing agencies, marketing platforms, and influencer marketplaces.

For a creator, two ways of generating revenue are either being on a platform that requires subscriptions, or offering subscription services for increased community engagement or specialized content for an extra price. This could include exclusive content or course material, or specific information and behind-the-scenes content.

Similar to subscription, there are various donation, or "tip jar," services, which creators can embed on a website or otherwise are included in a platform. This gives audience and community members a chance to give to their favorite creator as their needs allow.

Creators often use crowdfunding platforms to publish or create one-off products or merchandise, or to fund larger projects outside of the capability of the individual creator to fund, such as a trip to a remote location for filming, filming a feature-length project, or publishing a book.

As mentioned above, an evolution of the creator economy has been towards blockchain, cryptocurrencies, and NFTs as new chances to generate income from their content online. While the early phase of the evolution of the creator economy saw creators flock to large centralized platforms where they could be found, an opposite movement has begun with blockchain back towards decentralized networks powered by blockchain and web3. This move allows creators to own the relationship with their audience, and fans can be rewarded for their engagement, creating a more dynamic engagement between creator and audience.

Furthermore, as more creators are finding the rules of platform companies difficult to follow or understand, the desire to move off-platform and towards a decentralized model has increased. As the pressure and interest has increased towards this move, there have come companies and projects to help creators develop their own spaces. These tools can also help creators develop individual cryptocurrencies, and create and sell NFTs.

For the creators in the creator economy, one of the largest concerns comes from the platforms themselves. The relationship between creators and platforms has evolved with the creator economy, from a largely symbiotic relationship to one in which the largest platforms no longer view the creators on the platforms as peers, so much as users of the product. This means that platforms no longer have the content contributors' best interests in mind. This has led many creators to cross-promote and diversify their presence on different platforms to minimize "platform risk." In this way, the creators are not vulnerable to a platform's decline, a platform's change in priorities, removal of features, or reduction in opportunities, all of which negatively impact the creator. This has further eroded many of the relationships between platform and creator.

Another concern, especially with the increased role the creator economy has played in the larger general economy, and the desire many have to be a part of the creator economy, has been the lack of a "middle class" in the creator economy. This is as some members have been propelled to stardom, and a large group fail to achieve financial security. On Patreon, for example, 2 percent of creators made the United States federal minimum wage of USD $1,160 per month in 2017. On Spotify, the story is similar, with an artist needing 3.5 million streams per year to achieve the annual earnings of a full-time minimum wage worker in the same year: USD $15,080.

This concentration of wealth has been pointed to as a point of concern for the platforms, as in the larger economy, a healthy middle class has been proven critical for promoting societal trust, a stable source of demand for products and services, and a place capable of driving innovation. Often the theory of wealth in the creator economy has followed a "long-tail" theory, which suggests that with the relative openness of the internet, niche products and niche creators have a better chance to flourish. But, in reality, top creators are massively successful, while long-tail creators struggle to get by. As the popularity of this type of economy grows, and is considered a part of the "future of work," these concerns have become more pressing, with some suggesting possible solutions to them.