Headline: What is the creator Economy?
Date: 12/28/2021
Body: I was just reading a news magazine and it mentioned the creator economy. It focused upon one particular woman, but did not directly address this central question. So, it seemed like a productive use of a blog post. I hope that you find it as interesting as I did.
What is a “creator?”
This is NOT a theological debate, but the answer does seem to depend upon who you speak with. Right now, it seems to include all people who make videos and upload them to any platform that is accessible. Interestingly, it seems that those who create audio-only files or podcasts are “audio creators.”
Is the Creator economy a big deal?
Yes. In 2021, this represents $1.3 Billion investment. I think this qualifies as a pretty big deal. Regardless of the amount of money involved, it is important to understand just what the creator economy is. Many experts term it the “attention economy” and this makes some sense. People begin to make a lot of money when they begin to have relationships online with hundreds and thousands of people. Then, the brands come knocking. Case in point, I like dog videos and I love this lady’s videos with 8 huskies. She just did a video that is essentially a commercial for an air filtration system. She got this opportunity because enough eyeballs were glued to her content. (Note carefully that the opportunities are tied closely to the reason that people come to your page.)
So, is this a worthwhile thing for me to pursue?
Well, if you are in a position to quit your job, for a while, your answer could be Yes. But, be warned that this is seemingly part of the gig economy: you cannot get healthcare coverage, and the income will likely be ebb and flow. That said, TikTok has started a Creator Fund, and Facebook promised to pay over $1 Billion to creators across its platforms in 2022. So, maybe? It is interesting to note that using social media might be just a platform-advertising device, and the videos could pull in a larger and larger audience until the crowd suggested that you think about merchandise or perhaps writing a book. But, most likely, if you are looking to score a bunch of money quickly, this is probably not it.
To really put things in perspective, consider the following:
- On Patreon, only 2% of creators made the federal minimum wage in 2017.
- On Spotify, artists need 3.5 million views to maintain the federal minimum wage.
Suffice it to say, you probably won’t be making a lifestyle changing transition from your participation.
Others seem to be of the opinion that the creator economy is not really a new thing.
Some are of the opinion that the creator economy is a completely novel thing. Others see TikTok and other vehicles as newer mousetraps that merely distribute the content more efficiently. “Platforms like TikTok, like Instagram have democratized the ability to make content that looks good, that is entertaining,” said Avi Gandhi, head of creator partnerships at Patreon. “The creator economy actually has been around basically forever. It is only now that the tools and the technology…have existed to enable creators to scale their audiences and actually monetize them.”
Monetization is an important topic related to the creator economy. Take the technology piece out of it, and I think things can be seen more objectively. One could have been a fantastic maker of horse blankets. But, if that person was on an island, and there were no horses on it, the horse blanket making skill would be very difficult to monetize due to the lack of a market. They would still be a “creator” but they would likely begin to create things that will be of use on that island. In a similar way, TikTok and other platforms will allow one to create videos, but the monetization piece is largely left to the individual creators. Thus, they must make videos about subjects that they know very well AND will be of interest to a significant group of others, (just like the horse blanket example.)
Are there plans in the future to change this stasis quo?
Yes, there are such plans. For decades now, there has been some debate about a “Universal Basic Income” that would ensure that each citizen got what he/she needed for basic food, shelter and clothing and medical care. There are some ardent supporters of this, and some people who see this a Welfare that should be avoided like a plague. More recently, there has been put forward a kind of “Universal Creative Income.” It seems unclear to me where the money will come from, but, TikTok started a $200 Million “Creator fund” to jump start the concept.
Others seem to suggest that content creators are the new small businesses of the economy, and suggest that there should be a mechanism to make upfront funding of such capital enterprises. Within this space, Podfund is doing something related for podcasters. They will provide between $25,000 and $150,000 to podcasters, in return for a share of revenue. This would seem a game changing new business model for some.
The Verdict
The verdict seems to be that the creator economy is very exciting. I know that I follow this 50-year-old retiree in the Midwest who owned his own landscaping business. He is just VERY smart and provides excellent evidence for all of the views he espouses. Without TikTok I never would’ve heard of him.(He now has over 1,000,000 followers.) This is just a taste of what the creator economy might mean to us. But, for now, we can revel in what we have. Find your favorite content creators, and when you can, why not send them a buck or 2? Maybe get them something off their Amazon list? In doing so, you might encourage them to keep up their efforts and in effect, be a creator yourself.
REFERENCES
https://fortune.com/2021/12/02/brainstorm-tech-creator-economy-tiktok-patreon-mighty-networks/
https://www.inc.com/gabrielle-bienasz/louisiana-restaurant-charity-gofundme.html
https://hbr.org/2020/12/the-creator-economy-needs-a-middle-class
Editor’s Note: Please note that the information contained herein is meant only for general education: This should not be construed as Tax Advice. Personal attributes could make a material difference in the advice given, so, before taking action, please consult your tax advisor or CPA.