A quick primer on the Creator Economy

Date
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Rahul Mathur
@ rahulmathur2501

Li Jin of Atelier Ventures defines the creator economy as “New digital platforms (that) enable people to earn a livelihood in a way that highlights their individuality”.

The gig economy was the starting point here. It offered commoditised jobs requiring limited creativity and providing one-dimensional work, like driving a cab or doing deliveries. Workers could make money by providing the service. Getting new customers was the job of the platform (like Uber).

In the early 2010's, startups like Patreon and Gumroad enabled artists and online creators to go directly to their fans and earn money from them, kickstarting the modern day "creator economy".

Since then, many platforms have come up that enable independent creators to monetise their skills. Teachers can now host virtual live sessions and offer paid-courses using platforms like Teachable. Writers can start a paid newsletter using Substack.

There are two major advantages the creator economy holds over the gig economy:

  1. Leverage : Creative work has more leverage than commoditised services. For example, a teacher offering a paid course only needs to record their content once to sell it to multiple students. But an Uber driver needs to do more rides to earn more money.
  2. Individuality : as a feature: Creators succeed by creating great content which more people will pay for. Great content is a function of their individual personality, skills and authenticity. In contrast, gig-economy workers provide a commoditised service which is not specific or unique to them.

While more empowered today than ever before, creators are still at the mercy of social media platforms and their algorithms. These platforms own their content's distribution. Policies around algorithms are not always clear or consistent. Any change impacts the performance of content and the lives and income of creators. This power dynamic now seems to be changing.

TikTok's algorithm makes it easier for newer creators to amass large followings quickly, while Instagram and Facebook promote existing creators with large followings. The emergence of Patreon and Gumroad provided creators an alternative source of income, incentivising them to focus more on those platforms. Sensing their grip on creators loosening, the social media platforms responded.

Creators on Instagram can now charge a subscription fee for exclusive content. Similarly, Twitter allows followers to 'super-follow' their favourite creators. Following Tik-Tok's lead, billion-dollar funds have been set up by these platforms to ensure successful creators get paid. Times seem to be changing.

It's still early days for the creator economy. How it plays out in different geographies remains to be seen. Lower disposable incomes and high price sensitivity may limit the success of direct monetisation models like Patreon. Entrepreneurs and creators, who twist and turn to find different ways to make money, will lead the way here.

Irrespective of what happens, the societal impact is significant and visible. We’re seeing this as new careers emerge (Podcaster, Gamer, Youtuber, etc.) and the meaning of 'work' changes.

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