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What is the Creator Economy, and why now?
The rise of the content creators, and what it means in the future
Creating content is not a new phenomenon on the Internet. People have been creating content online since the days of Vine, YouTube and the likes.
In recent times, there is a good chance that you’ve heard of the term ‘Creator Economy’.
What is the Creator Economy?
Creator Economy refers to a line of business that focuses on people who create content.
Way before online platforms like Patreon, Vine or Spotify existed, content creators such as musicians, artists, journalists, and entertainers had to go through large media corporations to get distribution. The biggest challenge was exactly that — distribution.
Budding musicians had to sign with a record label in order to get their music out there. What this means is the content created by the musicians themselves effectively belongs to the record label. For instance, Taylor Swift had to rerecord her old songs all over again in order to gain ownership of them.
Frequency of distribution was also a problem. Movies and shows could only be aired at specific timings due to the limitations and control of cable TV. If you’re hosting a stand-up comedy, your audience is only limited to whoever who shows up to your show. If you’re a journalist, your audience is mostly limited to whoever who follows that publication you work for.
Through the old model, it also meant a lack of autonomy on direction of content, and creators earn less because they had to go through an intermediary.
In the Creator Economy, the relationship between creator and fan becomes much more direct. Creators now have more control over the type of content they create, and can control the ways their content is distributed. Fans now have a lot more options in supporting their creators too. And these are made possible because technology has enabled platforms to help content creators make more money.
Why is the Creator Economy getting so much attention now?
Since recent years, there has been a lot more attention on the Creator Economy. There is markedly a lot more attention since COVID-19 hit globally. Why is it the case? 🤔
COVID-19 accelerated the accessibility to content creation
Due to lockdown situations happening across the globe, people had more time to pursue hobbies and other forms of entertainment while being stuck at home. There were a lot more people who were exploring their creative side, through TikTok videos of themselves painting, making music, acting and even cooking. And people were actually at home with lots of spare time to view these content and be entertained.
As a result, TikTok’s growth exploded during the early days of the pandemic 2020, seeing a 50% QoQ growth from 2019Q4.
With more than 30,000 loss of jobs in the media industry, it also resulted in a lot more journalists and writers coming onto Substack, a newsletter subscription platform to publish their writings and research.
As a result of more content creators turning to platforms to create their own content instead of relying on large companies that control their distribution, there is an explosion of user generated content (UGC). The nature of UGC are usually either (or both) entertaining and informative, which then encourages viewers to share them. Hence, much more people are aware about content creation and have had at least attempted to create content. And the beauty of content creation is in its potential to become a full-time job in today’s knowledge economy.
With much more impressions on UGC than ever before, in the absence of intermediaries, the next question then is: can content creators make a sustainable living creating content?
Technology and product innovation matching the timing of the market
In the past few years, many platforms supporting the creation of content in various formats have sprung up.
There’s also Cameo for celebrity shout-outs, Twitch for live streaming, and of course TikTok. Also, the 14-year old Twitter platform is finally giving ways for its tweeters to monetise through paid Super Follows. And social gaming platform RecRoom recently announced their Creator Compensation Program, which lets creators exchange their in-game tokens for cash.
With the increasing availability of content creation tools, and better affordability of mobile devices and data, these factors significantly reduced the barriers to entry for anyone to become a content creator.
Democratizing access to Status
• People are status-seeking monkeys
• People seek out the most efficient path to maximizing social capital
Eugene Wei - Status as a Service
Eugene Wei wrote a really insightful article on Status as a Service — for Gen Z who lack social capital that the older generation has had time to accrue, it became a form of desire which seemed unreachable to youngsters, but could be accrued much quicker because of social media. Being a creator gave the ability to people to garner status at a faster pace than other careers.
TikTok’s algorithm supposedly gives each uploaded video visibility in between popular videos, and improves its visibility depending on how viewers interact with it. The more people interact with that new video, the higher chance there is for the video to go viral.
While platforms like YouTube and Instagram have enabled distribution for content creators, many worry about being under the control of the algorithm and losing their audience overnight. In 2019, there was a sudden frenzy where Instagram influencers urged their followers to like and comment ‘Yes’ on their posts due to a ‘algorithm change’. Creators have voiced out concerns of solely depending on YouTube; as “benevolent of an overlord” as YouTube has been, they have to keep up with rigorous uploading schedules, and even refrain from deviating from their niches for fear of being penalized by the algorithm. As such, some of the more sizeable channels have been looking for, or building alternatives such as Nebula or Floatplane that connect the creators directly with their audience.
While understanding that platforms have a need to monetise to be here for the long run, is there a better way platforms can allow for creators to do what they love sustainably? What kind of tradeoffs would there be on either sides? Is it inevitable that creators look toward alternatives, or platforms have to consider a change in their business model?
Building more authentic relationships with followers
Content creators can also cut the distributor and go “direct-to-consumer”. For instance, musicians do not necessarily need to go through a big record label in order to produce and distribute their own music today. They release teasers on TikTok, relishing in stories and experiences of what inspired them to produce the song. They drum up hype, encouraging their followers to engage and interact. This form of interaction results in a closer relationship between the creator and their following, which creates more emotional value for both sides.
“20,000 comments, and I will (drop the song,)” was Clinton Kane’s announcement to his followers on Instagram before he released his latest single “CHICKEN TENDIES”.
The ability to go direct to consumers (D2C) also allows for the ability to humanise businesses and brands. People generally seek authentic and genuine connections; TikTok has enabled people and businesses to share their story behind their own journeys.
Source: Blush Babe Jewelry, TikTok
Blush Babe Jewelry, a US based jewelry business, posts TikTok videos of how they pack their orders. Customers can see what goes behind ensuring how the business gets their orders ready, humanising the purchase experience.
All in all, the Creator Economy has the potential to power the next one million jobs. No longer are the traditional routes of being an accountant or an engineer the most lucrative. Jobs that require hard skills may slowly be automated, but that doesn’t necessarily mean a bad thing. The job market will evolve to accept creative forms of work; work that was previously viewed as an unsustainable form of income have the potential to power the next million jobs. Work that was previously regarded as hobbies could become the next important jobs in the world.
Types of content: UGC vs PGC vs PUGC
To better understand creators, we look at the different types of content types created by content creators, namely:
User Generated Content (UGC)
UGC is broadly defined as content that is created by people for fun. Entertainment content that you see on YouTube or TikTok, and Instagram can be considered UGC.
Professional Generated Content (PGC)
These are the more traditional types of content that are created and produced by production houses, such as Netflix, or cable TV.
Professional User Generated Content (PUGC)
Professional content relating to careers, or created by independent production teams like Wong Fu productions, TwoSetViolin, either in literary, audio (podcast, Clubhouse) or video formats.
This is just a general way to categorise content though, and may not apply for all cases. For instance, how would one categorise high quality streaming content like esports live streaming on Twitch? It’s still considered UGC, but would one consider it a PUGC too? How about tweet storms by creators about certain topics such as product management or a certain industry? Would they be considered UGC or PUGC?
Potential pitfalls of being a content creator
Source: Creator Economy, Peter Yang
Peter Yang wrote an insightful article about a creator’s hierachy of needs. At each step of the pyramid, the creator faces challenges in overcoming each of them.
Staying motivated and making a meaningful and sustainable source of income are probably the two most difficult challenges that content creators have to go through. I was listening on Clubhouse on the topic of Content Creators, and one of the content creators mentioned that the way to keep producing content was to “force” themselves to upload something on a daily basis. Doesn’t sound fun if content creation actually becomes a chore; but at the same time, consistency in posting content is so important in the Creator Economy.
“Every day you're thinking, you're brainstorming, ‘What's my next video?’ Then you're filming it," she continued. "Then you have to edit it. Sometimes you can get discouraged when you upload a video and it's not hitting the numbers that you want. You start thinking, ‘What can I do to get more views?’ That begins this obsession of compromising your own integrity to hit these numbers."
Being a content creator is hard work. You have to consistently put out content, edit, publish and distribute them in order to have a shot at making it a sustainable career. At the same time, being a content creator is not a sustainable career for majority of people at this point in time, with many creating content as a side hustle for now. You hear the exploding successes of creators like PewDiePie, Nas Daily, and Charli D’Amelio, but it is because they are the top 1 percent of the content creators. But even they go through bouts of burnout and hiatuses.
In 2018, the top 3 percent of YouTube channels translate into $16,800 a year in ad income, but that is no more than one-third of the U.S. median household income. What about the next 97 percent of YouTubers? Plus, in the same year, the average non-“top tier” Spotify artist earns just $12 a month.
Li Jin talks about the need of a middle class for the creator economy, where the long-tail content creators need more support in order to make their work more sustainable.
The future of the Content Creator Economy
Despite those challenges, I’m super excited at the potential of the content creator economy creating the next one million jobs. I very much believe people should enjoy the work that they do. As with how technology has transformed jobs over the ages, many of our existing jobs may eventually get automated or made redundant. But that isn’t necessarily a bad thing. That just gives us more opportunity to explore much more creative work and up-skill ourselves.
So what does the future of the content creator economy look like?
Helping content creators to make more money
Content creator platforms like Substack, YouTube and TikTok have to figure out how to better help content creators make a sustainable livelihood out of creating content. Different tiers of fans could contribute to content creators in different ways. For instance, die hard fans could pay for a shoutout Cameo-style, while less than ardent supporters can support content creators via virtual gifts, ala HUYA or Twitch-style.
Non-Fungible Tokens (NFTs) is also a concept in its early days but holds huge potential to help provide a way for content creators to bypass intermediaries and fans can pay directly to them.
An NFT is a token that represents something unique, and is thus not mutually interchangeable. In contrast, cryptocurrencies like Bitcoin are fungible in nature, which means if you exchange one BTC with another BTC, nothing really happens.
Basically, fans would get to purchase the NFT of a content creator’s work through an NFT marketplace like OpenSea or Foundation, and in that process, pay directly to the content creator. Creators then make more money through this process, and can collect a royalty fee every time their NFTs are resold.
The NFT of the famous Nyan Cat was sold recently at an auction for US$561,000 in ETH.
NFTs are not without criticism however, with concerns about the unsustainable consumption of energy with the usage of NFTs. This is because NFTs have to be bought with cryptocurrency, which is generally mined with energy sources like fossil fuels.
It turns out my release of 6 CryptoArt works consumed in 10 seconds more electricity than the entire studio over the past 2 years.
The rise of new ‘religions’ / cults / community around individuals
People generally want to be a part of something bigger than themselves. Content creators form communities or cults around themselves, where the ‘cult leader’, which is the content creator in this case, would organise activities like comment raid groups on various platforms.
Having some sort of an intense following allows for creators to monetise their fans through different ways. Melissa Ong, the cult leader for the Step Chickens that originated on TikTok, started to sell merch, released a song on Spotify and Apple Music, and is also negotiating brand deals.
In the 2019 battle between PewDiePie and T-Series to be the most subscribed channel on YouTube, PewDiePie’s army took it on themselves to help Felix maintain his position, to the point where a supporter scrawled ‘Subscribe to PewDiePie’ on a WWII memorial.
Creators have to be aware of the influence and clout they would have on their following, and put out appropriate forms of content. Once a loyal fan base is established, it’s as good as a religion that sees the rise of faithful and steadfast followers.
Pseudonymity - Creators need not reveal their true identity
Pseudonymity can be the basis of real communities.
The next generation of content creators need not fully reveal their identities to the public. People follow interests and personalities more than the identity of the individual themselves. People care that you care about the same thing as they do, instead of caring that you stay in a specific neighbourhood in Singapore.
Nobody knew the identity of /u/Shitty_Watercolour when he just started out on Reddit. He could just do what he enjoyed as therapy, which was watercolouring. But eventually, a community formed around his work, where people gather to support his work and /r/Shitty_Watercolour was created. His identity, his real name, his real job, didn’t matter in this case.
The concept of Vtubers, or Virtual YouTubers, is also getting increasingly popular, where creators would not show their real faces, and interact with their fanbase through computer graphics-generated avatars. And that’s totally fine, as long as they maintain a form of authenticity with their followers.
CodeMiko is considered a combination of her creator’s personality and the avatar itself; she usually streams via her virtual character, which is done by creating the avatar through the Unreal Engine software and controlled with an Xsens motion capture suit. The suit itself can cost $30,000, so it is definitely not a cheap investment.
I’ve learnt a lot from these people and communities in the Content Creator space, especially Li Jin. If you’d like to find out more about the Creator Economy, these are super helpful:
• Creators used to face the challenges of expensive and low frequency distribution of their content. That changed as platforms came in to facilitate the distribution at a lower cost, and provide tools to help them create better content at the same time.
• There’s a lot more attention now on the Creator Economy because COVID-19 accelerated the accessibility to content creation, coupled with the increase in tech and product advancements that matched the timing of the market. Further, these platforms democratized access to Status, which traditionally is a form of social capital that took time to accrue.
• There are three main types of content: User Generated Content (UGC), Professional Generated Content (PGC) and Professional User Generated Content (PUGC).
• Being a content creator, you will be face the main challenges of staying motivated and making a meaningful and sustainable source of income.
• Future of the Creator Economy would focus around: Helping content creators make more money (like NFTs), the rise of religions and cults around the creators, and the proliferation of pseudonymity around creators and their communities.
Credits to Jun Xiang for reading drafts of this post and making it better!