The Creator’s Economy: Beginners Guide (2023)

This is the era of the creator economy, in which celebrities are fashioned from scratch in the comfort of their own suburban living rooms while millions of admirers peer through the curtains.

Independent artists are enjoying a time in the spotlight as the borders between entrepreneurship and the creative economy continue to blur.

Once upon a time, the creator-to-fan pipeline was controlled by a select group of huge media organizations, music labels, and publishing houses. These groups had the power to decide who and what audiences saw, as well as how much artists and the content they made were paid. But over the course of the last ten years, a fresh, natively digital playing field has evolved, making it possible for artists to become their own publishers.

Platforms like Twitch, Patreon, and TikTok have democratized the distribution of content and made it possible for producers to communicate directly with consumers. Soon after, monetization mechanisms appeared, and so the audience-first business model was established.

Many companies are increasingly tying their brands to their owned channels and developing communities that are not tied to any certain platform. Independent creators are now experiencing a renaissance as a result of the blurred borders between the creative economy and entrepreneurship.

Concept of the creative economy

Animated gif depicting a person juggling a variety of non-objective forms The term “creator economy” refers to a kind of online business that is run by people who make online content and make money from their audiences through paid partnerships, advertising income, tipping networks, and the sale of physical products. The creative economy is made up of an estimated fifty million different types of people, including artists, curators, community builders, and influencers.

The easel for this painting is provided by yet another set of entrepreneurs who are the owners of companies that are responsible for developing the technology that supports this economy. This encompasses anything from applications for the development of content to social media platforms with shopping capabilities to monetization tools such as Patreon. Creators have the ability to develop their own personal brands, attract viewers, and make money with the use of this technology.

Evolution of the creator economy

Much of the phenomenon of the creative economy has been on the rise for more than a decade, its origins may be found even farther back in history. In the late 1990s, Web 2.0 opened the door to a new era of user-made content and interaction. Concurrently, the growth of mobile technology led to consumers’ tendency to be constantly connected to the internet. These “very online” audiences were first fed by blogging platforms, which used to be online diaries but are now one-person media machines.

Some people have been able to make a living solely from blogging, and collecting readerships that are on par with those of big media sites thanks to various monetization possibilities such as advertisements and corporate sponsorships. The Huffington Post and BuzzFeed were among the first news sites to add a blog-like feel to their more traditional work. The use of “real people” in big advertising campaigns started at the same time as conventional celebrity endorsements began to fade, marking the beginning of the current influencer marketing era.

This trend was made worse by reality TV, which made people who were once unknown into celebrities overnight. When YouTube opened to the public in 2005, aspiring stars no longer needed production agreements to get an audience. In the next decade, there will be an influx of new social platforms, and in the recent past, there have been incentives for creators such as YouTube Shorts. The situation improved gradually at first, and then suddenly.

This day and age’s creator economy

Over the course of the last several years, a wide variety of influencers, bloggers, social media celebrities, comedians, activists, podcasters, videographers, artists, musicians, and sports have joined the ranks of those participating in the creative economy. They run the gamut from part-time workers to full-time business owners, from little influences to enormous celebrities.

Via the cultivation of a following through the production of content and the monetization of their efforts through the sale of online courses and paid partnerships, Colin and Samir have created an empire in the creative economy. Instagram posts by Colin and Samir

But if we take into account the whole ecosystem, that number becomes an impossibly large amount. “People look at a really successful creative and don’t understand how many team members are behind them,” says creator Samir Chaudry, who is also one half of the cinematic pair Colin and Samir. “People look at a very successful creator and don’t realize how many team members are behind them.” These positions in the background are essential in assisting artists in developing their personal brands into established businesses.

In the year 2022, creators are able to earn money directly from platforms, but only a small percentage of artists really generate enough money from these profits to support themselves. On Spotify, 98.6% of artists made only $36 each quarter, while on Patreon, just 2% of creators earned a monthly minimum wage. Patreon is a crowdfunding platform for artists and producers.

The future comes far too quickly.

Even while the pandemic had a terrible effect on small companies — in many instances, it drove enterprises to shut, sometimes permanently — an unexpected trend saw an increase in the number of businesses being formed in the United States in the middle of the year 2020. The spirit of entrepreneurship flourished as a result of the high number of unemployed creatives who looked for autonomous and alternative sources of income. Even though the economy is growing more slowly in 2022, the number of people starting their own businesses is growing.

We were all going through the same experience, and because of TikTok, we were able to convey it despite the fact that there was a very low entrance barrier.

Everyone’s screen time rose as a result of remote employment, which, combined with our collective loneliness and need to connect with others, boosted the creative economy. The conditions were ideal for artists to establish the one-to-many online interactions that have come to characterize them. Samir said, “We were all going through the same thing, and TikTok made it easy for us to share what we were going through.” TikTok is a mobile app that allows users to record and share short videos.

While building her line of items that are offered via her own eCommerce site and stores like Target, LaurDIY acquired a following across a variety of social media platforms (and through an HBO miniseries). LaurDIY/Fanjoy

The increase in the number of people without jobs has led to an increase in the number of people interested in pursuing entrepreneurial endeavors.

What younger generations understood intuitively, namely, the possibility that a reel might be just as exciting as a silver screen, quickly sprang to the center of discussions about contemporary culture.

The middle class of the creative economy.

Illustration depicting light penetrating what seems to be two price tags in the form of windows in order to illuminate some flowers. Some of the highest-earning people give a false impression of what’s possible. Only a tiny percentage of people are able to support their luxurious lives only via advertising money and sponsored content.

For the remainder of the population, or what Li Jin refers to as the “middle class” of the creative economy, having many streams of income is the norm rather than the exception. Creators have the ability to directly monetize their social audience on-platform via a variety of methods, including advertisements, subscriptions (like Patreon), sponsored content, shoutouts (like Cameo), and tips.

A new generation of content producers is leading their consumers to safer, more stable environments—environments that they themselves control. The establishment of communities and the exchange of value may be accomplished by artists via the use of a website or an online shop in order to foster a more direct and intimate interaction with their audience. This includes providing users with access to special material or virtual events, selling fan club subscriptions or merchandise, and offering sponsored on-site content for partner businesses to promote their products.

Diversification of income streams for creatives

While there are now a plethora of tools available to artists to help them grow and reach audiences, the vast majority of these tools do not belong to the creators. According to Hugo Amsellem, a serial entrepreneur and angel investor, “The permissionless internet that we all applauded has reached its boundaries.”

One poll indicated that just 5% of creators listed their own brand as their major revenue source. This is despite the fact that many artists have already come to terms with the advantages of having many money streams.

A pie chart illustrating the composition of the creator economy’s many sources of income

The creator’s most precious asset is the community that surrounds their work. Samir opines that “if you’re developing a community, people will come with you” in response to the aforementioned statement. True fans often want more methods to show their support for their favorite producers beyond just “liking” their content. Branded goods and communities that are owned by a company provide an entry point for audiences to identify and communicate with other fans, so helping to deepen connections. It is imperative that this change takes place as quickly as possible.

In the creator economy, entrepreneurial endeavors

Even before the product was released, the developers had eliminated one of the most significant challenges that conventional business owners face: drawing attention. It is on these built-in purchasers who are eager to possess a piece of their heroes that the success of the creative economy depends.

Those who have learned about business via observation and experience have a leg up on the competition when it comes to conventional forms of entrepreneurial endeavors. Creators are required to be specialists in a variety of business-related fields, including marketing, customer (audience) retention, brand creation, and deal brokering. A great number of individuals, including comedians, sportsmen, and dancers, who have never thought of themselves as business people, have sorted out some of the most difficult aspects on the fly.

Beginning a business as a creative

A graphical representation of two hands sorting a variety of shaped and colored objects.

There are a few recommended practices that creators who are contemplating entrepreneurship as a road to independence need to take into consideration.

Construct the appropriate technology stack.

According to research done by the London Business School, small businesses that use low-code technologies like Shopify have grown and made more money while spending less money upfront. Dr. Gary Dushnitsky, who did the research and wrote the article, says that ten years ago, “building an online presence required a big investment up front.”

Therefore, the introduction of low-code tools has had the effect of leveling the playing field by providing access to a set of people who were previously excluded from possibilities to monetarily gain from the creative economy.

A person is seen standing next to a rucksack decorated with patches, and the image begins at the knees.

Conclusion

Gary says, “These tools can be stacked on top of each other and made bigger to meet the needs of a focused business.” Also, for many content creators, commercialization is the best way to turn their work into a source of income long before they have more than a hundred thousand followers. One example of this kind of businessperson is Sonja Detrinidad, who is the plant mom for TikTok and the creator of Partly Sunny Projects. Sonja has built her company in tandem with the expansion of her fanbase.

On a daily basis, new content production tools and platforms are being added to the tech stack that supports the creative economy. Even if social media apps help artists grow their audiences, those audiences need to be moved to their own channels so that they can buy things, sign up for online courses, or subscribe to paid subscription services to help support creators financially.

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