A beginner’s guide to the creator economy

Consider yourself a creator? Looking to profit off your content? If so, the creator economy awaits. The creator economy is a business category where individuals monetize their hobbies and talents, creating content on social media platforms like YouTube, TikTok, and Snapchat to earn a profit. 

Until recently, digital creators could only generate limited revenue because these platforms didn’t offer opportunities for creators to become discoverable by their algorithms, thus stunting their ability to grow their potential earnings. Now, these companies offer creator funds to incentivize creators to produce content on their platforms, and major players like Bessemer, Northzone, and Lightspeed have invested in the creator economy as it continues to evolve.

Even so, many full-time creators still don’t make as much money as you might think. For example, a YouTube creator with 1 million subscribers earns only $60,000 in ad revenue annually. That’s six cents per subscriber per year. But now that Web3 has arrived, experts expect community-led distribution to create many new exciting and potentially lucrative opportunities for creators to find audiences to support them.

Web1, Web2, Web3

During the early days of the web—aka Web1—the internet contained only static content pages for early users to read. 

Then came Web2, when bloggers began building audiences, attracting the attention of big companies that started to investing in these content writers to profit from their influence and web traffic. The internet became an ecosystem dominated by companies looking to provide sponsorships and brand deals to invest in Web2 creators and businesses in exchange for their users’ data. The internet evolved thanks to supporting from financial backers, eventually funding the creation of the major digital publishing platforms and apps like YouTube, Instagram, and TikTok. From a creator’s perspective, while it sounds like the creator economy has a healthy flow of inbound revenue, publishing platforms limit their ability to profit from their creative output. 

And so, the desire to create a decentralized economy for creators to have more control over their eCommerce, merch, and revenue from their social networks, has brought the world to the next age of the internet: Web3.

How big is the creator economy market?

Gauging the size of the creator economy market isn’t exactly easy because it’s new and continues to evolve. What’s more, the ambiguous term “creator” could refer to anyone from a YouTube filmmaker to a hobbyist selling their creations on a digital marketplace. That makes measuring the total number of creators and the revenue they generate quite challenging. 

While the creator economy is in its infancy, investors are flocking because they believe in its potential. According to Linktree’s 2022 Creator Report, influencer marketing targets a total addressable market (TAM) of over 4.2 billion social media users, with around 200 million creators across platforms. 

“Creator platforms flourish when they provide an opportunity for anyone to grow and succeed,” said Li Jin of Atelier Ventures.

The earning potential has attracted prospective creators, leading to economic disparities among producers. Top-tier YouTube channels reported earnings of more than $200M between June 2019 and June 2020 and while this minority thrives, a creator middle class has also emerged. These individuals earn much less than the reported six-to-eight figures reported by top-tier creators, though sometimes they themselves graduate to this point and earn significant sums.

The future of the creator economy remains unclear. Experts suggest platforms should help creators grow their revenue streams so there are more mid-tier earners, a sort of middle class that bridges the revenue gap between new accounts and top-tier earners. Wealth concentration among the top tier, they argue, could lead to competing platforms poaching top creators and threatening the entire business.

Web3 platforms offer creators some of this agency. The tools these new platforms offer could push creators to become more platform-agnostic, leaving them free to take their audience with them when they shift platforms.

Ways content creators can earn money and creator tools

Professional writers, musicians, and videographers make money by charging for a service or selling goods, but web3 content creators earn a living in less conventional ways. They don’t get paid directly for the content they produce, but through ads consumed by those watching them. These revenue sharing agreements entice creators to keep making content in exchange for a percentage of the revenue their video generates to the platform as a whole. 

Creators though, report that this income has been decreasing steadily over the years. YouTube, which once fed the bulk of the creator economy, has since seen some of its bigger stars leave – temporarily, in most cases – for upstart platforms willing to pay more to creators. 

And while this helps, creators certainly see the value in diversified income streams. It’s hard building a business on the back of one platform, and when that platform makes significant changes – or shows you the exit – creators are often left wishing they’d diversified earlier.

Here are just a few of the many options creators currently use to monetize their content.

• Subscription-driven platforms like Patreon, Substack, and Buy Me a Coffee
• Marketplaces for non-fungible tokens (NFTs), like Foundation, Rarible, and OpenSea (the world’s largest NFT marketplace)
• Donations and tips 
• Affiliate marketing campaigns 
• Branded content and/or product placement
• Launching educational content and courses 
• Selling audience engagement
  • Marketplaces like Cameo offer creators the opportunity to commodify their interactions by offering fans the chance to buy personalized video messages from their favorite creators 

The current climate finds us in a world where it’s easier than ever to start creating and harder than ever to stand out from other creators. But for those who find their niche and an audience willing to follow along, there are no shortage of ways to reach and monetize them. Persistence has proven to be key, and that doesn’t seem to be changing anytime soon. Be smart. Keep creating.