CHAPTER 2

The Creator Economy

Welcome to the Future

The Creator Economy. It is so varied. As such, it is impossible to start the chapter with only one story. So, let’s look at three: the creator as content developer, the creator as influencer, and the creator as entrepreneur. One of the best examples of a creator who creates content is a photographer. Think about all of the travel photographers who travel the world, take gorgeous photos, and then either sell the photos using Instagram as a marketing platform or create a large audience and become a magnet for brands. Travis Burke (@travisburkephotograpy) out of California focuses on the natural landscape of national parks. Others like @bemytravelmuse have left the corporate life to lead a more creative life.

The creator as influencer can be anyone, and we learn in this book, you don’t have to be a celebrity to do so. West Gissinger @westgissinger on Instagram is an example of successful nano-influencers. West is a Pilates and cycle instructor in Dallas, Texas, and created a popular ab routine that she highlights through videos on Instagram. She posts for Sessions Pilates, as well as serves as a brand ambassador for Outdoor Voices and Carbon38. She also is on Liketoknow.it and a part of an Amazon affiliate program where she has access to affiliate links to a database of brands to tag. “My goal as a content creator and influencer is to show up authentically to encourage, motivate and educate everyday people in the fitness space,” said Gissinger. “It is a way for me to build community around my profession. I use social media as a dynamic and real-time business card. It is a way for me to connect to current clients and potential clients. I use it as both a fun and creative outlet, as well as a strategic marketing tool,” she added.¹

The last is the creator as entrepreneur. The beauty brand Glossier launched in 2014 is one of the successful direct-to-consumer (DTC) brands that have deftly used social media and ecommerce as the cornerstone of their value proposition. Valued at $1.2 billion as of 2020, Glossier’s beginning was a blog in 2011, written by founder Emily Weiss, who was then an intern at Teen Vogue. The blog called “Into the Gloss” was where Weiss noticed that the beauty industry had an image problem. She wrote articles on beauty issues that were widely popular and that were then augmented with Instagram (early on with 186,000 followers for Glossier—now with more than a million). The beauty industry was failing to portray real women with normal shapes, sizes, and skin. So, she created a company, got funding ($2 million from Kristen Green of Forerunner), and launched with four products. “She was really thinking differently,” said Green in an article. “I thought—I need to work with this woman. I don’t know what we are going to build, but it’s going to be different and interesting,” she said.

The tagline “Skin first. Makeup second. Smile always.” remains the ethos of the company. The product lines are sparse relative to larger beauty brands. But the insight into what women wanted and needed (and what was not there) paired with the explosion of ecommerce which allowed brands to completely control their own retail experience from product discovery to online experience design to social media initiatives helped launch Glossier.

The company has a relentless obsession with its consumers. Glossier spends a lot of time listening and building its community to the point where customers feel they have a stake in the company. The conversations with consumers exist largely online but within a multichannel conversation. This had led to a cult following and is much more than the result of good market research. Given its roots as a blog, content marketing is the foundation for Glossier’s strategy. In addition to the blog, they popularized the “Get Ready With Me” format on YouTube to share beauty routines. The brand’s Instagram is their central social media channel, but most of the content is user created and shared, thus making all of its customers potential influencers. All of this attention to people have created a strong community—one that rivals other DTC companies such as Dollar Shave Club, Peloton, Harry’s, and Honest Company. Weiss has become a sought-after speaker and leader, as well as one of the few unicorn startups of the past few years.²

Who becomes a social media influencer? The rise of the social media influencer—and relatedly, influencer marketing—is the result of a larger trend—the creation and expansion of the Creator Economy. The Creator Economy is the larger ecosystem. Influencers are one part of it (albeit a very visible and fast-growing part of it). Let’s start by digging into the Creator Economy and how it differs from earlier models.

Creator Economy

The Creator Economy (also called the Passion Economy) is the fast-growing class of businesses centered around independent content creators, content curators, and community builders. According to a recent Forbes article, the creator economy is made up of online platforms, marketplaces, and tools that help democratize and monetize creative expression from anyone.³ These creators include social media influencers, web content creators, bloggers, podcasters, videographers, and all of the software and finance tools to facilitate that growth and monetization.⁴ The Creator Economy has done much to democratize the ways that content is created and produced, distributed, and amplified and consumed by others. Previously, content was dictated by major players—advertising agencies, television and movie producers and studios, music producers and record labels, and publishers of all kinds. Now, creators have more power and audiences have more choice.⁵ “Creativity is at its peak in the 2020s, and platforms that support independent creative expressions are springing up more than ever,” said technology writer TK Princewall.⁶

Much of the growth of the Creator Economy comes at the expense of the old “Attention Economy”—the advertising-based revenue model that has dominated advertising and creative industries for the past several decades. In fact, some of the largest and most valuable companies—especially in technology—have built their success on this model. Google and Facebook are essentially advertising-based companies. Overall, there has been a major shift from a tangible-based economy (e.g., physical products) to an information-based economy. Attention has become more scarce and more valuable, and several products were “free” in exchange for that attention as well as the personal information that tech companies then sold to advertisers.⁷ Eventually, the notion of “free” led to broken trust, misinformation, privacy scandals, and information hacks. Additionally, at the beginning of the Attention Economy, the platforms provided a mass audience important for creators. But soon the leverage of creators increased, barriers to entry for creators decreased resulting in a power shift—away from the platforms and toward creators.⁸ Engagement between creators (and influencers) and audiences became the most important currency. So, platforms are now attempting to provide ways for creators to monetize their work. According to Clara Bergendorff, a Forbes contributor for venture capital, “It seems the future of digital capitalism is in the hands of many micro-entrepreneurs who are closer, more connected, and by virtue of being niche understand their patrons better than the big brands—whether selling content, products or knowledge.”⁹ This has major implications. “The creator economy has clearly taken over the world of influence and culture and the rise of creator economy tools have allowed new creators to emerge daily, and existing creators to reach audiences in new ways,” said Andrew Omori, Partner at venture capital powerhouse Andreessen Horowitz.¹⁰

In addition to the major shift from Attention Economy, there are several recent trends that led to growth of the Creator Economy. First, the 2008 recession (and later the 2020 global pandemic) affected full-time job creation and many people found themselves out of work. Second, there has been a social shift where people want to do something they are passionate about as their primary job, want more control over their lives, and want to be their own boss. The economic conditions of the rise of the Gig economy and the ramifications of the global pandemic led to a greater number of content creators with time to pursue their passion. Indeed, there seems to be a rise of “micro-entrepreneurs” who are using digital platforms to make a living by leveraging their skills in the absence of a traditional employer relationship.¹¹ Third, technology has ushered in the ability to do more at cheaper prices. This includes faster mobile networks (5G), better quality phones and video recorders, larger screens, more apps, and simply more curiosity from creators. Fourth, marketing strategies and media consumption have undergone dramatic changes. Media choice has exploded, technology is ubiquitous, and marketers collect more data on their audiences than ever before making it easier and more effective to target advertiser messages. However, this increasing choice also leads to lower engagement and less attention from audiences, as many install advertising blockers to ignore overt advertising messages.¹² In fact, ad blockers have become a major pain point for traditional digital advertising. All of this has led to the creation of an entirely new content ecosystem, where social media influencers are only part of the story.

These changes and resulting attention led to the major financial impact of the Creator Economy. The Creator Economy spurred more than $800 million in industry growth from only 31 startups since October 2020. April 2021 had the highest capital infusion of $338.8 million, signaling that the Creator Economy is a major player in entrepreneurship and business. The influencer marketing market alone is on pace to exceed $13.8 billion in 2021 while the total Creator Economy is estimated at $104.2 billion. The Creator Economy intersects with the mega “Gig Economy,” which is forecasted to reach $455 billion by 2023, with 64 percent of full-time workers saying they want to do side hustles. The Gig Economy, while large, is also known more as a commodity and is prevalent in industries such as food delivery (DoorDash) and transportation (Uber, Lyft). That said, the 14 percent of gig workers are in creative industries.¹³

Who Are the Creators?

According to estimates, more than 50 million people globally consider themselves to be a creator. Most are amateur creators, while more than two million are considered professionals. That will likely grow given the low barriers of entry. A creator is an individual who has created an audience on a digital or social platform and who curates or produces content to meet the needs of that audience.¹⁴ The Creator Economy belongs to everyone who can create—artists, writers, musicians, journalists, dancers, photographers, designers, and video gamers—anyone looking at creative expression. In the past decade, there has been a surge in the Creator Economy, where people who are creating and distributing content for brands are earning income from their efforts. Using social media platforms such as YouTube, Instagram, Snapchat, Twitch, TikTok, and Substack, content creators and entrepreneurs can earn money through a variety of models.

There are at least two important caveats when it comes to monetizing for creators. First, the audience must be built first. Second, once the audience is built, it is important to understand that all audience members are not created equally in terms of their willingness to spend money. Peter Wang in Creator Economy¹⁵ argues that there are three types of fans. Casual fans are not willing to pay for much but will likely make up most audience members. Active fans are willing to pay a small amount, while super fans are willing to pay a lot. In fact, venture capitalist Li Jin¹⁶ states that a creator only needs between 100 and 1,000 super fans to earn a strong living. That said, to maximize earnings, it is critical to have multiple income streams targeted at different audiences.

Advertising is aimed at the casual fan, allowing the creator to earn income from the most fans for the lowest price. Subscriptions are recurring income from fans through either paywalled content or community or unlocking some additional value, like community badges. Many creators create tiered subscriptions. Both ads and subscriptions are reliable and are valuable for creators with large audiences (e.g., more than 100,000). Tipping is another option for monetization but is not a reliable source given its variability. Selling digital goods such as eBooks, PDFs, and online courses are great once the audience is built and the creator is delivering consistent value. Digital goods are usually targeted at the super fans. Nonfungible tokens (NFTs) are a newer way for creators to sell unique content to fans. Right now, NFTs are high because they are new and unique and use an auction format.¹⁷ Other ways to monetize include sponsored content, product placement, and brand sponsorship, especially for influencers. There is also affiliate marketing, VIP meetups and fan clubs, and even cocollaboration product launches.

The top content creators make millions. YouTube creator David Dobrik’s monthly Adsense checks averaged $275,000 per month for an average of 60 million monthly views. Charli D’Amelio is a 16-year-old TikTok influencer who surpassed 100 million followers making more than $4 million in the past year and a half.¹⁸ The highest paid writers on Substack are earning more than $500,000 annually. The video gamer Ninja earns more than $500,000 a month on Twitch. Even an eight-year-old who reviews toys made $26 million on YouTube. That said, the real riches are only available to those at the top. For example, only the top 3 percent of YouTube creators make more than $17,000 annually in advertising revenue and that requires 1.4 million views per month.¹⁹ These more niche “long tail” communities represent value and are currently underserved and underpaid, even though their fans are incredibility invested and engaged in their work. This continues to be an issue—currently, the Creator Economy has no “middle class.”

In a survey from NeoReach and Influencer Marketing Hub, the companies explored the earnings of creators (and in particular influencers). What they found was that the traditional idea of influencers making their money from sponsored posts and brand deals is only part of the story. They found that 43 percent make a livable wage from their content (about $50,000 annually). It does take time—46 percent of these creators who are making money have been at it for more than four years.²⁰ Creators state that they are most concerned about engagement rates over the number of followers. The human connection with their audience seems to be very important to them. In fact, in four out of seven social media platforms, creators listed engagement rate as the top measure of success (platforms included Instagram, TikTok, YouTube, Facebook, Twitch, and Twitter). Instagram is still the most important platform with TikTok taking a surprising second given its age.²¹ In IZEA’s 2018 State of the Creator Economy report, they found that most of the creators they surveyed made their money from influencer marketing content with display ads coming in second. They felt that fit with content, audience relevance, compensation, ability to screen, process ease, and timing fits were all important factors when working with a brand.²²

IZEA conducted a survey of its influencers called the 2021 State of Influencer Equality report.²³ This report is based on a survey of its marketplace. They found that for the first time, African American influencers earned the most per post in 2020. Smaller populations of non-White influencers paired with marketer demand for diverse voices has driven the price per post up for Hispanic, Asian, and non-White other influencers as well. They also found that sponsorship deals for racial minorities now mimic the general population. Thirty-five percent of the U.S. population is non-White. But 37 percent of the deals went to non-White influencers, showing that brands are increasingly interested in more diverse voices. They also found those who speak Asian languages command a premium as well. Males earn more than female influencers on a per post basis, but the gap is closing. The gap was 24 percent in 2020 down from 47 percent in 2019. But female influencers get a large majority of the deals—90 percent—due to the abundance of brand friendly female influencers. Last, influencers under age 17 command the highest premium for sponsorships. They found that as influencers age, the cost per post declines until age 55 and then bounces back.

The Tools of Creator Economy

According to Influencer Marketing Hub, there are several types of creators: web content creators, YouTube creators, podcast creators, and social media creators. These cover a range of platforms and channels. Web content creators are generally developing blogs, checklists, white papers, eBooks, and case studies. These are common forms of content marketing and utilize both writing and graphic design skills. Some creators are generalists; some are specialists.²⁴

YouTube creators typically develop a channel on that platform and build an audience of subscribers. They create and publish videos—some longer form than other platforms—on YouTube. Most YouTubers are “on camera” and do most of the production (editing, writing, and recording) themselves, unless they have a large channel. This is not always easy—YouTube has more than two billion monthly active visitors and 50 million of them are actively creating content, making for a very crowded marketplace. Indeed, 85 percent of YouTube views are generated by only three percent of YouTube channels. But the audience is there—especially among Generation Z, who are more likely to watch YouTube than television.²⁵

Podcast creators, such as YouTube creators, develop a podcast “show” with several seasons (perhaps) and episodes. They may do part of the podcast or all of it—from interviewing, writing, recording, editing, and producing. Podcasting has seen a huge surge; as of March 2021, there are more than two million podcasts with more than 47 million episodes. Of those two million, about 750,000 remain active and subscriber numbers increased during the pandemic.²⁶

Social media creators, such as web content creators, are writing and creating articles, blogs, guides, e-books, and so forth, but for a specific social media platform. Additionally, their content can include images, testimonials, infographics, contents, and holiday content. Many of the social media creators are also social media influencers since they are often creating this content for a specific audience often useful for brands.²⁷

In addition, there are several other types of creators—from networkers who create videos and community events to artists who make how to videos, to teachers who publish tutorials online, and to others. Many of these are not necessarily connected to being an influencer, but rather more of a content creator or marketer. According to Fast Company,²⁸ some of the hottest creator categories include podcasters, writers, video course creators, teachers, personal shoppers, fitness instructors, and virtual coaches.

The Role of Technology

One of the main reasons that the Creator Economy is even possible is the explosion of new technology in the space. Tech is playing a huge role in creative expression, and new tools and platforms spring up daily to help creators pursue their passion of creating. Social media platforms are moving away from an ad-based revenue model to a content-based model. This is good news because the ad-based model does not offer much value to content creators. Instead, some of these same social media platforms are empowering creators with new tools enabling them to become micro-entrepreneurs.

In terms of investments, there are four categories: platforms, tools, monetization enablers, and creator-led businesses. Some combine aspects of each. Social platforms are allowing creators to showcase their work and enable new forms of entertainment. They typically try to solve a utility need with new tools in a new category and then allow for platform stars to develop content. Instagram, TikTok, Substack, and Medium—all of these—are good examples. Platforms like YouTube and Patreon have traditionally supported creators through revenue sharing. Others like Gumroad and Etsy have created marketplaces for creators to sell their products. Breakr is a music marketing platform that bridges the gap between content creators and music labels.³⁰

Tools are the next category that assist creators to do their job. This can include ways to improve their work and to facilitate communication among several parties (e.g., between a social media influencer and a brand wanting to employ them for a campaign like an influencer marketplace). Or tools are used as ways to make creator jobs easier. For example, Red Bubble allows for print on demand services allowing for an efficient “production” for some creators. ³¹

Technology has also allowed new pays to monetize. Using technology such as cryptocurrency and blockchain, some companies have created efficient ways to connect creators to those who will pay them. Only fans allow creators to receive funding directly from fans on a monthly basis as well as one-time tips and pay per view. Shopify is an e-commerce platform that allows the setup of online stores. NFTs are digital certificates of ownership (of say—memes) on the blockchain which allows creators to authentically own and sell their craft.³²

Finally, there are the creator businesses—a small subset of all the 50 million creators but who are driven to leverage platforms and infrastructure to become the entrepreneurs of the future.

Connections With Everyday Audiences

But is the audience there? The answer is yes. Several factors have led to more attention aimed at creators. First, 81 percent have U.S. adults have a smartphone³³ and spend more than two hours daily on social media. Indeed, this is particularly the case for younger audiences. Generation Z spend three hours daily on social media platforms and millennials spend two hours 39 minutes on social media platforms.³⁴ Second, content sharing platforms have increased, including sector agnostic (e.g., Instagram) as well as category-specific platforms (e.g., Twitch). Top platforms for creators include YouTube, Instagram, Twitch, and others aimed at music, podcasts, writers, and illustrators. Some of these new platforms also include different monetization models, such as subscriptions, or in the case of YouTube, creators are paid a small portion of earned ad revenue.³⁵ Additionally, new platforms are simply fun ways to amass followings without a specific skill (e.g., TikTok). Other platforms for content creators include Amazon publishing, Etsy, Ebay, Twitch, Instagram, YouTube, and others.³⁶ Third, audiences increasingly have more power and don’t trust traditional advertising and more likely to pay attention to people they follow on social media. As such, audiences value user-generated content and are interested in a variety of niche areas. They appreciate that content creators can personally engage with them. The creator economy is directly impacted by the growth of influencer marketing.

But why do Generation Z and millennials want to be influencers? There are a variety of reasons. A report from Morning Consult stated that for Generation Z, the top reasons were (1) the opportunity to make a difference in the world, (2) the opportunity to share ideas with an audience, and (3) it is fun and interesting work. Millennials’ top reasons included (1) flexible hours, (2) money, and (3) and the opportunity to try new products. These show the varying motivations of two specific audience who are primary drivers of the creator economy.³⁷ It also shows the dynamics of an ever changing workplace and concept of work that will lead to disruptive innovation.

Many content creators start with writing on a blog or creating a video or audio podcast. From there, they can grow their audience by developing compelling content and engaging in an authentic way. Eventually, the most popular and successful creators can monetize their work in a variety of ways. Here is a great example. Alex Snodgrass, author of the New York Times winning cookbook The Defined Dish: Healthy and Wholesome Weeknight Recipes, started with a food and wellness blog and built from there. As a native of a small town called Celina, Texas, in the Dallas/ Fort Worth area, and with an Italian mother who was a great cook, Alex started cooking and experimenting while in college to avoid eating out. In fact, she was a popular choice with her college friends due to her cooking talent. After graduating and while staying home with a young daughter, she started a blog in 2014 with her sister. Her sister was a personal trainer and provided the fitness advice, while Alex provided the healthy food and cooking information. The “Defined Dish” was born. Alex refocused the blog in 2016 to make it “real job” after doing the Whole30 diet plan to rid herself of gluten and sugar. For Alex, this newfound health perspective was a gamechanger and launched her influencer empire. She creates and shares hundreds of healthy recipes, focusing on real food that everyone loves. To date, she has more than 575,000 Instagram followers, and in 2020, she released her cookbook. Blogging was the platform that really set Alex as a creator on the path to stardom. Her advice? “I would say that consistency is probably the key. There is no way of knowing how to start a blog, and there is no right or wrong way of doing it. It took me about two years to find my own voice and find my rhythm and get to know what people wanted from me and what I was good at sharing. And, so, I think you’ve just got to get started, be consistent, and it just kind of evolves into your own brand and your own voice with time. Once you get there is when you can really blossom.”³⁸

It is clear that influencer marketing, content marketing, and native advertising have changed how most brands market their products and services. The value of influencer marketing is particularly important to millennial and Generation Z audiences, given their interest in social media influencers relative to traditional celebrities. Influencer marketing has played a major role in the “creator economy” which will continue to transform popular culture, marketing, and entrepreneurship. So how can brand managers leverage this knowledge to benefit their products and services?