Decoding the Creator Economy Part One: What is the creator economy?
In part one of our new series, Fiona Corr will help you understand what the creator economy is and check off all of the basics you need to know.
Hello Don’t Count Us Out Yet readers, social media enthusiasts, web surfers or whoever else you may be…
Welcome to “Decoding the Creator Economy,” a three-part series created to help you understand one of the biggest developments of the digital age.
My name is Fiona. I’m a journalism and business student at Lehigh University, a guest writer for this newsletter, a social media enthusiast and, for now, your guide throughout this series.
Here’s what you can expect. This series will be divided into three parts. Here, in Part One, we’ll take our time defining what the creator economy is and check off all of the basics you need to know. In Part Two, we’ll provide you with a list of employers within the creator economy, giving you an idea of the opportunities that exist within this world. Finally, Part Three will act as a how-to guide for breaking into the creator economy.
Like any other new, highly technological idea, the creator economy may be difficult to comprehend. Its rise has shifted cultures, blurred boundaries and bent traditional structures, all of which may be contributing to its ambiguity.
My goal is to demystify the creator economy, making it more digestible and less daunting. My hope is that by the end of this series, you’ll not only have a better understanding of it, but you’ll also be able to explain it to your friends, enter this space if you are interested, and above all, be ahead of the curve by recognizing its magnitude and power sooner than later.
So, again, welcome to this series, and let’s get started!
What is the creator economy?
Put simply, the creator economy is a system that allows people to make money from what they post online.
Today’s digital world, made up of many social platforms, websites and apps, is teeming with content. Within this vast world, people tend to congregate in smaller groups of like minded people, whether it be the subscriber base of a Youtube channel or the LinkedIn group for people of a common interest. These “online communities” create value in this economy. Imagine the opportunity it would be for a brand to have its entire customer base in the same place at the same time.
In the creator economy, those who create content that resonates with a particular audience can monetize what they do through various means — advertising, sponsorships, subscriptions, sales… the list goes on.
What is the purpose of the creator economy?
“The purpose of the creator economy is to get more revenue to the creator,” Craig Gordon, founder of Don’t Count Us Out Yet, said.
The ability for people to make money online has transformed digital platforms into a financial landscape. It has transformed a hobby for many into a career for some. It has transformed what was once your typical social media user into what we now know as a “creator.”
Creators, the first major component of this ecosystem, may also be known as influencers, bloggers, podcasters, YouTubers, TikTokers and beyond. In non-internet terms, you can consider them artists, musicians, writers, videographers, or people who earn some form of income by sharing their interest online and engaging with their audience.
Creators are the life force of this economy, however, this ecosystem would perhaps cease to exist without the brands and companies that partner with these creators.
Some profit flows within the bounds of specific platforms. For example, those enrolled in the TikTok Creator Fund are paid based on how many views their content garners. Some creators are also able to generate their wealth through their audience. An example of this is Instagram Gifts, which allows followers to grant creators with “stars” that are converted into revenue paid out by the app.
The truth is, the large majority of the money within this economy comes from outside sources. According to Goldman Sachs, about 70 percent of creator revenue comes from brand deals — companies paying influencers to promote products or services to their audiences.
So, while it’s still difficult to make big bucks in this space completely on your own, the essence of the creator economy is that it allows creators to develop personal brands on the basis of their talent without traditional gatekeepers like publishers or media companies.
It’s these new forms of partnerships and monetization that allow musicians to share their music without a label, writers to share their craft without a publisher and videographers to share their art without a studio. The purpose of this economy is that it democratizes content distribution.
Today, if you have internet access and talent, you can find success and revenue on a new path thanks to the creation and growth of this economy.
How big is the creator economy?
The first metric we can use to capture the size of the economy is the number of creators worldwide. The problem here, however, is that there isn’t one definite number.
Goldman Sachs found there to be about 50 million creators in 2023. Alternatively, Adobe’s “Future of Creativity” study found there to be more than 300 million creators globally in 2022.
The factors contributing to this variation may include differences in the definition of a creator, variable activity levels, the dynamic nature of the growth, and a lack of centralized tracking. One source can define creators as people of a certain internet status, whereas another defines them as people who simply post content. Some sources may account for only the largest of platforms, while others may focus on smaller, more niche areas, too.
You can be sure, however, that this world is large and growing. The “Future of Creativity” study found that the creator economy grew exponentially after 2020, stating more than 165 million creators joined between 2020 and 2022.
The second, more concrete, metric we can use to measure the size is the economic value. Goldman Sachs research found that the creator economy was valued at around $250 billion in 2023, and this number is expected to almost double by 2027. Eric Sheridan, the senior equity research analyst covering the U.S. Internet sector for Goldman Sachs, said in just three years, the creator economy could be as large as half a trillion dollars.
This growth is being caused by the many creators across each and every platform. Youtube’s creator economy generated more than $35 billion in 2022, according to its website. TikTok’s 2024 economic impact report stated that the app’s economy contributed $24.2 billion to overall GDP in 2023. Even smaller platforms, like Substack, are contributing to the expansion of this economy through subscriptions and donations.
Why is it beginning to move forward?
Forbes suggests there are three kinds of factors contributing to the rise of the creator economy: technological, economic and generational factors.
The technological factors include much of what we’ve discussed above, specifically how the internet has democratized content distribution. Traditional media structures no longer control the spread of content or the money being earned in these spaces; instead, the growth of social media and creator marketplaces has allowed creators to function on their own terms. The wide audiences tapped into social platforms have also paved the way for direct connection with communities.
The economic factors that Forbes suggests are that large recessions, such as the COVID-19 pandemic, have led to fundamental changes in working culture. Many of those who experienced layoffs or other transitions in the past few years have redefined what a “job” is altogether. “Whether they were forced into it or chose it, these independent workers have changed the concept of what a job can be … and creators are a huge part of that trend,” the article stated.
The generational factors proposed focus on the unique behaviors and values of Millennials, Gen Z and Gen Alpha. These include embracing self-employment and entrepreneurship, as well as the fact that these generations are made up of “digital natives.” Since many young people have never lived without the internet, they’re capable of understanding modern technology enough to function in the creator economy. Also, young people today tend to prefer creating connections with people, as it offers more diverse and personalized content.
Each online platform is modeled in a unique way, which may lead to more or less individual success. To better understand this success, let’s look at one of the trailblazers and leaders on the internet today: YouTube.
Simon Owens, a media industry writer here on Substack, said Youtube is “quickly becoming the most powerful media platform in the history of humanity.” He even suggested in a recent piece that YouTube is only in the early stages of its ascent.
The title of Owens’ piece? “Why YouTube will continue out-competing Hollywood.”
He attributes YouTube’s growth to three main factors: how the site pays for content, how it serves niche audiences and its “frictionless discovery.”
Stacked up against traditional Hollywood, Owens compared YouTube’s revenue system to a feedback loop. The site’s content budget is mostly revenue share coming from the ads embedded in videos, which creators can reinvest into future content production. Hollywood studios, however, pour millions into the production of shows, many of which flop and become wastes of money.
Owens also suggests that expensive production gets in the way of Hollywood connecting with more niche audiences. Web surfers can find just about anything on YouTube, whether it’s ASMR, animals or video games. However, it would be completely infeasible for movie studios to churn out a feature film for every niche people may have.
The last strength that Owens points to is YouTube’s discovery tools, more specifically its content recommendation engine and its seamless form of sharing. As soon as you click one YouTube video, dozens of similar videos will appear on the screen, waiting to be viewed next. Furthermore, sharing videos from YouTube is as simple as copying a URL. It’s far easier, for both a viewer and a creator, to exchange information this way instead of executing and awaiting a Hollywood marketing rollout.
My biggest takeaway from Owens’ piece is that these three strengths are not necessarily unique to YouTube. Similar revenue structures, opportunities for niche content, and discovery systems exist across the internet.
I warned you in the beginning of this article that the creator economy is shifting cultures, blurring boundaries and bending traditional structures. And while, yes, I hope this series can help diminish some of the enigma, I also hope you can find excitement in the changes occurring.
For those intrigued, stay tuned for Part Two and Part Three of this series, where we’ll take a closer look at entering this field and give you the tools to break down the door.
Best,
Fiona for the Don’t Count Us Out Yet Team
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