The Creator Economy: The Economic Model that’s quickly replacing the Attention Economy
For decades, media conglomerates controlled the narrative. To contribute to this conversation, interested individuals had to be employed by these companies to have some sort of say in the matter, even though, many a time, the narrative was still controlled and shaped by the men in suits.
The advent of the internet and the digital era changed things completely. The media has decentralised and online content is plentiful, meaning that audiences can now choose what they actually like and don’t like. Content and narratives are now shaped by “normal” people who can distribute content without the need for traditional mediums. In turn, this has inspired many individuals to dip their toes into content creation. This brave new world, driven by content creators, has been coined “the creator economy”.
There are more than 4.2 billion social media users worldwide and the number of content creators exceeds 50 million. Moreover, there are approximately 2 Million full-time content creators and around 46.7 million amateur creators.
But how does one become a content creator? And can content creation serve as a viable revenue stream for musicians and artists?
The Creator Economy: An Overview
The creator economy can be divided into three layers. The first layer – the foundational media platform layer – has been evolving since the early 2000s, and encompasses platforms such as Facebook, Instagram, Youtube, TikTok, and Twitch. In essence, these form the basis of the creator economy. Without them, this type of economy won’t exist.
Monetisation is the second layer, and this incorporates those companies that have been created as a result of these platforms’ growth. These include influencer agencies, talent rep companies, sponsorship marketplaces, and whatnot. Mediakix estimates that USD 15 Billion will be spent on influencer marketing by 2022.
The third layer is the start-up founder stage – where individual content creators transform into bonafide entrepreneurs. This gives content creators the tools to expand their online presence into a brand and business empire. This business model is supported by subscription models, sponsorships, and brand ambassadorships.
Music and the Creator Economy
Music is one of the key forms of content on the aforementioned social media platforms. Furthermore, DSPs such as Spotify and Amazon Music are moving towards the social media platform model – meaning that the lines between “content” and “art” are becoming increasingly blurred.
This isn’t necessarily a bad thing though, as it’s enabling individuals that might otherwise not have been discovered by traditional means to succeed. The famous Lil Nas X story is a classical example of a TikTok success story. More recently, the dancer-turned-TikTok star Addison Rae has debuted her single “Obsessed” – a prime example of the growing trend of content creators becoming musicians due to extrinsic attention and an in-built fanbase that’s automatically converted into streams.
Initially, ads were one of the few ways that allowed creators to make money off their content. In the space of a few years, however, monetisation options have blossomed and are projected to continue growing.
In an interview with Forbes, Yuanling Yuan said, “When you look at Asia, the biggest trend that has been dominating the creative economy there is e-commerce.” She continues, “So live streaming times e-commerce, and we don’t really have that yet in the U.S. But I suspect that in the next 5 to 10 years there will be platforms that emerge that help creators monetize and get another format, which is selling merchandise, but selling them live.” China is a key player, as massive e-commerce platforms such as Alibaba, Baidu, and JD.com are live streaming to sell their wares.
How can musicians become content creators?
There are a few ways musicians can become content creators as a way to diversify their income and create a long-term financial plan that doesn’t simply involve touring and sales.
By focusing on evergreen content, i.e. content that can be re-purposed, musicians can create high-end content that’s re-used and re-purposed on different platforms. This leads to a return on investment, especially when using platforms such as Youtube, where money is generated every time a video is viewed by fans and followers. Furthermore, if we see music as evergreen content, money is generated every time that single is streamed and added to a TikTok video or Instagram Story.
Furthermore, by targeting niche audiences, musicians can build a solid fanbase and a loyal following that will be happy to pay for anything the creator sells. Remember – according to Kevin Kelly, it only takes 1000 genuine fans to make a decent living out of content creation.
NFTs still have a long way to go when it comes to them becoming a viable option for the lay content creator. However, the underlying technology is interesting enough to explore the possibility of NFTs becoming a way how artists/content creators and fans can form a mutually sustainable relationship without any middle persons.
Collaborations are also becoming a way of cross-pollinating audiences. HypeHouse and ClubHouse Europe are two prime examples of how collaboration breeds more collaboration. This “content creator habitat” shows that, by pooling their collective skills, creators can generate more compelling content and by extension, increase their income. Some of the content creators living in these houses are musicians – meaning that the concept is also applicable to ambitious musicians who want to devise a long-term income strategy.
Influencer Marketing Hub stated that the average Youtube Channel receives USD 18 in advertising revenue per 1000 views. If a video goes viral, or a content creator builds a steady enough viewer pool, this number can increase to a decent USD 1,800 per 100,000 views. This is a form of passive income – so even if you’re busy recording an album or touring, you can still receive money from videos that you uploaded months or years ago without actively doing anything.
Paid subscription models have been around for a while. However, in addition to the music industry standard Patreon, some other platforms and models have gained traction in the past couple of years. These include Buy Me A Coffee and its many competitors, as well as the controversial OnlyFans, which is now being used by musicians who want to release behind-the-scenes content to an exclusive group of fans. Rapper Cardi B is one of the many musicians and artists who have flocked to the platform – she’s reportedly earning between USD 3.6M and USD 18M per month from OnlyFans only right now.
Additionally, the COVID-19 pandemic has increased the popularity of Twitch amongst musicians looking for an alternative revenue stream. Twitch’s Affiliate programme enables fans to pay and subscribe to their favourite content creator’s channel, resulting in a steady monthly income for the content creator.
Finally, the transference of sponsorships to the digital sphere means that creators and businesses can form a mutually beneficial relationship where everyone wins. Say a particular guitar pedal brand wants to promote a new pedal. They hook up with a musician who happens to be a content creator to express how much they love this particular pedal. The musician gets paid for that post, and the pedal company benefits by reaching a whole new pool of potential clients.
Downsides of the Creator Economy Model?
There’s a downside to every economic model, and the creator economy is no exception. While some creators are making millions, others are only making a few dollars per year. If we take music as an example, DSPs such as Spotify are distributing 90% of total royalties to 1.4% of the artists on their platform. This is why commentator and investor Li Jin has said “The Creator Economy Needs a Middle Class” and has even suggested the introduction of a “Universal Creative Income”.
What’s next for the creator economy and its key players?
The creator economy can only flourish if it provides a quasi-equal opportunity for every content creator to thrive and succeed. Only then can it become a truly sustainable economic model.
Creators differ from gig economy workers in the sense that the former group has a unique selling point while the latter are replaceable. Additionally, content creators have a loyal fanbase that is ready to migrate to new platforms should their favourite creator do so. Therefore, platforms have to constantly innovate and become even more creator-friendly to persuade their top creators to stay.
A clear example is the now-defunct platform Vine – which is often cited as a cautionary tale. After reaching 200 million active subscribers in November 2015, creators migrated to platforms such as Instagram, Youtube, and Snapchat, where they felt they could make more money by reaching bigger audiences. This highlights the urgent need for platforms to constantly come up with new features to prevent them from becoming irrelevant.
Furthermore, the creator economy and the platforms that facilitate its existence need to strike that fine balance between supporting established creators and uplifting new ones by giving new faces the opportunity for true upward mobility and financial security. Only by dealing with this problem head-on can the creator economy and its players ensure that this economic model doesn’t turn into a gig economy facsimile that’s rife with injustices and instability.