The significance of the creator’s economy
by Bruno Natal
Creator economy is one of the most mentioned trends in 2021. Another one of the many changes accelerated by the pandemic scenario, where everyone works from home. With such a scenario leaving few options for creators to work offline, the main social networks are now providing monetization tools applications for those who create content.
The goal is to create a direct channel between fans and creators, so fans can contribute without having to leave the platform, making the whole process easier. YouTube and Twitch offered integrated tools for contribution as well as access to exclusive content already. Last year, as we saw the rise of paid newsletters, Facebook, Instagram, Spotify, Apple, and even Twitter followed and are now offering that kind of payment option also.
This kind of interaction has become even more important now that the subject of metaverse has entered the conversation once and for all, with its proposal of a non-mediated relationship between creators and audience. Many platforms are now revealing stories and outstanding numbers to validate the success of the format. Problem solved: now creators can make money on their channels.
But… is that really it?
It is almost impossible to hear about the creator economy and not associate it with the infamous gig economy. The promise of the first is that fans paying subscriptions to access content would make the creators’ endeavor viable. The latter describes the format of intermediation of services through platforms (such as Uber and iFood), which today is very much associated with the precariousness of labor.
The big social media and content platforms make a lot of money and are now among the most valuable companies around the world. Much of the revenue comes from the sale of ads precisely included in the content generated by the creators, with a completely unequal distribution of the revenue. Facebook, Twitter, YouTube, and even Spotify, virtually any social platform is a mere vehicle, they are nothing more than empty spaces that depend 100% on users to be filled with content.
By that logic, everyone should proportionally earn something, no matter how big the audience is, without depending on specific agreements. But that’s not what’s going on.
The creator economy proposal embraced by the major platforms transfers to the audience the responsibility to remunerate those who create content. The very term “content” has become an umbrella to refer, in a cold and objective way, to everything that circulates on those platforms, reducing films, texts, music, art, and all kinds of creation into a commodity.
It turns out that this format cannibalizes itself and becomes unsustainable. Besides the subscription to such services themselves, in some cases, how many newsletters, podcasts or Twitch channels can a person afford? The answer is harsh: certainly, not every person who likes and consumes this kind of content. Moreover, the platforms retain a large portion of this revenue by charging fees.
While, generally speaking, no podcast platform pays a dime per run of an episode, in 2021 alone, YouTube announced a $100 million dollar fund for creators to post specifically on its Shorts format (a copy of TikTok). Not to mention the $30 billion dollars paid to 2 million creators over the past three years. For a few weeks, Snap offered a $1 million dollar prize for the most viewed video of the day. Showing how much they depend on creators, TikTok has gone deeper into its pocket and plans to pay out $3 billion dollars over the next three years. In 2021 alone, $3.7 billion dollars were invested in creator-focused startups, several of them specializing in monetization, such as Patreon, Cameo, and Clubhouse.
In other words, there is money and there is a lot of it.
Due to such imbalances, in addition to subscriptions, there is a discussion about micropayments, especially in a scenario where the consolidation of blockchains will make this much simpler. However, this might not be a good idea. Basically, micropayments, of pennies or even fractions of pennies, would be made after someone consumes a piece of content. This means that, in addition to having no guarantee of a recurring payment in order to plan themselves, content creators would have to produce at their own risk, not knowing how much or if they will get paid.
One of the founders of the creator subscription service Patreon, Bremner Morris, spoke about the need for a bill of rights for creators, including the ability to take their fans from one platform to another, transparency about how algorithms and company decisions work, prioritizing quality over quantity, as the creator is punished by the algorithm if they stop producing content.
One of the greatest promises of the internet was decentralization, a dream buried by the big platforms and now trying to resurrect through the web3. The hope is that a network with fewer middlemen and go-betweens will also create a fairer distribution of the generated gains. The transformation brought by the possibility offered by NFTs and other functionalities of blockchain networks to define the origin, scarcity, and portability of digital assets (be they texts, photos, illustrations, videos, etc.) will change the power relationship between creators and platforms. Creators will be able to build and manage their own communities, establishing a direct relationship, including monetization, without intermediaries. The public can participate in the financial success of the projects they support. In this scenario, the chances of having a fairer distribution of revenues for the entire ecosystem increase.
Bruno Natal is a journalist, creative director, and host of the podcast RESUMIDO.
