Wondering what’s the secret to the growth of the creator economy? Here are the answers!
Almost all of us have been exposed to some form of user-generated content today. User-generated content, or content that you and I can create and share on Facebook or YouTube, came into being during the Web 2.0 era. User-generated content is so deeply ingrained in the fabric of the internet that some have even made a career out of posting content on various platforms. These content creators form a part of the up-and-coming creator economy.
The creator economy refers to the businesses built by content creators, like bloggers, vloggers or TikTokers. It also includes companies that provide services to these creators, such as content creation tools like Grammarly or Canva and analytics platforms like Google Analytics or Social Blade. The creator economy has received US$1.3 billion in funding in 2021 itself, which speaks volumes about its growth potential. But the burning question is, what are the reasons for this economy’s growth and what entrepreneurs can learn from it? Let’s take a look!
Reasons for the growth of the creator economy
Brand partnership
A creator with a substantial following gets ample opportunities to collaborate with brands. Creators spend a long time on social media and thus get well-versed in what’s popular and how to effectively communicate with their niche audience. This is often something that brands struggle with. Brand partnerships and collaborations are a perfect win-win situation for both the creators and their client companies. They offer creators a new monetization opportunity and brands a new way to reach customers.
An example of a successful creator and brand partnership has been that of YouTuber Pewdiepie and the energy drink brand GFuel. The two have been partners since 2019, and Pewdiepie has even created his own special flavored energy drink, called Yuzu Slash, in collaboration with the brand.
From being a creator to becoming an entrepreneur
Collaborating with brands gives creators the knowledge they need to establish successful businesses themselves. There are many creators today that have their own merchandise lines. For example, one of the most successful YouTubers, Mr Beast, has his own merch store as well as the delivery-only food brand Mr Beast Burger. Through advertising and these other sources of revenue, Mr Beast earned US$ 54 million in 2021.
Diversified sources of revenue
In the early stages of monetizing user-generated content, creators depended on the platforms they were posting on. So, for instance, if you post a YouTube video and join the YouTube partner program, you would earn advertising revenue when viewers see ads in your videos or channels.
However, today, they have several other ways to increase their revenue (besides creating merch like we previously mentioned). One of these is by creating their own cryptocurrency. Crypto integration gives creators a new way to monetize themselves and also provides their fans with a greater sense of engagement. Creators can make their own “creator coins”. These are crypto coins that are convertible to mainstream cryptocurrencies, like Bitcoin or Ethereum, and give buyers special privileges, like early access to content.
An example of this is the Tech First podcast, which has a cryptocurrency called the $SMRT coin. The $SMRT coin gives fans access to a special Slack channel where they can directly speak to the podcast’s creator, John Koetsier. Creators can use platforms, like Rally and BitClout, to build their own crypto coins.
As of 2021, there are over 50 million content creators. However, only 4% of them are able to make a livable wage. Startups within the creator economy can help creators maximize their earning potential. Examples of this include Cameo and Patreon, which allow creators to get paid directly by their fans. Startups within this space have been reaping the benefits of supporting creators, which is evident in the fact that both Cameo and Patreon are a part of the unicorn club.
All of this goes to show that the space has room for budding entrepreneurs with the knowledge and skill set to make content creation easier and more financially viable.
Header image courtesy of Unsplash
