The art of a good unicorn | Understanding the creator economy era

Social media giants and investors are betting on unleashing the power of creators. This is the era of the creator economy and it is markedly different from what we’re used to.

Imagine there’s a person who has been livestreaming their gaming and has been able to accumulate a good amount of following on a behemoth social media platform because of that. Now, they’ve decided to take their top fans off this social network and onto another website or app, where there may be better monetisation tools. Or maybe they’re building a company and assembling tools to start their business, while also focusing on their craft. Or maybe they’ve gained enough influence that their fans want to connect with them on a more personal level.

This ecosystem is the creator economy, with more than 50 million folks around the world considering themselves to be creators of content, be it articles, videos, podcasts, music, games or digital books. (Shutterstock)

This ecosystem is the creator economy, with more than 50 million folks around the world considering themselves to be creators of content, be it articles, videos, podcasts, music, games or digital books. Just imagine: An entire economic system built by independent creators connected to businesses and audiences through the internet. The audience supports the creator monetarily by engaging with their content, purchasing their merchandise, buying from brands the creator is associated with or by, just simply, making the creator a thought leader. And it’s so dominant that more kids in the United States (US) want to be creators rather than astronauts, according to one survey.

Do you have a phone, a stable internet connection, some adequate lighting and an indomitable spirit that won’t be undermined by the judgment of strangers? You’re on your way to becoming a creator. After all, Covid-induced digitisation has led to better mobile networks, more access to tech and creator-centred social networks, disrupting the status quo. Sounds easy, right? Not quite. You still have a ton of work to do. You still need to have engaging content, compelling storytelling, painstaking attention to detail when it comes to editing for visual medium and more. Or else, just be (conventionally) good-looking enough, where the rest of the above doesn’t matter all that much and you can jump on the bandwagon for what’s trending and copy stuff. And if you’ve built out that fan-following, you have companies available to support you.

There was a time when production companies were pulling the strings, when it came to producing content and what the audience ought to like, thereby controlling the distribution. Then, social platforms came along to help democratise content, but also had certain rules in place to moderate and control content. Being paid for ad revenue share for bringing in an audience transitioned to brand sponsors paying creators for their reach. These creators would work with sponsors to promote something or push a message, but the advent of influencer marketing also meant that some trust was lost with every paid post. Also, prudent creators had to, thus, cross-promote their content and diversify, in case one platform changed priorities or strategies and cut down on opportunities for creators. Many social media corporations don’t share advertising revenue with creators, though a social media platform like YouTube, seemingly, takes 55% of ad revenue and leaves the remaining 45% for the creator.

And then, creators realised that a dedicated fandom would follow them irrespective of platform, and harnessing this, they could build full-on ventures with multiple revenue streams beyond ads and even become platform-agnostic. So, instead of desperately trying to get views with clickbait, creators can be empowered to build their niche for people who truly understand them. Newer platforms are trying to uproot the media juggernauts, with Substack and Patreon allowing creators to get about 90% of the revenue derived and more.

With the creator economy strapped to a rocket, the pressures of working in the ecosystem are mounting, what with more revenue streams and more audience. Once an artist, creators have to, now, wear many hats such as a designer, e-commerce administrator, product manager, community head, and more. Creator economy startups include a growing number of unicorns, including Patreon, Cameo, and Substack. It’s become a multi-billion industry, with the generation of “micropreneurs” being estimated to reach about $104 billion in 2022.

And with great power comes great responsibility. It’s also a time for great resilience to be bred by these independent entrepreneurs, who can create a buffet of what revenue stream they best vibe with. Have a wacky esoteric interest? There are certainly one or two creators out there who can feed that and build a sustainable career. Eric Freytag of Streamlabs remarked, "Rather than ten TV shows consumed by billions of people, we now have hundreds of millions of shows that cater to billions of people. You could be only one of ten people in the world interested in a niche topic, but chances are you'll find content for it. Additionally, the people who are creating content for that topic are truly and authentically passionate about it."

Venture Capitals (VCs) are, increasingly, supporting the creator economy. One would think it would be by investing directly in creators themselves, but by supporting the market for services targeted at creators. Funding for the VC-backed creator economy ventures was about $940 million in 2021.

According to Antler, an early-stage venture capital firm, there are five main categories, when it comes to the creator economy on platforms:

1. Audience Curation

This allows creators to build foundational audiences, transforming regular fans into superfans. These include newsletters, event platforms and livestreaming.

2. Audience Monetisation

This allows creators to monetise their audience, once they have a substantial following. These include courses, NFTs (non-fungible tokens), social tokens, brand deals, live shopping and fashion marketplaces.

3. Vertical Platforms

Here, the focus is, solely, on one area, like education, gaming, music, podcasts and fitness.

4. Community Management

This allows creators to manage communities through strategies like community tools, integrating all media in one place and membership platforms.

5. Creator Tools

This allows creators to grow and build their businesses. Such platforms include audio & video, design tools and website builders.

Social media goliaths have recognised the potential of the creator economy. Mark Zuckerberg announced that Meta plans to invest $1 billion in creators by early 2023 by funding bonus programmes, creator funds and other monetisation strategies to empower creators.

He wrote, “We want to build the best platforms for millions of creators to make a living, so we're creating new programs to invest over $1 billion to reward creators for great content they create on Facebook and Instagram through 2022. Investing in creators isn't new for us, but I'm excited to expand this work over time.” His company is allowing creators to promote fan subscriptions, sell gifts and host paid virtual events and, overall, participate in a branded content marketplace. Instagram allows its creators to open virtual shops and sell products and badges. YouTube announced it would inject about $100 million into a fund for its short video feature, Shorts, getting its creators paid by engagement and viewership. Snap is being called a dark horse for providing innovative content creator tools by pioneering Augmented Reality lenses and introducing short-form video content Spotlight. That being said, some have opined its rollout of monetisation features has been slow.

India has the potential to be the premium hub for the creator economy. Jio penetrated the internet market, with the number of Indian internet users estimated to reach about 1.5 billion by 2040. With over 750 million internet users in India, as of 2020, it seems naturally inclined for success. But, then again, it’s a country that’s diverse in culture, religion, languages and more. Whether that’s a good thing or a bad thing depends on how creators and brands can utilise the market. Nonetheless, there cannot be a homogenous market for creators in India. Regional content across various languages can have a huge impact on hyper-defined pockets of people with different interests and common dialects. Providing opportunities for budding creators in Tier 2 and Tier 3 cities, regional creators also provide a conduit for brands to tap into regional audiences. This may not have been possible without the advent of the creator economy.

About 150,000 professional content creators are able to monetise their services effectively in India, according to one report by Kalaari Capital, a tech VC. The others may still be trying to decode how to best leverage their craft monetarily. For all of them, it seems like the creator economy is here to stay, especially in India. No longer at the whim of gatekeepers, there is much less pressure to adhere to brand narratives or weak monetisation strategies. These creators can rely on themselves and startups can identify how their target audience can be catered to. This may be the path to redefine the booming global economy with the creative resources of creators.

We’re at an inflection point in history. Social media giants and investors are betting on unleashing the power of creators. This is the era of the creator economy and it is markedly different from what you’re used to.

Shrija Agrawal is a business journalist who has covered startups and private capital markets before it was considered cool in India

The views expressed are personal