A tired aspirational trope invites us to reach for the stars. In 2023, those stars aren’t literal anymore — they’re internet stars.
More kids aged 8 to 11 would rather be YouTube stars than astronauts. This alone should give you an idea of how big the creator economy is and how untapped (still) its potential. But for the sake of thoroughness, let’s put some numbers on it: in 2022, the creator economy was valued at $100 billion — a large pie to be divided among roughly 50 million people.
That’s more than enough to go by, don’t you think? Yet, just like offline societies, online ones are dominated by inequality.
100% of astronauts earn a livable wage off their craft, while only 10% of creators make more than $100K per year.
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What makes creators so special (and better than astronauts)?
Astronauts get to fly among the stars. Creators get to be stars. What could be more exciting than creating something you like and then sell it? But not to clients. To raving fans.
This is the creator economy in a nutshell: build a following, create one or several products and sell them to people who already trust you. Simple, right?
Right, but not easy.
The term “creator” is still murky. Some say it’s a sloppy but much-needed rebranding of influencers, a term that became somewhat derogatory, depicting devoid-of-meaning captions slapped onto heavily-edited photos and videos. Zero substance, 100% glam.
I disagree.
Influencers are a sub-genre of the creator economy.
Creators rely more than influencers on their past experience. Aside from marketing, sales, and content production, they have other skills that they hone consistently. They are specialists, experts in their field.
Charli D’Amelio is an influencer. Rand Fishkin is a creator.
Both are influential and well-off. Now let’s see how people like Rand can make money off their skillset:
The diversified creator: multiple revenue streams, a single mind behind them
There are very few successful creators that rely on a single revenue stream. The top 1% rely on a combination among:
- Brand deals
- Paid courses and workshops
- Sponsored newsletters
- Paid newsletters
- Paid communities
- Book writing
- Tip jars
- Affiliate marketing
- Digital downloads
- Consulting
- Speaking gigs
- Merchandise
- Content syndication
The sky is the limit when it comes to monetization options for creators. I expect to see more options, especially in the B2B space, as more brands partner with creators to produce a diversified array or assets.
Experienced creators with a large following leverage more of these opportunities, whereas budding creators start with a few digital downloads, courses, or donations via Patreon or similar platforms.
And it makes perfect sense: you need a cult following if you’re going to sell merchandise. Until then, you need to offer something that’s perceived as valuable by your core audience.
A lot of opportunities in a single industry sound inviting. But there’s a catch:
When the entry barrier is low, the growth barrier is towering
Getting started as a creator has never been easier. The easel of the creator economy is the plethora of entrepreneurs who build solutions to support them. Zero-code payment gateways, monetization platforms, content creation tools — you’ve got everything at your fingertips and most of it is free or freemium.
However, millions of people have already figured that out; the creator economy is both booming and crowded. There’s only so much space in our inboxes and in our brains for yet another newsletter, course, mastermind, growth hack, PDF.
This is why it usually takes more than a year to monetize your assets as a creator: only 6% of creators with one year or less in the field make more than $10K per year. I expect this growth barrier to go even higher in 2023 and beyond, given the still uncertain economic context and the hype built around this industry.
There is a silver lining, though:
The middle-class creator: the sign of a healthy industry
In economy, we say that a nation’s economy is healthy when it has a sizeable middle class. The creator economy doesn’t have that yet, but it’s slowly forming. In the US, the number of creators earning a living wage (more than $69K/year) has increased by 41% year-over-year.
This is a sign of stability and it’s all the more important in an industry that’s perceived as hectic and highly unequal. On the other hand, the kids that have forlorn their dreams of flying among real stars didn’t do it to be average — they did it to be the new kind of star.
True stardom in this novel industry is and will remain harder to get than a job at NASA: only a little over 1% of creators make $1 million and up per year. Just like in every other industry, there are elites and everyone else — except the separation is more brutal in the creator space.
Forging the super-creator: what does it take?
Right now, there’s a very lucrative segment of creators teaching other creators: the fee for an hour of their time is more out-of-this-world than Apollo 13. Webinars, masterminds, courses, eBooks, online communities — everything sells like hotcakes.
Does this remind you of anything?
To me, it’s a 1:1 replica of the influencer factories in the twenty-tens, with a significant difference: the new breed of coaches (and their students) have a more seasoned and more business-oriented audience. Fame is not the first thing they chase; building a lucrative business is.
However, just like the influencer coaches of the twenty-tens, this niche has a rather short shelf-life. As more freely available information gathers up, it will become less lucrative to charge for sharing your knowledge. Snake oil peddlers will be quickly differentiated from real mentors and the creator growth hacks will have an increasingly vanishing audience.
Pro tip: how do you know when an asset type is close to its expiration date? Look for creators who heavily discount their formerly premium courses or digital downloads. Or for those who start investing in paid advertising to promote assets that they used to easily sell with an email or a social media post.
This is natural selection at its finest. Back in the 90s, you could make a fortune selling web design books. Less than 10 years later, most of the information you needed was freely available and technology moved fast enough to make any book on the topic obsolete before it hit the shelves.
There is an identical inflection point for how-to and growth hack peddlers: a couple years ago, they had novelty on their side. Even if their knowledge base was modest, what they had to say was new to a sizeable chunk of their audience.
As people learned and experimented more, their knowledge became obsolete. To still sell “how-tos” for other creators you need to be more than an echo chamber. You need to make it your full-time job and come up with something that’s truly new, disruptive, and ground-breaking. Re-spewing and re-framing what has already been told a million times won’t get you too far (anymore).
On the flipside, there will be more room for creators who have a real craft to share with their audience: from crocheting and cooking to business strategy and financial planning, people will prefer to buy from human creators rather than faceless brands.
Thinking about becoming a creator? Start with these questions:
- Do you have a skill that’s perceived as valuable, even by a tiny audience?
- Can you write or speak on camera about it?
- Can you turn your knowledge into information worth paying for?
- Are you patient enough to wait for six months (on average) before you see your first dollar?
Not sure how to answer these questions? Or perhaps you are confident that you would ace all of them?
Before you quit your day job or your lucrative business to jump on the creator bandwagon, do some testing. A good starting point is the ConvertKit Grow Your Audience Challenge. It’s free to join and it takes one month.
Please consider spending one month testing your idea before you make decisions that could take you years to undo!
Who’s funding the creator economy? (What to consider when you partner with a creator)
Creators rely on brand deals less than influencers because their digital assets allow them to earn a living directly from their audience. Still, I see B2B deals between brands and creators as a rising trend.
From sponsoring newsletters to paying for direct advertising, brands have taken an interest and a lot of them have started working with creators. What do they look at when they choose a creator to work with? A couple of things:
- Audience size and engagement level. Unlike a decade ago, the size of the audience matters less than the engagement rate. Micro-communities are a go, as long as they are hyper-engaged. Brands are willing to put lucrative deals on the table for creators who have audiences of less than 100K people.
- Audience overlap: if you’re going to pay to tap into a creator’s audience, you need to make sure that there’s a significant overlap.
- Reputation: controversy may sell in the influencer world, but B2B creators need a spotless reputation to land brand deals.
A glimpse into the future: what’s next for the creator economy?
As expected, the industry will continue to grow and separate its wheat from its chaff as it does so. And there are a few other trends that caught my eye:
- Creators become platform-agnostic. They have learned a brutal lesson about audience ownership from their influencer forefathers, so they are looking to become less vulnerable to shifts in tech giants’ priorities and ever-changing algorithms.
- Creators become more diversified. They invest in building several revenue streams, no matter how small their niche is. With 14+ assets they can sell, they’ve got a lot of room to mix and match to fit their style.
- Mainstream outlets will have to catch up. For every interest out there, no matter how esoteric, there will be at least a handful of creators ready to provide information, entertainment, and art. Pop culture is being broken into tiny bubbles. If all the 90s kids get a reference to TV shows like Seinfeld, making a pop culture pun 20 years from now will be rather hard.
- More VC funding will go to this industry, not only directly, to fund the creators themselves, but also indirectly, to fund entrepreneurs who build solutions for creators.
That’s it from me today! I hope you found my email useful and that you’ve found at least one thought-provoking idea in this edition of Ideas to Power Your Future.
See you next Thursday!
Here to make you think,
Adriana
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