Ten years ago, you wouldn’t believe me if I said financial advice on investing would be available for you on Instagram or TikTok. Well, that’s how social media has evolved over the years. As millennials struggle to balance virtual and real-world lives, they have also discovered they need to keep their followers engaged/entertained.
From tips on financial management to allowing each individual to make money out of their passion, platforms like Instagram, TikTok, Twitter, Medium and others have encouraged young people to go all out and explore alternative careers. All of these have created a new kind of celebrity — the modern celebrities are no longer the only stars of the latest blockbuster playing at your local multiplex, or even the leads of a popular TV program. They are the teenagers or twenty-somethings who make funny/interesting videos on YouTube or the gamers who stream through the night their progress playing Fortnite.
And while many musicians whose music plays on the radio still have fame, so do youngsters who lip-sync to their favourite video clips on TikTok. So don’t be surprised if you see the ad of a 20-something woman giving you financial advice through that ad in the midst of a movie you are watching at a multiplex. Such new celebrities are today’s “influencers.”
One such financial education influencer who has discovered his niche in the floating world of content creators is Shashank Udupa. The ex-investment banker, not only doles out investment advice but also gives important life lessons to youngsters who want to be productive and make money.
From spreading awareness about the importance of savings and the basic workings of finance, Shashank focuses on things that are seldom taught in traditional institutions across India. Growing being just another social media user to mushrooming into an influencer with 128K followers, Shashank’s professional and social media growth is a great testimony to the growth of the Creator Economy.
But wait….what is the Creator Economy? It is about people using their skills, talent or passion to create content and distribute it online through various platforms. While it may not have been seen as a huge phenomenon a few years back, the convergence of several factors such as the rise of the Gig Economy, implications of COVID-19 on the world and the ubiquity of technology and accessible tools that support content creators online have made this possible to a great extent.
From Blogging to the Youtube era
If you look at the late 1990s and early 2000s, Blogging was a huge hit as most people owned personal computers and began discovering digital cameras. People began creating personal blogs, eventually sharing their experiences with the world. From videos to pictures to poetry, stories and tips/advice, blogs were the social media then. However, the inception of Youtube changed the Internet forever! The co-founder of Youtube posted a video of elephants at the Zoo, which was one of the first viral videos on Youtube. What changed the virality game for Youtube was the Nike ad in 2005, featuring Football player Ronaldinho, which hit the one million views mark.
The growth of Youtube is synonymous with the democratisation of the Internet. As Youtube began evolving, many realised the freedom it brought for anyone to post content from any part of the world. Youtube, in a way, became a platform that revealed the Internet’s true potential to the world. This created the second wave of technology transformation driven by the introduction of social media platforms around late 2000.
The Attention Economy
Instagram, Quora, Medium and many skill/specific platforms began emerging and offering subscription-based models for members, writers, creators to monetise their work in a small way. During this time, Youtubers were called ‘Youtube Stars’, popular for their specific skill or talent. In the Youtube economy, you are a one-man army. You are the scriptwriter, lightman, producer, cameraperson and director — the whole package at once.
The Youtube Economy also created the passion economy which coincided with Web 2.0’s evolution, which proliferated using the Internet to share or create content through social media platforms and not just consume it to gather information. By increasing mass participation due to lower data prices and easy access to the Internet, many other platforms for content creators also emerged. In such an attention-driven economy, content creation brought status and value created through engagement.
This concept, of enabling people with an online following to make money from sales, was initially popularized in China. Then came Twitch, which did this in gaming; Patreon, which enabled crowdfunding for artists; and then Substack, which helps writers monetize their blogs.
The term was introduced in a blog post, “The Passion Economy and the Future of Work, by Li Jin of Andreesen Horowitz”, in which she talked about how this trend will shift the current mass standardization to “monetizing individuality” and lists out 16 metrics for tracking the passion economy.
In many ways, the Creator Economy consists of people performing their dream job. It gives people a chance to specialize in their passion. Now, many more people can make money from their passions. How many amateur writers would have expected that they could earn an income from their craft, or youngsters thought they could make money from making funny videos in their backyard?
Consider Niharika NM’s story. An American-Indian rose to fame with her humorous videos/ reels on Instagram during the pandemic in 2020. A student of MBA from Los Angeles, Niharika started her Youtube Channel in 2017, making videos on how “rich kids wanted to stand on their own feet” at her University. Niharika is also the first solo creator to have represented India at ‘YouTube Creators For Change’ two times in a row.
Her popular video, ‘Types of Students Before an Exam’ went viral and helped her garner 10,000 subscribers in just a few days. Though she began on a humble note, her switch to making reels on Instagram on relatable everyday frustrations like “Honking in a traffic jam,” or videos on her strict South-Indian mom, won her nearly 1.6 million followers in a short period along with numerous brand endorsement opportunities with Amazon Prime, Cadbury’s, Lionsgate, etc.
And, while Niharika’s story is something that makes all of us smile a bit in this grim reality of COVID-19 taking a toll on the world, another gem of a digital content creator that India discovered in 2020 is Yash Raj Mukhate who made it big on Instagram with his music remixes. The guy who takes monotonous dialogues from Indian soaps and adds music, making them go viral for their catchy tunes. From making “Rasode mein Kaun tha” a trend to “Sadda Kuttha Tommy” a catchy phrase for Indian brands, he’s one of India’s digital content creators to enter the fastest 1 million followers club. Currently, he has a following of 2 million followers on followers while he continues to rock the social media “Pawri.”
The likes of Yashraj, Shashank and Niharika are now ruling the roost on social media as “influencers” who now affect the purchase decisions of the masses. Given the explosion of digital content consumption across India, young people look up to these content creators as their influencers. They don’t follow the traditional movie and television stars much because they don’t waste their limited time going to movies or watching regular TV. They would rather be entertained by someone like Prajakta Koli or Vir Das or someone like Anushka Rathod who reviews company stocks on Instagram.
Platforms that help monetise
The Internet has fortunately shown us a way out of long-term, laborious contracts running into pages and has helped creative people find opportunities through live streaming, podcasts or other digital content formats.
Additionally, the content commerce game has given us websites like Amazon Publishing, Etsy, and eBay. However, other vertical platforms can also benefit creators, such as Tumblr and WordPress, Substack (for writers/bloggers), Twitch and Mixer (for live streamers), Instagram and Pinterest (for photographers), and YouTube and TikTok (for actors/filmmakers).
And, how exactly do creators make money? These are some widespread methods used by most of them: 1) Advertisements/Endorsements 2) Subscriptions 3) One-Off Sales/Donations 4) Brand Sponsorships & Influencer Marketing and 5) Affiliate Marketing. Of these, what’s working the best for content creators is the influencer marketing model.
Popular YouTubers play ads on their channels and get to keep a portion of the advertising revenue. You revenue-share in some way with all the other creator marketplaces.
Consider platforms like Twitch and Substack for example. Peter Yang, who writes extensively on Creator Economy, highlights that the 80:20 rule applies to both creators and followers. “On Twitch and Substack, The 80:20 rule applies to fans well. On both platforms, only a fraction of viewers and readers pay to subscribe to creators. Some of these paid subscribers are true fans who will even gift subscriptions to other viewers and readers to bring them into the creator’s community. Gift subscriptions were one of the most successful product launches at Twitch, but I’m not sure how successful it has been for Substack.”
But, one medium which is making a huge difference to the Creator economy is live streaming. For instance, any gamer can use Twitch to live stream their gameplay. Most of these streamers play multiplayer games against people from across the globe. While there are a few streaming superstars, most are everyday people who just like to play in a public setting. They may not even be good gamers. Yet they have viewers, in some cases, millions of viewers. Why? Because people find their games fascinating.
Often it is the quality of their commentary and self-analysis that attracts viewers, more so than their expertise at playing the game. One such Indian example who has made this trend popular is India’s stand-up comic, Samay Raina. He started with his independent YouTube channel that focused on making chess fun and entertaining for the masses.
With this move, he mobilised fellow members of the Indian comedy TV series “Comicstaan”, into playing an online chess tournament on his stream. It got people to sit up and notice. Here was this sport, largely considered a preserve of serious players, being engaged in by a group of people who make people laugh for a living. There was banter, trash talk and it was almost as if chess had crossed over to enter the ‘cool sport’ zone. He created a huge following in the country and reignited the audience’s love for playing and watching chess videos at a time when they were starved for at-home entertainment avenues. What’s interesting is that his timing also couldn’t have been better because it coincided with the release of the international hit series, “Queen’s Gambit”. Apart from all of the banter and making chess fun, Samay also managed to raise money for several social causes from Floods in West Bengal and Assam to saving the lives of Rag Pickers in Delhi.
If one skims through the mechanics of creator economy, they are likely to discover that community is as important as the content. And how does one build that? Here’s how it works: A creator can cultivate a large, free audience on horizontal social platforms or through an email list. He or she can then convert some of those users to patrons and subscribers. The creator can then leverage some of those buyers to higher-value purchases, such as extra content, exclusive access, or direct interaction with the creator. In short, different monetization methods for different followers.
If one keenly observes the growth of digital content creators by the hour, it is indicative of the expansion of India’s influencer industry. It is estimated that India’s influencer market stands at $75-$150 million a year as compared to the global market of $1.75 billion. This is an industry that has become mainstream within the advertising space and is only expected to grow as more people go online.
According to a report, Instagram influencer partnerships method is by far the best performing platform for brands to reach new audiences quickly. With an average 3.2% engagement rate compared to 1.5% across all social networks, having a strong influencer campaign strategy is a real asset to brands looking to grow on Instagram. So more than ever before, we’re seeing brands and businesses investing a high portion of their budgets to influencer marketing.
Here’s the surprise — it is not the celebrities or the macro-influencers but micro-influencers who have the highest engagement rates, averaging at 7%. Influencers with 0-25K followers had higher engagement rates regardless of their genre, target audience, or topics.
How D2C brands are shifting the Creator Economy
As more Tier 2 and Tier 3 audiences from across India enter the digital ecosystem, most brands believe that this spike in nano and micro-influencers is just the beginning. Additionally, the explosion of social media and consumption of digital content in the aftermath of the pandemic has compelled brands to reinvent themselves and find alternate ways to celebrity promotions. What this has done to the Direct-to-Consumer (D2C) Industry is to look for endorsements from everyday people across the world who become their brand ambassadors and live stream product reviews from their houses (as they remain indoors due to the impact of the pandemic).
As mentioned in my article on D2C brands, let’s look at some brands which are using micro-influencers who amplify their product discovery and sales. Fast & UP is one such brand that cleverly uses gym/fitness trainers/ Yogis/ Runners’ Groups as influencers for assisted sales and marketing. Their storytelling approach through this directly connects with trainers’ clients, thereby increasing their customer base.
Well, take The Running Yogi’s as an example. With a followers base of nearly 1900 followers, this marathon coach is one of Fast & UP’s many micro-influencers who not only appeals to his clients from his Running Community called the TRY Squad, but also that of vegans (because Fast & UP is plant-based), Yoga Teachers and Fitness Trainers. Additionally, through his collaborations with Yoga Teachers and top brands like Brooks, he offers discounts on products to his clients and anyone interested to follow him.
Like this athlete, there is an army of growing micro-influencers across the internet. Given that many marketers see engagement as the most important metric and a popular KPI of brand awareness, Engagement Rate is used as a benchmark of success on Instagram as it can determine if an influencer is connecting with their audience. What this means is highly engaging content with many likes and comments often stand a better chance of organically appearing on an Instagram feed.
While there are many examples of several people like Niharika, Prajakta, Bhuvan Bam and others making money as Youtube Stars, there is also a growing middle class in the Creator Economy. Such micro and nano influencers who are trying to find their footing are also causing a decisive shift in the passion economy from a “bigger is better,” ad-driven revenue model to one of the niche communities and direct user-to-creator payment.
To propel this, an emerging category of digital platforms is helping people to translate their skills and talents into businesses. But as the creator landscape evolves, the playbook needs updating. So, if one were to consider the“100 True Fans model” in this context, it calls on creators to distinguish between various subsegments based on affinity and willingness to pay. The relationship super-fans have with creators is different from regular fans: they become disciples, protégés, co-learners, and co-creators. As such, they require a whole new set of tools and platforms.
For instance: If I were a regular fan of screenwriter Aaron Sorkin on these platforms, I’d be happy to get updates about his next film or glimpses of the upcoming movies. But, if I’m a co-learner or fall in the co-creator space of his fans, then I will look for a “Masterclass in Screenwriting” from Sorkin. So, he’d have to offer that space of paying for a course if I’m a co-creator who is willing to pay and learn the art of screenwriting and how to ace it!
So, a tiered approach to fans is something the Creator Economy is evolving into gradually. A creator might have a broad follower base on free social platforms, convert some of those followers to one-time purchasers or patrons, then uplevel some of those users to high-paying super-fans. For founders and operators, that means building products that align monetization with the end-user value.
Challenges of the Passion Economy
As the Creator Economy keeps surprising with its growth, there are a few challenges in the way for new and upcoming digital influencers. There are many examples of Youtube or Internet stars who have made it big and garnered stardom. But, there is also a significant population of digital content creators hardly achieving any financial security from these platforms.
The current creator landscape more closely resembles an economy in which wealth is concentrated at the top. On Patreon, only 2% of creators made the federal minimum wage of $1,160 per month in 2017. On Spotify, artists need 3.5 million streams per year to achieve the annual earnings for a full-time minimum-wage worker of $15,080, a fact that drives most musicians to supplement their earnings with touring and merchandise. On Spotify, for instance, the top 43,000 artists — roughly 1.4% of those on the platform — pull in 90% of royalties and make, on average, $22,395 per artist per quarter. The rest of its 3 million creators, or 98.6% of its artists, made just $36 per artist per quarter.
Right now, just a tiny segment of creators from the passion economy are aware of the tools, resources to monetise their skills or following in a meaningful way. Individuality platforms such as Patreon, OnlyFans, Substack, have surged in demand since the pandemic began. These products enable creators to earn an income by providing a platform to host their content.
Generally, platforms take a percentage of the creator’s revenue, ranging from 5% to 30%. However, there’s also precedent for these platforms using a SaaS model, and charging a monthly fee. These platforms are great for the early stage creators or those who earn below $1M a year on their chosen platform.
On the other hand, many users on platforms such as Substack, Patreon or OnlyFans feel restricted by the lack of brand ownership they have over their content produced via those platforms. But, there is again, a huge chunk of creators that lack tools and community to understand audience growth and eventually, monetise.
However, as the creator starts to earn more money, it will be interesting to see how these platforms adapt and change the rules.
Is the Creator Economy Sustainable?
The ethos of “making your dream career come true” is alive and kicking on most content platforms today! A recent study of kids aged 6 to 17 found that nearly 30% aspire to become YouTubers. With countless examples of normal people achieving massive success on the platform, this should come as no surprise. Creator platforms flourish when they provide the opportunity for anyone to grow and succeed. And, platforms that keep the creators’ needs as a priority will emerge and succeed.
So, if these platforms want to retain their top creators, they may start exploring ways to allow their top creators to white-label their products, own their audience, and provide discovery options. This will need a shift in the platform’s revenue opportunities from taking a percentage of revenue, to a flat SaaS model or a combination of both!
Another way social media giants could work out deals with digital creators is by paying a share of their ad revenue to them. Given that these giants understand how content creation drives their business, such individual recognition of content creators could boost the morale of “Internet superstars” as well as their revenues in the long-term, creating a win-win situation for all!
Across the world, there are currently around 50 million creators: 48 million are amateur and two million are professional. What this means for start-ups is that platforms can do more to enable creators to connect for emotional support, collaboration, and education. For example, Female Hustlers makes it easier for women creators to build a network with others in a similar business phase. Given the lack of formal colleagues in this new unbundled work world, creators are well-served through alternative sources of community.
Another such Indian example is Creatorshala. It is a creator community where digital content creators from different genres connect, get brand collaborations and grow together as a community through umpteen opportunities. Similarly, take Tagmango which is a hassle-free monetisation for influencers or creators. This works as a master tool to centralise a creator’s community, automate payment systems and streamline the entire process!
Well, more start-ups and business opportunities mean more VC activity in the years ahead. So, if creators are the new founders or small businesses of the future, then how will upfront capital investment work in such cases? While the returns on being a successful creator may not be venture scale, there could be new models like social tokens or niche creator-focused funds that provide a bundle of funding and education. For instance: Podfund, in the podcasting vertical, is an example of the latter, providing funding between $25,000-$150,000 to podcast studios and high-potential creators in exchange for a revenue share.
With the Creator Economy already witnessing massive shifts to changes in tools and platforms, it looks like brands and influencers will explore new forms of media and experiment with creative ways to capture their audience’s attention.
Ultimately, the creator economy is an outlet for talented people to express themselves and receive an income. While it is an ever-evolving industry with technological shifts and changes in society, platforms may eventually explore a Universal Creative Income (UCI) like the Universal Basic Income concept to incentivise more content creators and push for better quality content on platforms.
Just like collab houses and accelerators empower their participants for shared learnings and pivoting their ideas, platforms can facilitate better education, learning and guidance for creators to succeed.
Leading the way in creating this kind of an influencer ecosystem is China. Its influencer incubator is exploring this educational angle and taking it to the next level. Take Hangzhou-based Ruhnn for example. First, they create marketing channels and a customer base by developing bloggers with massive, loyal followings. Then they create the products. Blogger incubators are like traditional talent agencies except that the source of income is not advertising commissions but sales revenue from individual bloggers’ online stores.
Each blogger the incubator works with has their following, their store, and their self-branded products. To the average consumer, it appears these bloggers all work independently — it’s nearly impossible to tell that they are working with an incubator.
While there will always be risks, such “internet celebrity incubators” are expected to lead the Creator Economy into the future. What this indicates is that being a creator in the current world requires evolving from being an artist to being a founder. The job encompasses product management, design, community engagement, e-commerce, and data science along with being an entertainer. So, you could be compelled to build a team of experts and vendors to help you manage the tools to build a diversified business across platforms.
With that diversification, comes resilience. Creators, according to a report, become less vulnerable to shifts in priorities of the tech giants or their algorithms by owning a direct relationship with their fans. Each creator can assemble a different balance of revenue streams to match their style, no matter how niche their content is.
That’s a win-win for everyone because creators could eventually build a sustainable career out of their deep/esoteric interests. So, instead of drab, boring, homogenous sitcoms, we get content tuned to every culture/sub-culture in the rainbow, even from the tiniest hamlets across India and the world. How interesting would that be!