Social media platforms and creator-focused startups haven't been looking very good this year, as companies like Snapchat, Patreon, Cameo, and Meta have made layoffs along with the rest of the tech industry. YouTube's ad revenue is declining and creator funds for platforms like Pinterest have dried up.
It may seem that things are going wrong on the surface, but The creator economy is more than a buzzword that is losing interest among venture capitalists. Despite the challenges at the platform level, creators continue to make a living outside the confines of traditional media and will only continue to grow in 2023.
Social media platforms will need to engage with creators
The biggest news for creators in 2022 was YouTube's announcement that it would include Shorts creators in the YouTube Partner Program, allowing them to earn ad revenue for the first time. Starting in early 2023, creators will be able to apply to the YouTube Partner Program if they reach a new Shorts-specific threshold of 1,000 subscribers and 10 million Shorts views over 90 days. As members of the Partner Program, these creators will earn 45% of the ad revenue from their videos.
It's an open secret that short-form video is hard to monetize. For example, TikTok pays creators through its Creator Fund, a $200 million pool launched in the summer of 2020. At the time, TikTok said it planned to expand that fund to $1 billion in the US. over the next three years, and double internationally. That may sound like a lot of money, but by comparison, YouTube paid creators more than $30 billion in ad revenue over the past three years. As the pool of eligible creators becomes more saturated, creator funds are pretty useless: if you're in the TikTok creator program and have a video that gets 1 million views, you might be able to charge a little coffee with milk. So while these multi-million (or billion) dollar creator funds might seem like a beacon for creators, they don't help much. The most popular TikTokers get their money from off-platform endorsements and opportunities, rather than their videos.
TikTok has long been the dominant platform in short-form video, while Snapchat, Instagram, and YouTube largely copied the newcomer to keep up. But creators will finally have an incentive to flock to YouTube Shorts once they can earn ad money there. The best part? There has never been more pressure on TikTok to do the same.
'Creator economy' is not a buzzword
What is a buzzword? You'll know it when you see it. It's when Facebook rebrands to Meta and suddenly you get hundreds of emails about "the metaverse," or when a cryptocurrency startup declares its commitment to fostering "community" just because it has a semi-active Discord server. You might as well classify “builder economics” as a buzzword.
But all these buzzwords actually represent real things. Yes, even the metaverse is one thing, though I'd say we're talking more about Club Penguin than whatever Mark Zuckerberg is into. The problem with buzzwords, however, is that they dilute real phenomena into fads that get further muddled when disengaged venture capitalists double down on the trend with overzealous investments.
VC will still engage with creators, just not in the way you think
Investments in companies in the creator economy may be down, but creators continue to engage with VC money in ways their audiences often don't see. Charli D'Amelio and her family have become investors. MrBeast is seeking funding at a valuation the size of a unicorn, which is not surprising given that other particularly successful creators have done the same.
In less extreme cases, many creators are growing their businesses through startups like Creative Juice, Spotter, and Jelly, which offers cash up front in exchange for temporary ownership of a creator's YouTube back catalogue, meaning the company gets all the advertising revenue from those videos. These firms operate in a similar way to venture capital firms. They invest in creators who they believe will turn that infusion of cash into even more money, giving both parties a return.
Despite securing massive funding rounds and mammoth valuations, the model these companies operate is still relatively new, and creators need to be careful, as they should with any business.
