In retrospect, the creator economy was inevitable
7 min read

In retrospect, the creator economy was inevitable

“Money, uh, finds a way.”
In retrospect, the creator economy was inevitable

A song to read by: “Adventures in Success,” by Will Powers

What I’m reading: “The Sympathizer,” by Viet Thanh Nguyen

The birth of creators

Although I have been writing about the creator economy for close to a year, I never formally introduced the concept or sought to pin down its taxonomy because, frankly, it was developing in real-time, even as I and others were covering it.

Now, though, the phrase and the concept have graduated from buzzy internet subculture to the economic trend most actively shaping the decision-making of the social platforms whose machinations shape the warp and waft of modern life.

Rather than try to nail down precisely what the creator economy encapsulated before I had a clear idea of what it meant, I have held off on such a task until now.

Below is a primer, colored by my experiences, opinions, and reporting, of what constitutes this new phenomenon, why it has become such a powerful force in the world of tech development, and where it might take the rest of the economy.

What is the creator economy?

While covering the concept at Business Insider, I used to explain it to the uninitiated as concisely as possible, saying, “The creator economy consists of individuals with unique skill sets using platforms to monetize their craft.”

At first, some framed it as the natural evolution of the gig economy; where one used software to sand human individuality off of laborers until they were smooth, interchangeable cogs, the other relied on the idiosyncrasy of its constituents as its primary draw. Uber drivers, the quintessential figures of the gig economy, were indistinguishable from one another: They drove different cars and made different small talk, but so long as they transported you from one destination to another, they served the same function.

Creators, the atomic unit of individuality in the creator economy, are the polar opposite: Two fitness instructors could teach the same workout class, but you would choose one over the other based on their charisma, personality, and magnetism. The service matters, but so does the server.

In time, the line connecting the gig economy and creator economy began to meander. One certainly predated the other, but an important intermediary step had been overlooked: the influencer economy.

When I first started covering the industry, many treated creator and influencer as synonyms. Taylor Lorenz, whose work more than anyone’s should be credited with unearthing this entire ecosystem of digital entrepreneurship, has said that the term “creator economy” only emerged once venture capitalists realized there was money to be made through social media. I imagine she is mostly right.

To me, the difference between influencers and creators can be reduced to one criteria: Who pays them?

Influencers, whose heyday in the mid-2010s made tummy tuck tea a household name, trade eyeballs for revenue. Particularly on platforms like Instagram, where attractiveness and verve led to large followings, influencers accrued millions of followers, then monetized their fanbase by promoting products. By any other name, this is advertising.

In advertising, as publishers might remember from their pre-duopoly salad days, one figure draws an audience, then sells the attention of that audience to another party. Influencers went through these exact motions, except on social media rather than a television set.

However, for the better part of a decade, this new-age advertising was the only substantive way to make money, as an individual, on the internet. It also required the actors in question to build massive followings, because without millions of eyeballs at your disposal, your product placement was worth very little.

These realities, plus the fact that lifestyle influencing and modeling so closely resemble each other, led many a boardroom bro to turn his nose up at the entire concept, a subtle breed of misogyny that was easily disguised as business acumen. Influencing was just advertising with a slick rebrand, and there was little in the way of disruption that could make the industry appealing to tech types.

In the late 2010s, specifically following the advent of Substack, Patreon, and OnlyFans, a new paradigm emerged. These platforms, rather than require massive fanbases, held the promise of turning just a few devoted fans into revenue. Using digital subscriptions, a person offering a distinct enough service could generate revenue from people who wanted that service, no matter how small or large the following.

In this way, the key technology that unlocked the creator economy was the digital subscription, as it cut out the advertising middleman and rewarded creators for their skill sets, regardless of their prominence or reach.

Slowly, a platform emerged for every kind of craft. Podcasters took to Patreon, writers to Substack, sex workers to OnlyFans, chefs to Demi, fitness instructors to Playbook, gamers to Twitch, teachers to Teachable, celebrities to Cameo, etc.

Creators, unlike influencers, make their money from their fans. While such a premise sounds unremarkable enough, it upends many of the incentives that the influencing industry held dear.

Creators are beholden to their customers, not advertisers. Where advertising prizes scale, subscriptions reward inimitability. Where the former cherishes appearances, the latter honors realism. Where one incentivizes quantity, the other encourages quality.

I should note that in this definition, I differ from others in the space. Not everyone believes there is a difference between creators and influencers. Others believe that platforms like YouTube and TikTok, because the platforms technically pay their creators, count as creator platforms.

I would counter such an assertion, as I believe that so long as the platform monetizes via advertising, it lacks the alignment of incentives that are a hallmark of the creator economy.

The creator economy is the natural evolution of user-generated content (UGC), which early social platforms relied on for value. You posted to Instagram, Twitter, and Facebook because it grew your clout and brought you sweet bursts of serotonin, but no one made any money doing so, at least from the platforms themselves. Influencers could sell the attention of their followers, but they were never paid for the content.

In the creator economy, creators sell their skill sets, not their audience (though some platforms, such as YouTube, dabble in both). Because they do so through a platform, that platform generally takes a cut: 10% on Substack, 20% on OnlyFans, etc.

As a result, creator economy platforms use a much more combustible fuel: creator monetization. The carrot of generating money through subscriptions is far more compelling than the carrot of doing so through advertisements.

For one, subscriptions make monetization far more accessible: Anyone can get good enough at one thing to sell their service at cost, while very few people can accumulate a large enough audience to sell ads against it.

By giving their practitioners the tools to turn their work into revenue, creator platforms harness the self-interest of creators as the engine for their success, a trusted method of money-making that hearkens back to the butchers, the bakers, and the candlestick makers.

What, to you, sounds more appealing: The thrill of posting pictures in exchange for likes, or the thrill of posting pictures in exchange for cash?

Creator economy platforms realized that the only thing more enticing than popularity is wealth, and that by giving creators the means to turn their skill sets into revenue (and then skimming a bit off the top), they had hitched their wagon to a far more motivated horse and, in the long run, stood to make far more money doing so.

The state of creators

For this reason and more, creator platforms are proliferating at light speed. The formula is simple enough: Find a group of people with a unique skill set, put it on the internet, and place it behind a paywall.

Even the social platforms that ushered in the first era of social media, such as Twitter, Facebook, and Instagram, are scrambling to give creators the tools to monetize, for fear of losing their power users to a platform that pays them.

Twitter, in particular, unveiled its Super Followers concept just last week, and its recent acquisition of the newsletter service Revue suggests it is positioning itself to transition into this brave new world. TikTok and Snap, meanwhile, are throwing money at prominent creators to keep them on their platform, a metaphor for the new power dynamics of the creator economy if there ever was one.

And Cherie Hu, who works more closely in the world of music, has seen similar changes in the world of audio (“music” is now an outdated concept).

Her observation about collectors in the audio industry pertain to the rest of the creator economy writ large. The power has always been in the creators; they have always been the primary source of value for platforms.

Now, everyone has finally realized it.

Some good readin’

— My first story for Adweek! Why The Washington Post is herding readers onto its app like parents in “Twister” herded their families into tornado shelters. (Adweek)

— I was on Simon Owen’s podcast, where I talked about newsletter bundles and the changing face of media entrepreneurship. (Simon Owens)

— As a kid raised in Texas, few book series were closer to my heart than “Hank the Cowdog.” This profile of its author made me a little emotional! (Texas Monthly)

— Just this New Yorker piece about the mystery behind Abraham Lincoln’s final words that I must have read 10 times in the last two years. (The New Yorker)

— Casey Newton explains in ways I cannot how Twitter’s latest product launches threaten to destabilize newsrooms even more. (Platformer)

— Jarrod Dicker and his band of Merry Pranksters took to Mirror to unveil their vision for how NFTs, DAOs, and other new-age acronyms could change the internet and the economy. (Dark Star)

Cover image: “Saturn Devouring his Son,” Francisco de Goya