The creator economy is the economic landscape in which individuals use digital platforms to produce and distribute content, products, or services directly to their audience.
THE CREATOR ECONOMY
First, there were the Influencers. Then, in the 2000s, with the emergence of platforms like YouTube and TikTok that provided new spaces for creators to monetise their products or services, the creator economy evolved and has grown to such an extent that it is impacting the broader economy, marketing, and technology.
This article explores the creator economy and the effects it is having.
What is the creator economy?
The creator economy is the economic landscape in which individuals use digital platforms to produce and distribute content, products, or services directly to their audience.
The landscape comprises influencers, bloggers, YouTubers, and podcasters who monetise their work through subscriptions, direct sales, advertising revenue, and brand partnerships.
Given that Influencers are a part of the creator economy, it's important to understand the distinction between Influencers and creators.
Influencers and creators – the difference
While both terms are often used interchangeably, and there can be a blending between the roles, there are differences between the two. The critical differences between Influencers and creators are
Purpose. Creators prioritise content creation, while influencers focus on influencing their audience’s likes and preferences.
Content vs. Brand Endorsement. Creators emphasise their creative content, whereas Influencers often balance their content with brand endorsement. This is one area where the lines blur, as many creators partner with brands to ensure a regular income stream.
Engagement vs. Reach. Creators aim for engagement with their audience, while Influencers often seek to maximise their reach and impact rather than build a community around engagement.
It is essential to remember the differences, particularly if, as a brand, you are seeking to engage an Influencer or a creator. The results will be very different depending on which one is involved.
For example, creators create content and information that reflects their creative vision. They bring niche expertise to their platforms, making them ideal partners for brands seeking legitimacy and authenticity. Creators' followers trust their recommendations, which means higher conversion rates for products and services they endorse or recommend, increasing brand profitability.
In contrast, Influencers generally provide an opportunity to increase brand awareness and reach a broader audience, allowing brands to extend their visibility. Influencers also have followers from diverse demographics, allowing brands to connect with different audiences.
What is the size of the creator economy?
The exact size of the creator economy can vary because there is no definitive definition of who makes up the creator economy. A 2022 Report from Linktree stated there were 200 million creators. Whatever the numerical size, the market size of the creator economy in 2022 was estimated to be $104.2 billion, double its value in 2019.
A 2023 article in Goldman Sachs claimed the creator economy could be valued at nearly half a trillion dollars by 2027.
The Creator Economy in Singapore
The creator economy in Singapore has an estimated market value of around $19 billion. It is a sector that has proliferated with the increasing popularity of social media platforms, particularly TikTok.
For example, Mr Tan Ming Wei, one of Singapore’s taekwondo athletes, is also one of Southeast Asia's most well-known TikTok creators, with over 22 million followers. Like many Creators, his journey began during the COVID pandemic when Taekwondo competitions and sporting events could not occur, and he started posting on TikTok.
Given the size and growth of the creator economy, what is its impact?
The impact of the creator economy
The creator economy significantly impacts several areas beyond the economic impact. These other areas include consumer behaviour, cultural impact, and the growth of technology.
Economic Growth
The creator economy is a significant contributor to the global economy. As mentioned, Goldman Sachs considers this economy will be worth half a trillion dollars by 2027.
An article in the Washington Post stated that in 2021, YouTube’s creative ecosystem supported more than 425,000 full-time equivalent jobs and contributed more than $25 billion to the United States GDP.
While exact figures for the economic impact of the creator economy in Singapore are more challenging to obtain, the digital economy, including the creator economy, contributed 17.3% to Singapore’s GPD in 2022.
The economic significance of the creator economy will only increase. While there are many reasons why this ecosystem will continue to grow, two of the reasons are:
● The empowerment and individuality that the creator economy encourages; and
● The growth of technology.
Empowerment and individuality and the creator economy.
The creator economy empowers individuals to monetise their passions and talents, which gives them a greater sense of agency and individuality than traditional employment models. This agency and freedom to express individuality are attractive to people who have strong creative talents and feel confined by the routines and protocols of conventional workplaces.
One of the ongoing consequences of the COVID pandemic is that people have become more unwilling to accept the routines of conventional workplaces. Post-COVID, people are evaluating their employment and its cost-benefit ratio, and for many, the creator economy is a viable option.
The different income streams have also made the creator economy a viable career path for many. These sources of income range from ad revenue to brand partnerships to merchandise sales to direct payments from followers.
YouTube’s creative ecosystem supported more than 425,000 full-time equivalent jobs and contributed more than $25 billion to the United States GDP.
The growth and impact of technology
The growth of the creator economy has led to technological advances, particularly in making content creation more accessible and affordable. As technology develops, creators will use and adapt this technology, which, in turn, will lead to further development and growth in technology.
Cultural impact
Creators shape cultural trends and often drive the popularity of new ideas, products, and movements, which has a cultural impact. This is because authentic and relatable content resonates with audiences more than traditional media sources. Consumers are seeking engaging content that addresses their issues from sources they trust. Most of these trusted sources are individual creators rather than traditional institutions.
The creator economy also impacts marketing
The creator economy also influences and changes how brands and companies market.
Direct engagement
The creator economy allows brands to engage with niche communities more authentically and directly than traditional advertising.
Creators who provide informative, entertaining, or inspiring content are more likely to attract, retain, and build a community of followers. This offers new opportunities for brands to tap into these communities.
Brand deals are the largest source of income for creators (about 70%), reflecting the importance brands place on connecting with niche communities.
Personalisation and Content Diversity.
Creators have capitalised on the diverse content formats, such as short videos and live streams, available on platforms like TikTok, YouTube, and Instagram. As creators have connected with and built communities, they have developed a deep understanding of the issues that concern community members and how to speak in ways that resonate with their audience.
This provides a real benefit for brands. They can experiment with different types of content to reach their target audience, guided by and influenced by the creator who knows the target audience. This can avoid marketing mistakes and failures. It can also reduce the cost of trying to come up with the right message for the audience.
Partnering with creators can be more cost-effective for small to medium-sized brands or companies than traditional advertising.
The challenges of the creator economy
While there are many benefits for a creator, particularly if they have a strong community and several brand partnerships, the creator economy is not without its challenges.
Monetisation Challenges
Earning a sustainable income can be challenging for creators starting in the creator ecosystem. While platforms like TikTok and YouTube offer monetisation options, the revenue is often inconsistent and insufficient. When a creator targets an affluent audience, earning may be more accessible. However, it is often difficult to earn a sustainable income, particularly in the early days of building a community.
Algorithm Changes
The creator economy is based on platforms and technologies. Maintaining a steady audience can be challenging when social media algorithms change, often frequently and without sufficient notice.
Market Saturation
Given the rapid growth in the creator economy, the market is becoming increasingly saturated, making it difficult for new creators to stand out and gain a sufficient following. As discussed above, a lack of following can lead to a lack of financial sustainability.
Burnout
This is not often discussed. However, burnout is a real issue for creators, particularly digital creators. The pressure to constantly produce engaging content, be online and active, and interact with one’s community can be mentally and physically exhausting.
Creators must find ways to reduce and manage this pressure to remain engaged in the creator economy.
Regulatory Requirements.
Navigating the regulatory requirements and laws around advertising and digital content can be complex. Keeping current with the changing legislative landscape is imperative as laws and regulations change.
The other challenging issue is copyright and plagiarism. Copyright infringement can be complex, particularly if a creator has plagiarised or unintentionally breached copyright.
Despite these challenges, the creator economy will continue to grow. The sense of empowerment, individuality, and creativity provided by the creator ecosystem appeals to many disillusioned and disengaged with traditional work environments.
It is also an exciting landscape for those who enjoy using technology in new and creative ways to build authentic communities. For brands and companies, particularly small to medium-sized brands, the creator economy provides unique and cost-effective ways to market their products and services.
These are some reasons why the creator economy will continue to grow and impact the economy, technology and marketing.
