\n<\/p>\n
Social media platforms and creator-focused startups haven\u2019t looked too hot this year, as companies like Snapchat<\/a>, Patreon<\/a>, Cameo<\/a>\u00a0and Meta<\/a> all waged layoffs along with the rest of the tech industry. YouTube<\/a> ad revenue is declining, and creator funds for platforms like Pinterest<\/a> have dried up.<\/p>\n It might seem like things are bad on the surface, but the creator economy is more than just a buzzword that\u2019s losing interest among venture capitalists. Despite challenges on a platform level, creators are continuing to make a living outside of the bounds of traditional media and will only continue to grow in 2023.<\/p>\n In my opinion, the biggest creator news in 2022 was YouTube\u2019s announcement<\/a> that it would include Shorts creators in the YouTube Partner Program, allowing shortform creators to earn ad revenue for the first time ever. Starting in early 2023, creators will be able to apply to the YouTube Partner Program if they meet 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 ad revenue from their videos.<\/p>\n This is huge, because it\u2019s an open secret that shortform video is hard to monetize. For example, TikTok pays creators through its Creator Fund, a pool of $200 million unveiled in summer 2020. At the time, TikTok said it planned to expand that pool to\u00a0$1 billion<\/a> in the U.S. over the next three years, and double that internationally. That might sound like a lot of money, but by comparison, YouTube paid creators\u00a0over $30 billion<\/a> in ad revenue over the last three years. As the pool of eligible creators becomes more saturated, creator funds are pretty useless<\/a> \u2014 if you\u2019re in TikTok\u2019s creator program and have a video get 1 million views, you might be able to cash out for a small latte. So while these multi-million (or billion) dollar creator funds might seem like a beacon for creators, they don\u2019t help too much. Most popular TikTokers make their money from sponsorships and off-platform opportunities, rather than from their videos.<\/p>\n 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 be incentivized to flock to YouTube Shorts once they can actually earn ad money there. The best part? There has never been more pressure on TikTok to follow suit.<\/p>\n What\u2019s a buzzword? You know it when you see it. It\u2019s when Facebook rebrands to Meta and you suddenly get hundreds of emails about \u201cthe metaverse,\u201d or when a crypto startup declares its commitment to fostering \u201ccommunity\u201d just because it has a semi-active Discord server.\u00a0You could also classify \u201ccreator economy\u201d as a buzzword \u2014 I personally find myself cringe whenever I say it out loud, but I stand by the fact that it\u2019s a much easier shorthand than saying \u201cthe industry in which talented people on the internet are leveraging social media audiences to develop careers as independent creatives.\u201d<\/p>\n But all of these buzzwords actually represent real things. Yes, even the metaverse is a thing, though I\u2019d argue we\u2019re talking more about Club Penguin than whatever Mark Zuckerberg is into. The problem with buzzwords, though, is that they dilute real phenomena into fads that get further muddled by disconnected venture capitalists doubling down on the trend with over-enthusiastic investments.<\/p>\n On TechCrunch\u2019s own Equity<\/a> podcast last week, everyone\u2019s favorite tweeter<\/a> and brand new dad (!!) Alex Wilhelm reflected on a prediction<\/a> he made last year.<\/p>\n \u201cThe passion economy isn\u2019t sustainable,\u201d he read, quoting his prediction from last year. \u201cNailed it! Who talks about creators these day? Nobody!\u201d<\/p>\n I can forgive Alex because I do hate \u201cpassion economy\u201d with the fire of an exploding supernova for each and every follower Khaby Lame<\/a> has on TikTok. The term glorifies the relentless, soul-crushing hustle that people face while trying to \u201cmake it\u201d in a field they love, while ignoring that industries that people pursue out of passion (art, non-profit work, politics) are often the most exploitative of all.<\/p>\n I think what Alex is getting at here, though, is that in 2021, venture capitalists poured money into the creator economy in the same way they pursued \u201ctrendy\u201d tech like AI and web3. According to data<\/a> retrieved from Crunchbase earlier this year, here\u2019s the breakdown of creator economy funding for the first three quarters of 2022.<\/p>\n I don\u2019t think this means that the creator economy is failing, though. It could just mean that the industry is correcting for over-investing in a bunch of creator-focused companies that creators didn\u2019t actually want or need. Also, you know, the economy.<\/p>\n I\u2019ve been saying for the entire past year<\/a> that creator economy startups can only succeed if their foremost goal is truly to help creators. In 2021, a year when venture capital flowed like champagne at a Gatsby party, we joked that there were more creator economy startups<\/a> than creators. But that\u2019s a problem for investors, not creators, many of whom operate completely oblivious to the whims of a16z. It\u2019s indicative of an environment that incentivizes tech moguls with no hands-on experience to try to solve problems of an industry that they don\u2019t quite understand, and as a result, the space became deeply oversaturated. I cannot keep track of the number of companies I\u2019ve encountered that attempt to automate the process of securing brand deals or help creators make white label products.<\/p>\n I\u2019d go as far as to say that it\u2019s bad for creators when there are too many startups angling for their partnership. We know that most startups are doomed to fail \u2014 what happens if you rely on a company to offer your business some sort of service, and then they fail within a few years? This is why I\u2019ve made it a personal policy of mine to always ask creator-focused startup founders how they would plan to protect their creators from harm if their company fails.<\/p>\n No matter where the VC funds may fall in 2023, the playbook for creators\u2019 success remains the same. Diversify your income streams, build trust with your audience, and make sure you don\u2019t burn yourself out.<\/p>\n Investments into creator economy companies might be down, but creators are continuing to interface with VC money in a way that their audiences don\u2019t often see. Charli D\u2019Amelio and her family have become investors<\/a> themselves. MrBeast is seeking funding at a unicorn-sized valuation<\/a>, which isn\u2019t surprising given that other especially successful creators have accomplished the same.<\/p>\n In less extreme cases, many creators are growing their businesses through startups like Creative Juice<\/a>, Spotter<\/a> and Jellysmack<\/a>, which offer up-front cash in exchange for temporary ownership over a creator\u2019s YouTube back catalog, which means the company gets all of the ad revenue from those videos. These companies operate similarly to venture capital firms. They invest in creators that they believe will turn that cash infusion into even more money, giving both parties a return.<\/p>\n Despite securing massive funding rounds and mammoth valuations, the model that these companies operate is still relatively new, and creators should exercise caution, as they should with any business deal.<\/p>\n<\/p><\/div>\nSocial media platforms will need to commit to creators (seriously, this time)<\/h2>\n
\u2018Creator Economy\u2019 isn\u2019t a buzzword<\/h2>\n
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Venture capital will continue to intersect with creators, but not in the way you think<\/h2>\n