The new ruler of the startup ecosystem — The Creator Economy
Not long ago, a few players dominated the information and entertainment industries. But, then, most people consumed content through television, radio, and newspapers.
The pattern persisted for a long time. However, as the internet evolved, so did Web 2.0 — the web in which users were not only consumers but creators. People began to create content and distribute it to their communities. Individuals became producers and brand managers for themselves. This trend ushered in a new content creation, distribution, and consumption era.
Despite the creator economy only having existed for ten years, more than 50 million people worldwide identify themselves as creators. Moreover, a survey shows that more American children (29%) desire to be YouTube stars than astronauts (11%) when they grow up. Thus, it has become the fastest-growing category of small business.
What is the Creator Economy?
The creator economy is an economy centered on highly driven, artistic, and skilled individuals who have established their brand, business, or community and are sharing their work through a digital platform. The creator economy meets the growing demand for readily available expertise, experiences, and communities.
It has grown exponentially due to the proliferation of e-commerce and online community platforms. Platforms like Shopify enable creators to create digital storefronts to sell their products. Online community platforms such as Mighty Networks would allow creators to develop communities, offer online courses, and even host virtual events all in one place.
The creator economy has grown into a multibillion-dollar business that has helped launch the careers of several well-known figures. In 2022, this generation of microbusiness owners would generate $104.2 billion. Today’s creators approach content creation and career management with a growing degree of professionalism. International brands and businesses have mastered using this new media environment as a channel for advertising and sales. Successful content creators are compared with film stars and celebrities because of the fame and admiration they earn among their fans and followers. The creators are more relatable to the audience than stars from earlier eras.
Evolution of Creator Economy
This ecosystem evolved through several phases with enough history to track back to and some visible patterns. Be it desktop publishing in the past — or e-commerce and 3D engines more recently.
The evolution of Creator Economy :
- The Pioneer Era saw the development of new technologies by early adopters like Amazon and Pixar.
- The Engineering Era is when middleware and bottom-up tools were developed to assist overworked engineering teams.
- The top-down technologies that support a much larger market of artists and displace many enterprises from earlier periods are known as the “Creator Era.”
This is an age of entrepreneurs and, precisely, solopreneurs, and the evolution of the creator economy only lies in building businesses around these creators. The last ten years have seen the emergence of firms that allow creators to monetize their work. For greater clarity, consider that over 45% of Indians own smartphones, and over 350 million people in India watch internet videos. According to a Bain & Co analysis, the global number is increasing. Globally, professional artists earn an average of $3,500 per year, according to Elevation Capital data. India is only beginning to touch the surface of its potential and will overgrow.
The First Generation
Almost a decade ago, when words like influencers started becoming popular, there were platforms like Facebook and YouTube. These were the first generation platforms. The two platforms were game-changers because they hooked viewers on a new kind of material that was intimate in nature and planted the seeds of the creator generation.
The Second Generation
What took off with Facebook now saw spaces like Instagram and Pinterest. These were second-generation platforms, and the only difference was the focus. Here, images and videos were the key focus. But for a long time, the only method for Instagram creators to monetize their talents was through brand collaborations. Today, an Instagram creator with 100,000 followers can make roughly $200 for every post.
An economic change occurred when content creators began to take on the same significance as their material.
The Third Generation
With platforms like Patreon and OnlyFans, which focus on creators, clever and innovative monetization methods emerged. These were the third-generation platforms. All this has boosted creator earnings, which on third-generation media have climbed to 1.5–3x when compared to first and second-generation platforms. For instance, Patreon, the largest subscription-only platform, paid out $1 billion to creators in 2020, or $5,500 per creator. Media for creating online courses Teachable and OnlyFans received payments of $500 million and $1.6 billion, respectively. In addition, platforms like Graphy and Spayee assist people in India to become full-time creators.
Next Generation
No productivity solutions are still available to help creators maximize their own time. The white space includes a fintech application that makes remittances easy for creators of any age or educational qualification. The creative monetization that Web3 opens up is thrilling. The traded volume for digital art collectives like Hashmasks, a collaboration with more than 70 international artists, has reached $100M. Musicians can fractionally own their music on Royal.io, allowing fans to buy it and share the profits through royalties. A fundamentally new paradigm of verifiable ownership, fractionalization, and universal accessibility that NFTs have heralded has made all of this possible.
Trends
- The number of creators increased by 48% from 2020 to 2021
- The community platform sector saw revenue increase 148% from 2020 to 2021
- The number of creators earning at least $69k/year increased 41% from 2020 to 2021
- The number of paying subscribers on Substack increased 5x from 2020 to 2021
- TikTokers with 100,000 followers can make an estimated $200-$1000 a month
Conclusion
We at Rocket Capital believe that with the size of the creator economy reaching ~$100 billion the next couple of years will be defining leaders for this space. If you are excited about creator economy and want to share your experience, please reach out to us at mark@rocket.capital and akarsh@rocket.capital
About Rocket Capital
Rocket Capital is an early-stage VC fund investing in New Media Technology start-ups. We invest in pre-Series A, Series A and Series B stages, but we are open to investing earlier/later if we have strong conviction in the idea and founders. We have deep respect for all founders and the products they are building, and believe in creating long-lasting relationships in the industries we invest in.
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