The financial side of advertising and entertainment is constantly transforming, but the internet made this process much faster. We are experiencing decentralization of content that is shifting the role of traditional media companies. Much of this content is written, spoken, or filmed by ordinary people like us. All this indicates that we live in a new kind of economy where brands and advertising agencies need to adapt to this new way of distributing creativity and earning money while doing so.
To understand this new shift in the digital economy, we need to go back in time and go through different stages of the world economy.
A century ago, we lived in an industrial economy. It was the age of manufacturing, and most people (men at least) earned money demonstrating their physical skills in some form of a factory (or in “modern” agriculture, taking advantage of improved farming practices). Most people earned their living by making “stuff.”
By the 1950s, however, we were turning into a consumer economy. People had been through a depression and a second World War and were looking at new ways to spend their cash. People began to earn income by performing services for others. Trade became more globalized, with people wanting a wider variety of „stuff” from around the world. Traditional media, television, in particular, showcased the latest and greatest products, and repeatedly encouraged people to spend more on consumer goods. Many of the world’s most recognized brands have been built on the back of TV advertising. Back then, attention was easy to capture, before the internet—namely social media—fragmented our attention.
In a world flooded with choice, attention becomes the most valuable commodity. The attention economy is the ad-based revenue model that has dominated the creative industries in the 21st century and made the incumbent social platforms some of the most valuable tech companies in the world. Unfortunately, this economy earned a bad name as problems started stacking up. These negative effects include privacy scandals, misinformation behind click-baiting headlines, an increasingly polarized society, the toll on mental health, a struggling longtail of creators…
As the creators and their leverage increased, the barriers to micro-entrepreneurship decreased, and people with niche interests around the globe were able to discover like-minded people to convene against the so-called mainstream. There was a subtle but acute power shift and the platforms now need the creators’ loyal communities. This developed into the creator economy, where people found a way to earn money by marketing their inane skills, hobbies, and interests online.
This most recent shift in the world of the economy was followed by a shift from influencers to creators. In the 2010s, influencer marketing represented a new opportunity for corporations to increase brand awareness and rebuild consumer trust. By now, the connotations of being an influencer are mostly negative—edited selfies, fake relatability, and unmarked sponsorships. This led to influencer fatigue and inauthentic brand partnerships. Accordingly, social-media platforms are now embracing a new buzzword as a successor: “creator.”
Creators now have the power to build viable businesses from a small number of dedicated fans. In the creator economy, passion and true connection supersede vanity metrics such as likes, views, and impressions that were crucial for attention economy. „Creator” is being adopted as a byword for a new generation of social-media spaces designed to support content producers in new ways. Where the ad-driven platforms Facebook and Twitter profit from our data and attention without giving much back, the likes of Clubhouse and Patreon promise to deliver a larger share of value to users by allowing direct monetization. Instead of the companies selling ads based on overall engagement, creators can get paid by their individual viewers, who might buy subscriptions, send tips, or crowdfund new projects.
Now that we’ve covered the stages of the world economy and tried to explain the buzzword „creator“ we can have a better look at this paradigm shift towards the creator economy.
The creator economy is not something that appeared out of nowhere in this new decade. We can say that it matches up with Web 2.0 – a point when the basic paradigm of the internet changed. This process started in 1999. with the beginning of the Read-Write-Publish era and contributions from LiveJournal (Launched in April 1999) and Blogger (Launched in August 1999). People stopped using the internet simply for information gathering and storage and started being active participants in the digital world. They eventually discovered new potential uses, such as social media and video sharing. Web 2.0 offered numerous opportunities for people to express themselves online, and the Creator Economy grew from this.
The best way to define what this economy represents is to cite Clara Lindh and her Forbes article. „The Creator Economy—made up of the platforms, marketplaces, and tools democratizing creative expression and entrepreneurship; empowering an independent creative class to make a living on their passions—represents a paradigm shift.“ There are several platforms and marketplaces where we can see this new economy coming to life. Subscription-driven platforms like Patreon, Substack, and Buy Me a Coffee charge a percentage of users’ income in return for publishing and paywalling their content (only allowing access to users who have paid to subscribe to the site). Apps like Linktree, Beacons, and Feedlink offer a service that, for a monthly fee, expands the Web site links that sit in the bios of social-media accounts, directing fans to a creator’s various content channels. On Twitch, a site where users can live-stream content like video games, and Heygo, a streaming site that provides a virtual proxy for travel, viewers can access video streams for free, with the option to send tips to the hosts. Another platform that is exploding right now is Discord. It’s changing the gaming experience and creating a revolution in communication. The whole model revolves around social tribes with shared values and interests, often bordering on obsession. On this wave of success, Discord created a high-budget ad campaign with cameos from Danny DeVito, Awkwafina, Grimes…
But just like the attention economy, the creator economy is not immune to scandals. In the latest news, Discord is being presented as a hackers’ tool for spreading malware. NFTs (short for non-fungible tokens) started as a good idea that allowed smaller artists to get their art noticed by potential buyers. This project eventually turned to climate controversy. Already famous people from different spheres of showbusiness started exploiting these tokens, while news that NFTs cause „ecological nightmare“ appeared in public. Take “Space Cat,” an NFT that’s basically a GIF of a cat in a rocket heading to the Moon. Space Cat’s carbon footprint is equivalent to an EU resident’s electricity usage for two months, according to the website cryptoart.wtf. Every article that talks about this topic also mentions OnlyFans – a surprisingly big part of the creator economy. It also got a bad name after already established names started using this platform. People whose only income is from this sex work started calling this a scam.
Besides these controversies, there are many more positive sides to this new economy. In many ways, the creator economy consists of people performing their dream job. It gives people a chance to specialize in their passion. Who would have thought you could earn a living from sitting at home playing video games, commentating as you make your moves. How many amateur writers would have expected that they could earn an income from their craft, or teenagers thought they could make money from making funny videos in their backyard? This is turning into reality thanks to the mindset that stresses that everyone posting on social media is producing something, pitching into the collective effort of making user-generated platforms compelling and thus profitable. This idea has proved to be highly marketable: the creator economy has reportedly seen $1.3 billion in investment funding in 2021 thus far, nearly three times the funding it received in all of 2020. Nicole Quinn from the venture-capital firm Lightspeed Venture Partners says that March of 2020 was the “key inflection point” for this burgeoning economy, as the increased appetite for digital content and the loss of jobs in other industries during the pandemic prompted more people to try their luck as creators.
The social players are responding to this power shift, in the content creator’s favor, by introducing a range of features to help individuals on the platforms monetize their fans—realizing that if they don’t, the creators will take their communities and potential revenue streams somewhere else. According to Forbes, it seems that the future of digital capitalism is in the hands of many micro-entrepreneurs who are closer, more connected, and by virtue of being niche understand their patrons better than the big brands—whether selling content, products, or knowledge.
Now you may ask yourself: where do brands and advertising agencies stand in this new economy? If brands want to stay relevant, they need to adapt to the creator economy. This requires a completely new attitude and approach. First, marketing departments need to connect with people—not consumers—beyond the point of transaction. They need to build real communities, reflect society and always add value. Second, most brands need to rethink their value proposition and start exploring membership and new subscription models. On this path, our Studio081 team can be on your side. We can apply our social media management tactics to your brand and help you adapt to this new way of creating and sharing content. This way, your brand can become an integral part of this new digital economy. Just contact us by e-mail: email@example.com!