How Does Money Flow in the Creator Economy? (Part 1)

📸 We all have that friend who always takes photos of the food before we eat…

They are a creator.

And there are 300 million creators in the world.

They are all creating value. $250 billion worth of value.

If the creator economy was a country it would be the 50th largest country by GDP alongside Portugal, New Zealand and Qatar. 🇵🇹🇳🇿🇶🇦

But what is the value? And how does the money flow?

Below, I break down the core stakeholders and the business models that make the economy work…

The Stakeholders - in order of most important to the least (my opinion).

1. The Creator

Creators come in all shapes and sizes. Whether they are platform native or traditional celebrities (think Mr Beast from Youtube vs DJ Khaled).

They also come in different verticals/categories e.g fashion, fitness, food etc

They also come in different sizes from micro influencers on instagram to giants.

So many shapes, sizes and colours. Thats what I love about it.

2. The Fan/Audience

Creators and their content are nothing without the audience that engages with it.

Does a tree fall in the woods if no one is there to hear it?

3. Tech Platforms and Tools

The companies that allow creators to connect with their fans. This can be content first platforms such as Youtube, Instagram or Tiktok. E

very market and country has a different flavour - some are more popular. E.g in Brasil users spend 16 hours on Instagram per month whereas the average German users spends half that time.

Over recent years new platforms have emerged which promote certain formats (short form vs long form) or creator niches. All the way from Slushy (X rated Tiktok) to Clubhouse (audio first) to live shopping.

This layer also includes tools that help creators create and monetise their content as well as brands to manage marketing campaigns. And tools that connect creators and brands more seemlessly.

4. The Brand (marketing)

Today 80% of all value in the creator economy comes from Brands. 

They have the budget and it drives the economy in the form of ‘brand deal’ such as paid partnerships on social media, affiliate marketing, influencer marketing (including the emerging trend of User Generated Content).

5. The Agency

Otherwise known as the middleman, agencies connect the budgets of the large brands and other companies such as media or advertisers.

In different markets and countries they have different significance. For example in China you could argue agencies prop up the whole ecosystem by building up and managing the operations of all the largest creators.

Read my article on the Creator Economy in China here…

My bet is that in the long run with more sophisticated software tools that reduce the inefficiencies created by mainstream agencies the role of the agency will diminish.

I will dive deeper into the interconnected relationship between these by analysing the thriving business models that take place - and which ones have strong potential in the future….D