The Shaping of the $100B+ Creator Economy by Big Tech: Retaining Users and Empowering Creators

The Shaping of the $100B+ Creator Economy by Big Tech: Retaining Users and Empowering Creators

Introduction:
The creator economy has witnessed exponential growth in recent years, with influencers and content creators demanding fairer compensation for their high-traffic content. Recognizing the potential of this market estimated at $104B and growing, big tech giants are strategically positioning themselves to capture a larger share. However, creators are increasingly seeking platform-agnostic solutions to establish their independence and reduce reliance on any one platform. In this article, we will explore how big tech companies are shaping the creator economy and discuss the challenges and opportunities for both platforms and creators.

Shifting Power to Creators:
Influencers have long been frustrated by the meager rewards they receive compared to the substantial traffic they drive to big media platforms. Acknowledging this power shift, platforms like Facebook have introduced features to better support creators. For instance, Facebook enables users to tip creators through its native tipping system called Stars. Furthermore, Facebook plans to facilitate one-time or recurring access to Live Audio Rooms, allowing creators to monetize their content. This shift is evident as the number of content creators on Facebook earning $10,000 a month from ads and fan support grew by 88% from 2019 to 2020.

Integration of Newsletters:
Newsletters are another thriving aspect of the creator economy, offering a more direct and intimate connection between creators and their audiences. Facebook aims to integrate itself further into this ecosystem by exploring ways to incorporate newsletters into its platform. Currently, platforms like Substack and Revue take a percentage of creators' earnings, but as big tech companies enter this space, new pricing models and revenue-sharing strategies may emerge.

Live Streaming and E-Commerce:
Big tech companies are also venturing into the realm of live streaming and e-commerce to tap into the growing social commerce trend. Amazon, for example, has its Amazon Live Creator app, which allows influencers to earn commissions through livestream sales. Twitch, Amazon's game streaming service, presents another avenue for the company to expand its reach. In Q3'20, creators streamed 206M hours on Twitch, and users viewed 4.7B hours of video. To fuel subscription growth, Twitch introduced tiered subscriptions tailored to different countries, considering local pricing. This innovative pricing model demonstrates a commitment to adapt to the needs of creators and audiences.

Platform Fees and Independence:
One of the key challenges faced by creators in the creator economy is the high platform fees imposed by big tech companies. For instance, YouTube takes a 30% cut of ad revenue, while Apple charges a 30% fee for app purchases and in-app subscriptions. These fees have been a point of contention, with some arguing that they hinder the growth of the creator economy. Gumroad founder Sahil Lavingia, for example, claims that the creator economy would be significantly larger if Apple's fee were reduced to 3%. Creators are increasingly looking for alternative platforms or building their independent brands to reduce their dependence on any single platform.

Actionable Advice:

1. Diversify Your Platforms: As a creator, it is essential to establish a presence on multiple platforms to reduce reliance on any one platform. This way, you can reach a wider audience and safeguard against potential changes or limitations imposed by a single platform.

2. Explore Direct Monetization: Investigate various monetization options, such as native tipping systems, subscriptions, or merchandise sales, to diversify your revenue streams. By exploring multiple avenues, you can maximize your earnings potential and establish a more sustainable business model.

3. Advocate for Fair Platform Fees: Join the conversation surrounding platform fees and advocate for fairer terms that benefit creators. By raising awareness and encouraging dialogue, you can contribute to the growth and development of a more equitable creator economy.

Conclusion:
The big tech giants' entry into the creator economy signifies a significant shift in power dynamics, with platforms striving to retain users and creators seeking independence. While big tech companies offer valuable resources and reach, creators are increasingly exploring platform-agnostic solutions to ensure their long-term success. By diversifying platforms, exploring direct monetization strategies, and advocating for fair platform fees, creators can navigate this evolving landscape and thrive in the ever-expanding creator economy.

References:

• CB Insights Research: "How The $100B+ Creator Economy Is Going To Be Shaped By Big Tech"
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