Along with the rest of the tech industry, social media platforms and creator-focused startups have been laying off employees. Creator funds for platforms have dried up.
The creator economy is more than just a term that is losing interest among venture capitalists. Despite challenges on a platform level, creators are continuing to make a living outside of the confines of traditional media and will only grow in the years to come.
In my opinion, the biggest creator news of the year was the announcement that shorts creators would be able to earn ad revenue for the first time. If they have at least 1,000 subscribers and 10 million shorts views in 90 days, they will be able to apply to the partner program. 45% of ad revenue will be earned by these creators as members of the partner program.
It's an open secret that shortform video is hard to make money. The Creator Fund is a pool of $200 million that TikTok will unveil in 2020. Over the next three years, TikTok said it would double the pool in the U.S. YouTube paid creators over $30 billion in ad revenue over the last three years. If you're in TikTok's creator program and have a video get 1 million views, you can cash out for a small latte. These funds seem to be a beacon for creators, but they don't help a lot. The majority of popular TikTokers make their money from off- platform opportunities.
TikTok has been the leader in short form video for a long time, with other platforms copying them. Once creators can earn ad money there, they'll flock to the site. What's the best part? The pressure on TikTok has never been greater.
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A word is a word. When you see it, you know it. When Facebook changes it's name to Meta and you get hundreds of emails about "the metaverse" or "community" just because it has a semi- active Discord server.
Real things are represented by all of these words. The metaverse is a thing, but I think we are talking more about Club Penguin than anything else. The problem with buzzwords is that they diminish real phenomena into fads that get further confused by venture capitalists who double down on the trend with over- enthusiastic investments.
Everyone is the favorite brand new dad on the EquityPodcast. He made a prediction a year ago.
He said that the passion economy wasn't sustainable. I nailed it. These days, who talks about creators? It's nobody!
Alex can forgive me because I don't like the idea ofpassion economy with the fire of an exploding supernova for each and every follower. The term glorifies the hustle that people face while trying to make it in a field they love, and ignores the exploitative industries that people pursue out of passion.
I think what Alex is getting at is that in the year 2021, venture capitalists poured money into the creator economy in the same way they did in the past. Here is the breakdown of creator economy funding for the first three quarters of the 21st century.
This doesn't mean that the creator economy is failing. It could be that the industry is trying to correct the over-investment in companies that weren't really needed. The economy is also something you know.
For the past year, I have said that creator economy startup can only succeed if they are truly helping creators. When venture capital flowed like champagne, we joked that there were more creator economy startup than creators. Many of the people who operate completely oblivious to a16z are investors. It's indicative of an environment that encourages tech moguls with no hands-on experience to try to solve problems of an industry that they don't understand. I don't know how many companies try to automate the process of securing brand deals or help creators make white label products.
It's bad for creators when there are too many startup vying for their partnership If you rely on a company to offer your business some sort of service, what happens if it fails within a few years? I make a personal policy of asking startup founders how they would protect their creators if their company fails.
The success of creators remains the same regardless of where the VC funds go in the future. Diversification of your income streams, building trust with your audience, and making sure you don't burn yourself out are some of the things you can do.
Yeah, funding for creator-focused startups is drying up
Even though investments into creator economy companies might be down, creators are still interacting with VC money in a way that their audiences don't often see. The D'Amelio family became investors themselves. The fact that other successful creators have accomplished the same is unsurprising.
Creative Juice, Spotter and Jellysmack offer up-front cash in exchange for temporary ownership over a creator's YouTube back catalog, which means the company gets all of the ad revenue from those videos They are similar to venture capital firms. Both parties will get a return when they invest in creators that they think will turn that cash into more money.
Despite securing massive funding rounds and mammoth valuations, the model that these companies operate is still relatively new, and creators should exercise caution.
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