The creator economy is changing, but can it thrive? | FT Tech

Summary

The video script explores the evolving creator economy, where individuals like Instagram influencers and YouTubers turn social media into lucrative careers. Despite challenges such as concentrated wealth among top creators and a drop in investment, there's evidence of consumer willingness to pay for quality content. The script also highlights the potential impact of AI on content creation, suggesting a future where platforms may cater to shorter attention spans and creators find new ways to engage and monetize their audiences.

Takeaways

• 📸 The speaker knew from the start that their career would be on Instagram, emphasizing the natural transition from hobby to professional content creation.
• 🌐 Social media initially served as a platform for interaction but has evolved into a vast ecosystem where creators can monetize their posts and advertisements.
• 💡 The creator economy has grown significantly, with Goldman Sachs valuing it at around $250 billion, indicating a substantial shift from its nascent stages 15-20 years ago.
• 🔢 There are an estimated 50 to 100 million creators working part-time or full-time, showcasing the scale of the creator economy and its impact on employment.
• 📱 Technological advancements have simplified content creation, with smartphones playing a significant role in enabling creators to produce and share content more easily.
• 🍽️ Anderson Nguyen's story illustrates the journey of a creator who started during the pandemic, highlighting the new opportunities and challenges faced by creators.
• 📹 The evolution of content creation includes moving from self-filming to having a team of professionals, such as videographers and editors, to enhance the quality of content.
• 📉 Despite growth in ad revenues for platforms like YouTube, investment in the creator economy has seen a sharp decline, reflecting financial challenges in the sector.
• 💰 The concentration of wealth among a few top creators, like Mr. Beast, contrasts with the reality for most creators who struggle to make a living from their content.
• 🤔 The creator economy faces the issue of a highly competitive market where only a small percentage of creators earn a professional income, indicating the difficulty of success.
• 🛍️ Consumers are showing a willingness to pay for quality content, even during a cost of living crisis, suggesting a continued demand for creator-produced content.
• 💼 The future of the creator economy may involve more direct income streams for creators, such as their own products and shops, as well as co-investment opportunities with their audience.
• 🧠 The transformative potential of AI in the creator economy is highlighted, with AI assisting in tasks like scriptwriting and editing, which could significantly impact content production.
• 🔍 The focus is shifting from quantity to quality in the creator economy, with the potential for new platforms and formats that cater to shorter attention spans and quick consumption of content.

Q & A

What was the initial perception of the speaker's career choice on Instagram?

The speaker's friends initially thought they had lost their mind, as they were constantly taking pictures of themselves. However, once the speaker started receiving payments and attracting brand attention, their friends began to understand the viability of their career choice.

How has the creator economy evolved over the years?

The creator economy has grown significantly from being a nascent, web-focused space with blogs and direct fan engagement to a vast ecosystem where creators can make money from posts and advertising. The number of creators has increased, and technology has made content creation quicker and easier.

What is the estimated value of the creator economy according to Goldman Sachs?

Goldman Sachs values the creator economy at approximately $250 billion.

How has technology facilitated the growth of the creator economy?

Technology, particularly smartphones, has made content creation more accessible and consolidated, simplifying tasks that previously required video, audio, and writing skills.

What challenges did Anderson Nguyen face when starting his creative journey?

Anderson Nguyen started his creative journey during the pandemic lockdown in 2021 and only recently began taking it more seriously, quitting his full-time job to pursue it.

How has the speaker's content creation process changed since 2014?

The speaker initially filmed everything themselves but now has a team including videographers, editors, someone to post on platforms, and a manager responsible for working with brands.

What financial signals are the creator economy facing currently?

While YouTube ad revenues are up around five percent, investment in the creator economy has dropped sharply, with total funding for US start-ups falling 50 percent last year compared to 2021.

What is the distribution of income among creators in the creator economy?

Only four percent of creators are defined as professionals earning at least $100,000 a year, indicating that the majority of creators do not make a living solely from their content creation.

How does the speaker describe the time-consuming nature of content creation?

The speaker mentions that coming up with new concepts and being creative can be a lot of work, and the process of content creation is very time-consuming.

What trends are emerging in the creator economy regarding direct income streams?

Creators are moving toward generating their own direct income streams, such as having their own products and shops, and engaging with their fans to sell directly to them.

How is AI expected to impact the creator economy?

AI is seen as a game changer, with the potential to save creators time by helping with tasks like scriptwriting, editing, and content creation, making the process more efficient.

What is the speaker's perspective on the future of the creator economy?

The speaker believes that while the days of wild growth might be over, there is still plenty of opportunity in the creator economy, with a focus shifting from quantity to quality.

Outlines

00:00

📸 The Rise of the Creator Economy: From Passion to Profession

This paragraph delves into the journey of social media influencers and content creators, who have transformed their hobbies into legitimate careers. It discusses the evolution of social media from a tool for social interaction to a significant economic force where creators can earn substantial income through brand partnerships and advertising. The text highlights the dramatic growth of the creator economy, noting how platforms and technology have made content creation more accessible, leading to a surge in the number of creators. However, it also points out the disparity in earnings, with only a small percentage of creators making a living wage, and the challenges of scaling within the industry.

05:02

🔄 Evolving Monetization Strategies in the Creator Economy

This paragraph explores the shift in how creators are generating income, moving beyond traditional platform monetization to more direct income streams, such as product sales and investments. It highlights the increasing democratization of investment opportunities, allowing creators to engage their audience in new ways, such as co-investing in projects or businesses. The paragraph also touches on the changing consumption patterns of audiences, driven by shorter attention spans, and the potential for new platforms and content formats, including AI-driven innovations that can streamline content creation and enhance engagement. Despite challenges, there remains significant potential for creators to thrive by focusing on quality content.

Keywords

💡Instagram

Instagram is a social media platform primarily focused on sharing photos and videos. In the context of the video, it is portrayed as a significant platform for content creation and a career opportunity. The speaker mentions having a career on Instagram, indicating its role in the creator economy.

💡Creator Economy

The creator economy refers to the ecosystem of individuals who generate content on digital platforms and monetize it through various means such as advertising, subscriptions, and brand partnerships. The video discusses the evolution and current state of this economy, highlighting its value and the challenges faced by creators within it.

💡Social Media

Social media is a collective term for websites and applications that enable users to create and share content or participate in social networking. The script describes how social media initially served as a tool for interaction but has since evolved into a platform for economic activity, particularly for content creators.

💡Content Creation

Content creation is the process of producing various forms of content, such as videos, blogs, and images, for online platforms. The video script emphasizes the ease of content creation in the modern era, facilitated by technological advancements like smartphones, and its significance in the creator economy.

💡Brands

Brands are identified in the script as entities that engage with creators for advertising and promotional purposes. The mention of L'Oreal illustrates how brands can recognize and collaborate with successful creators, contributing to the creator's income and validating their career choice.

💡YouTube

YouTube is a video-sharing platform that is highlighted in the script as a major player in the creator economy. Creators on YouTube can earn revenue through ads, subscriptions, and other monetization strategies. The video discusses YouTube's ad revenue growth and its implications for creators.

💡Investment

Investment in the context of the video refers to financial backing provided to startups and platforms within the creator economy. The script notes a significant drop in investment, suggesting a potential challenge for the growth and sustainability of the platforms and creators involved.

💡Monetization

Monetization is the process of converting online content into revenue. The video discusses various forms of monetization, such as ad revenue sharing on YouTube and direct income streams from creator-owned products and shops, as key to the financial success of creators.

💡Quality Content

Quality content refers to material that is well-produced, engaging, and valuable to the audience. The script suggests that despite economic fluctuations, consumers are still willing to pay for quality content, indicating its importance in the creator economy.

💡AI (Artificial Intelligence)

AI is depicted in the video as a transformative technology with the potential to significantly impact the creator economy. The script mentions AI's utility in scriptwriting and editing, suggesting that it can enhance the efficiency and quality of content creation for creators.

💡Engagement

Engagement in the context of social media and content creation refers to the interaction between the creator and their audience. The video suggests that direct engagement with fans can lead to support and investment opportunities, such as co-investment in businesses or purchasing creator-owned products.

💡Attention Span

Attention span is the duration for which a person can concentrate on a task without becoming distracted. The script speculates on the future of the creator economy, suggesting that platforms and creators may need to adapt to shorter attention spans by producing shorter, more digestible content.

Highlights

Instagram as a career choice and its natural progression into a real job appreciated by the world.

Social media evolving from a friend interaction tool to a vast ecosystem of monetization through posts and advertising.

The initial skepticism from friends about constant self-photography turning into understanding as revenue started coming in.

Goldman Sachs valuing the creator economy at $250 billion, indicating a significant market size.

The growth of the creator economy from a nascent web-focused phase to a large-scale industry.

Estimation of 50 to 100 million creators active part-time or full-time, showcasing the scale of content creation.

The role of technological evolution in enabling easier and quicker content creation, especially through smartphones.

Anderson Nguyen's story of starting a creative journey during the pandemic and transitioning to full-time content creation.

The expansion of content creation teams, including videographers, editors, and managers, as creators scale up.

Mixed financial signals for the creator economy, with YouTube ad revenues increasing but overall investment dropping sharply.

The concentration of creator traffic and wealth among a few top creators like Mr Beast, highlighting income disparity.

The reality of the creator economy where only 4% of creators earn a professional income of at least $100,000 a year.

The time-consuming and challenging nature of content creation and the struggle to generate new concepts.

The difficulty for VC-funded platforms to scale up effectively due to the concentration of traffic among few creators.

Consumers' willingness to pay for quality content despite a cost of living crisis, indicating a resilient market.

The trend of creators moving towards generating their own direct income streams through products and shops.

The democratization of investment and the potential for creators to involve their audience in co-investment opportunities.

The transformative potential of AI in the creator economy, with its ability to assist in script creation and content editing.

The shift in focus from quantity to quality in the creator economy, emphasizing the importance of creating lucrative content.

The ongoing opportunities in the creator economy, despite the end of wild growth, for those who can produce quality content.

Transcripts

I knew that I was going to have a career on Instagram.

It was very natural for me to pick up the camera and just share my world with others.

Now it's a real job.

And the world appreciates this job and it's like every kid's dream come true.

At first, social media was a tool for interacting with friends.

But now it includes a vast ecology of people making money from posts or advertising.

All my friends thought I'd lost my mind.

Like, every moment taking pictures of myself.

But once the cheques started coming in, then the brands and L'Oreal were knocking at the

door, everyone started understanding it.

While definitions vary, the number of online global creators active today is staggering,

and Goldman Sachs values the creator economy at some $250bn.

The creator economy 15, 20 years ago was very nascent.

It was very web-focused, blogs, creators reaching out to their fans directly.

The economy as a whole was very very small.

There are 50 to 100 million creators kind of doing this on a part-time basis or full-time

basis.

Creators and platforms have proliferated, as technology has evolved to enable quicker

and easier content creation.

It used to be really hard to produce content.

You needed video.

You needed audio.

You needed to be able to write the content.

These days a lot of that has gotten very consolidated.

I would say the phone is a big reason for that.

Right we’re getting Cherry’s Food House.

It is a Korean, Chinese fusion cuisine.

Anderson Nguyen started his own creative journey during the pandemic lockdown in 2021, but

only recently began taking things more seriously.

I stopped working my full-time job a month ago and decided to pursue this full-time.

I like to go around the city and try weird foods that no one really wants to try and

just tell people how they experience this.

Hey guys.

Welcome back to linguamarina.

Hey guys.

Welcome to Silicon Valley Girl.

I made my first video back in 2014.

I was trying to apply to American universities, and I decided to document my journey because

I felt really lonely in the process.

So, since 2014, everything has grown by a lot.

I have three YouTube channels now, Silicon Valley Girl, linguamarina, and my vlogging

channel.

I used to film everything myself.

These days I have videographers who help me from time to time, depending on the type of

content that I'm creating.

I have several editors to help me with editing.

I have someone who helps me post on platforms.

I have a manager who is responsible for working with brands.

But the creator economy is facing mixed financial signals.

After a flat 2022, YouTube ad revenues are up around five per cent to the third quarter

of 2023 - creators receive just over half of the ad revenue generated on their channels.

On the other hand, investment in the creator economy has dropped sharply.

Total funding for US start-ups fell 50 per cent last year, compared to 2021.

Revenue and funding going into these platforms has decreased quite dramatically.

One key problem for the creator economy is that creator traffic and wealth tends to be

concentrated among the very few, such as YouTube sensation Mr Beast, who reportedly earned

$82m from his social media fame last year.

Far more common, are creators like Anderson.

At the moment, it's not enough to make a living, but I've made enough from my previous job

to help cushion me for a little bit.

Only four per cent of creators are defined as professionals earning at least $100,000

a year.

It's really hard to become a creator, and I don’t think they quite understand as they

go into this how hard it's going to be.

Oh, the whole thing is very time consuming, generally.

What I'm doing today is something that I've done a lot, so I can do it quite quickly.

But to come up with new concepts and to be creative, it can be a lot of work.

But because only very few creators generate significant traffic, which itself creates

income for their platform, VC-funded platforms find it really difficult to scale up effectively.

+++ The state of the economy is really interesting.

So, it kind of peaked a couple of years ago, during COVID, and I feel we're at the bottom

of the hype cycle now.

Yet while the creator economy might be moving away from past explosive growth, there is

evidence consumers remain willing to pay for quality content.

We did research about the impact of a cost of living crisis on willingness to spend,

and we found that spending on social media content and creator content was one of few

areas we've actually seen a growth in people being willing to pay.

Of people who follow social media personalities, 29 per cent have actually paid, whether via

subscriptions or tipping feature in the last three months.

It's about not just wanting that early content or wanting that exclusive content.

It's also wanting to support that person.

And creators themselves may be moving more toward generating their own direct income

streams.

So the new type of opportunities which we've got emerge are not just the types of platforms

which will be coming out, but also investing in the creators themselves.

They're going to have their own products.

They're going to have their own shops.

If you can have that particular engagement with your fans, they're going to want to buy

from you in the future.

The world of investment is getting more democratised.

Now anybody who has five dollars can invest in the public stock market, no fees.

They make it super simple.

But you haven't seen that yet in the private markets.

Creators will be able to bring their audience into that.

So maybe they co-invest together with their audience into a company, or maybe their audience

invests in the creator’s business.

So as the creativity economy evolves, what’s going to sell?

I think creator communities and platforms will evolve in the future by following just

people's attention span.

People have a shorter attention span now than they did perhaps 20 years ago.

Will people want to read or maybe they want to read only short form?

I would say podcasts, they tend to be an hour, maybe half hour.

Well, that's kind of long.

Maybe there's a world where there's a platform of just quick soundbites that are 30 seconds,

or a minute.

And then of course, there’s the transformative potential of AI.

AI is booming, right, and I think it's going to have a massive impact on the creator economy

in a positive way.

AI is a game changer.

The first time we used it was to create a script.

I had to change some things, but it was right there in front of me, you know, in 60 seconds

or less.

If I create an AI version of myself.

If AI creates scripts, then my job is to decide which content goes out there and which topic

my AI prototype is talking about.

Good creators are becoming producers.

The great thing about AI is it saves creators so much time.

They can edit their TikToks or YouTube videos in five to 10 minutes, versus days today.

The days of wild growth might be over, or at least on hold, but that’s not going to

stop the millions of creators out there.

Sometimes it's hard to switch off.

Like I've just been on holiday and I did three brand

jobs on holiday.

If creating doesn't work out I always have the option to go back to software engineering.

That's what I did before.

That door is definitely not closed.

At the end of the day I will still be making videos.

And opportunities should remain for those able to create lucrative, quality content.

The investment in the creates economy is still really interesting.

There's still plenty of opportunity.

There is enough demand, enough supply.

And now is the time when the focus should shift from quantity to quality.