Small Business Labs

Fiverr's Creator Economy Guide

Fiverr released a Creator Economy Guide, which is designed to help aspiring and existing content creators "handle the ups and downs of the creator economy."

To compile the report, Fiverr interviewed ten successful content creators and, based on these interviews, put together a top 10 list of tips for creator economy success.

The ten are:

1. Know the right time to start your own business.
2. Position yourself as a leader, not just a creator/influencer.
3. Find other team members who can help you.
4. Be prepared to handle the ups and downs of the creator economy.
5. Focus on your skills—let experts do the rest.
6. Don't just create for fans—create for yourself, too! 
7. Be prepared to scale your business.
8. Finding the best opportunities in the creator economy.
9. Learn to collaborate with other businesses.
10. A final word of advice.

Our favorites are the teaming tips (3,5, and 9). 

Our research shows that the creator economy is a team sport, and successful creators partner, subcontract, and hire others at much higher rates than most freelancers and solopreneurs. So we agree it's very important for creators to team up with others.

We also like 4 - Be prepared to handle the ups and downs of the creator economy - because there will be ups and downs.

The Fiverr guide provides an excellent set of qualitative research on what it takes to be successful in the creator economy. And while targeted at aspiring content creators, even experienced creators will find the advice useful. 

Mastercard on the Creator Economy

Mastercard's study - The creator class: How micro business is fueling the next wave of entrepreneurialism - provides an excellent overview of those identifying as digital content creators. Key quote:

Scaling up from a hobbyist to a full-time entrepreneur has never been easier, thanks to democratization around social media, as well as advances in payment technology, Web3 principles, and monetization models. 

We don't know what "Web3 principles" refers to, but we still like the quote - mainly because we agree that scaling a hobby into a business has never been easier.

The report chart below (click to enlarge) shows the primary motivations for becoming a creator. These are consistent with why people give to becoming independent workers or small business owners.

The report covers the challenges creators face. They are not surprising to anyone following the creator economy - burnout, inconsistent income, and lack of control. Key quote from the report:

The pressure to always be creating is intense, as 89% of creators report experiencing burnout. A similarly high percentage feel beholden to algorithms and platforms that are constantly shifting, as 86% of creators feel they do not have control over their content. Financial challenges — from rising costs to inconsistent income streams — are also pervasive for over eight in ten creators.

Our one quibble with the study is that it doesn't actually say how many income-earning creators there are.

The report says there are 22 million content creators in the U.S., but also says "nearly two-thirds of creators envision turning their endeavors into businesses."

This leads us to believe the study found about 7-8 million content creators who consider their content creation activities to be a business, with the rest considering it a hobby or potentially a pre-business.

But that's a minor quibble, and we like the study overall and recommend it to anyone interested in the creator economy.

What is Deinfluencing?

One of the hottest new buzzwords is deinfluencing - a form of online influencing where influencers tell people what not to buy.

TikTok, of course, is where most of the deinfluencing influencing is happening.  As the screen grab from TikTok below shows, the hashtag #deinfluencing recently had 268 million views.  

Time's TikTok's 'De-Influencing' Trend Is Here to Tell You What Stuff You Don't Need to Buy nicely describe the trend. Key quote:

"The growing trend is a direct response to the endless deluge of products that beauty and lifestyle influencers insist you simply must have."

But others have pointed out that most deinfluencers are, well, just influencers with a slightly different message.

Yes, they tell you what not to buy. But they also tell you what to buy instead. 

Key quote from the Financial Times article What de-influencing tells us about the state of the creator economy:

De-influencing is not a rejection of consumerism or social media. You can tell that by the fact that many of the videos follow up negative reviews with suggestions of things their followers should buy instead.

Buzzfeed News' Sorry, But The "Deinfluencing Trend" Is Just ... Influencing says:

Deinfluencing is a fun trend and TikTok buzzword, but the media's embrace of the term illustrates some misconceptions about influencers. It doesn't spell the end of the industry at all — it's just another version of the same thing.

Social media influencers are here to stay.  So is social commerce.  

And deinfluencing is just an evolution in how influencers use their influence to promote commerce.  

The Creator Economy has a Middle Class - Thanks to Traditional Jobs

If you read about, participate in, or study the creator economy, you'll quickly learn that while a small share of independent creators earn a lot of money, most earn very little. 

Harvard Business Review's The Creator Economy Needs a Middle Class nicely covers this.

The HBR article's author, venture capitalist Li Jin, was also recently quoted in Fast Company's Web3 investor Li Jin thinks a Universal Creative Income can help bolster the 'passion economy' on this topic. Key quote:

"The creator economy follows this extreme power law curve where a very small sliver of creators were able to make a living ... Most creators exist in this state of precarity and are barely earning anything ... the vast majority of creators were just kind of scraping by earning a little bit of income here and there."

And data from the 2022 MBO Partners State of Independence study backs this up.

This study asked independent digital content creators (freelancers, self-employed, etc.) about their creator economy earnings.

The results fit with Jin's assessment of creator economy income. Key quote from the study:

"32% of Independent Creators make less than $5,000 annually, while only 10% make more than $100,000. About one-third (36%) report making between $5,000 and $30,000, while 22% make $30,000-$100,000."

In other words, about two-thirds of independent content creators (68%) report earning $30,000 or less from their creator economy work.

But the MBO Partners study also surveys Americans with traditional jobs.

And it turns out that about 17% of traditional job holders report they work in the creator economy. This equates to about 25 million Americans.

About half (47%) of this group report working full-time in the creator economy, with the other half (53%) saying they work part-time.

The chart below shows the reported income distribution for full-time creators with traditional jobs.

There isn't a standard definition of the middle class. But Pew Research defines "middle class" households as those earning $52,000 to $156,000 annually in 2020 dollars for a household of three.

This is not a perfect comparator with the MBO Partners data above. The MBO Partners data is for a single job, and the Pew data is for a household of 3 (many of which have two incomes). But it's a good enough comp for a blog post.

And according to Pew, in 2021, 29% of American households were lower income, 50% middle income, and 21% upper income.

After adjusting for the two income issue with the Pew data, this is similar to the MBO Partners data on full-time creators.

So there is a creator economy middle class. But its members mostly have traditional jobs.

We'll have more on the creator economy in the near future.  Emergent Research (that's us) worked with MBO Partners on this study.

Independent Influencers Driving the Growth of Social Commerce

Social commerce happens when consumers - and business buyers - discover and purchase products through social media and content creation platforms.  

And as McKinsey explains in Social commerce: The future of how consumers interact with brands, it's taking off in the U.S. 

As their chart below shows (click to enlarge), social commerce is expected to grow from $45.7 billion this year to $79.6 billion in 2025.

Social commerce is being driven by social media and content creation platforms such as TikTok, Instagram, Pinterest and others.  

These platforms have added shopping features that allow in-app shopping, including purchases.  

And independent influencers and content creators leverage these platforms to reach and monetize their audiences.  

McKinsey covers two types of independent influencers that are part of the social commerce sales and marketing mix:

1. Key Opinion Leaders have large numbers of followers and fans and are either celebrities and/or experts in their field. Highly professional, they are also skilled marketers that can sell millions of dollars of products in minutes and make new products trendy overnight. Think Kim Kardashian or Mr. Beast. 
2. Microinfluencers drive social commerce through organic, word-of-mouth recommendations to their networks. Many receive commissions or are paid directly by the brands. But some get free products or early access to new products.  

We first covered social commerce in 2014. Back then, social ecommerce companies, such as Stella & Dot, recruited independent workers to be brand ambassadors and commission salespeople.

In most cases, the business models were similar to multi-level marketing companies such as Tupperware. And these independent salespeople mainly marketed to their friends and families.  

But thanks to the rise of the creator economy, many consumer companies - and a growing number of B2B firms - have influencer programs designed to incent independent influencers to help sell their goods and services.

These programs also allow independent influencers to extend their reach well beyond friends and family. which means they can build larger and more sustainable businesses.  

Walmart, for example, has created the Walmart Creator Program. Key quote from the program's landing page:

Walmart is where you shop to save. Now, it's where you create to earn. Walmart Creator is a platform designed to help you monetize your content, grow your business as a creator, and keep you inspired every step of the way.

Selling merchandise (referred to as "merch" in the creator economy) has become one of the most popular creator economy income streams. And its popularity - both with creators and consumers - will likely continue to grow.

Measuring the Size of the Creator Economy: It's Deja Vu All Over Again

There's a relevant Yogi Berra quote on almost every topic. 

And we immediately thought of his deja vu quote while reading the Observers' Data About the Creator Economy Varies So Widely No One Knows How Many Influencers There Are.

The article covers the range of estimates of the size of the creator economy. Key quote:

Analysts can't even agree on how many social media creators there are. While a widely cited SignalFire report claims there are 50 million creators, Adobe counts six times as many, at 303 millions, and other reports cite numbers in between. Neither report outlines its criteria for determining the calculation. 

This is the same problem the gig economy has had for over a decade.

According to the article, the main reason for the large variation in creator economy size estimates is that the studies use very different definitions of who is part of the creator economy.

This is also the same issue the gig economy has faced. And because of this, estimates of the size of the gig economy still vary quite a bit.

Because we study emerging trends (hence our name, Emergent Research), we regularly run into these market sizing problems.  

And we'd love to say we have a solution.  

But we don't.

Simply put, markets driven by new technologies move too fast for statistical agencies to keep up - or for independent analysts to agree on definitions.     

So our recommendation to those interested in the size of the creator economy is to develop their own creator economy definition that fits their business needs. Ours is:

Independent workers (self-employed, solopreneurs, etc.) who earn money by creating and distributing digital content. This includes writers, artists, entertainers, videographers, influencers, educators, thought leaders, and others who monetize their knowledge or skills by creating online digital content.

We use this definition because we study independent workers who earn money via their independent work. Using this definition, we found 7.1 million independent workers made money creating and distributing digital content in the U.S. in 2021.

This is much smaller than the 303 million creators Adobe found.

The reason is that Adobe's excellent study used a much more expansive definition of creators, and included people who don't make money and those who work in the creator economy as part of their traditional job. It was also a global study, while ours just covered the U.S.  

Once you have a definition, you can easily compare studies, understand their differences, and glean information relevant to your needs from them.

Everyone wants a standard set of definitions and a standard, widely used dataset on the creator economy.  

We can very confidently predict this won't happen anytime soon, and maybe not ever. So developing your definition - or finding one that fits your needs - is the best path forward.

NIL Payments Have College Athletes Joining the Creator Economy

If you're a college sports fan, you know that NIL payments - paying college athletes for the rights to their name, image, and likeness - is changing amateur athletics.  

After the NCAA lost a supreme court case, college athletes were allowed to profit from their celebrity. This lets college athletes - especially football and basketball players - earn money by monetizing their name, image, and likeness.

Morning Brew's In year No. 2, NIL continues to disrupt college football points out that 12 college football players have signed agreements worth over $1 million.  

And it's not just high-profile stars. Key quote from Morning Brew:

"Boosters at many powerhouse schools have formed controversial collectives to funnel money into athletes' pockets. At Texas Tech, the Matador Club collective is paying every football player and women's basketball player $25,000 a year in exchange for event appearances and community service."

This means even the back bench walk-ons that couldn't qualify for a college scholarship can earn a decent amount of money.

NIL money is not limited to football and basketball players. Even college athletes in nonrevenue sports - like golf - are being paid.

It's also not limited to college athletes. High school athletes are starting to earn NIL money, and even elementary students are getting into the act.   

The rules around NIL money vary by state, but NIL recipients are independent workers. And because they're earning money by monetizing their name, image, and likeness, they're part of the creator economy.

Not surprisingly, the big conferences dominate NIL revenue. 

The chart below is from OpenDorse, an athlete marketplace, and NIL technology company. It shows the top 10 conferences by total NIL Income.

It's unclear what the long-run impact of this shift from amateur to paid college and youth sports will be.

But what is clear is that NIL money has created a large, new segment of the rapidly growing creator economy.  

Teens Embracing YouTube and TikTok; Facebook Usage Declining

Pew Research's Teens, Social Media and Technology covers how American teens' usage of social media has changed since 2014. Key quote:

"TikTok has established itself as one of the top online platforms for U.S. teens, while the share of teens who use Facebook has fallen sharply."

As the Pew chart below shows (click to enlarge), almost all teens (95%) use YouTube, and 2/3rds of teens (67%) use TikTok.  

     

But the share of teens using Facebook has fallen to 32%, down from 71% in 2014-15.  

The study also examined the frequency teens use leading social media platforms.  

YouTube was the leader, with 19% of all teens saying they use YouTube almost constantly, 16% saying this about TikTok, and 15% saying it about Snapchat.

Only 2% of teens say they use Facebook almost constantly.

YouTube and TikTok aren't usually considered social media platforms. But social media and entertainment have been blurring over the past decade, so this usage comparison is valid.

And with the social media platforms adopting TikTok's approach to making recommendations, they will likely blend more in the future.

VCs Continue to Fund Creator Economy Startups

The Crunchbase News article Online Content Creators Are Making Millions. VCs Want To Cash In On The Booming' Creator Economy' Too covers the growing amounts of capital VCs are putting into creator economy startups.

Crunchbase News defines the creator economy as:

"Loosely, the creator economy encapsulates the industry of people who create online content and make money off it, independent of a third-party brand. That could mean posting dance videos on TikTok and getting sponsorship deals, reviewing beauty products on YouTube, or writing about current events for paying subscribers on Substack."

As the article chart below shows (click to enlarge), VCs have invested $637 million in creator economy startups this year, and funding will likely easily exceed 2021 levels.

So where is this money going?

The article says the main investment area is content monetization. In other words, anything that helps content creators make money.

We're about to field our 2n annual digital content creator survey as part of our ongoing creator economy research project. See last year's survey results here, 

We'll post this year's survey findings in the early fall. 

Visit our creator economy section for more on this topic. 

The Tilt's 2022 Creator Economy Benchmark Research Report

Started and run by content marketing expert Joe Pulizzi, we've found The Tilt to be a valuable source of information on the creator economy and content entrepreneurs.  

They just released their 2022 Creator Economy Benchmark Research report. Key quote on one of their key attitudinal findings on content creators:

"... 90% say they are inspired to create to achieve "financial freedom on their own terms."

This is consistent with our research on the creator economy.

But as the report chart below (click to enlarge) shows, many creators have a ways to go to achieve this goal. Only 51% of full-time content creators report earning enough to support at least one person.

Our favorite part of the report is their advice to content creators and would-be creators. Key report quote on the advice: 

Build an entrepreneur's mindset: Many creators view content as a passion project. In our experience — and according to the research — successful content creators are also effective business owners. These content entrepreneurs are savvy about finances, operations, sales, negotiations, and time management. Are you willing to learn quickly and devote at least half your time to these tasks?

Plan your runway: It will take roughly 17 months to become self-sufficient as a content entrepreneur. Do you have the support you need to weather that period?

Moderate your financial expectations: Do you want to become a content creator to get rich? Are you aiming for the million-dollar lifestyle? Or do you see the creator journey as a path to build a well-rounded life and satisfying career? Those who stick with the content creator path are not motivated primarily by money, but by the thrill of independence and control. Wealth isn't off the table; 19% of full-time content entrepreneurs tell us they earn substantial money and support multiple people.

Take a master class in monetization: The content creator's ability to monetize is the single biggest factor determining longevity and success. There are dozens of ways to monetize your efforts. Consider joining a class or community to supercharge your tactics.

Embrace Web3 channels and strategies: Content creators must build channels they own to ensure all their invested time and money cannot be pulled away overnight. This is a mission-critical activity for all creators regardless of longevity, profitability, or industry.

Anyone interested in the creator economy - including existing content creators, and those considering becoming content creators, will find the report useful.

We also recommend subscribing to The Tilt newsletter. It has excellent stuff on the business of content creation.