February 6, 2023
The Creator Economy has seen explosive growth in recent years, with content creators of all types leveraging the power of digital platforms to expand their audience, build engaged communities, and monetize their content. In fact, the Creator Economy passed the $100 billion mark last year and is poised to hit $150 billion in the next 18 months. This rapid growth has attracted the attention of investors and entrepreneurs alike, and the industry is evolving at a breakneck pace.
As we look ahead to 2023, content creators are eager to understand what the future holds for their industry. That's why we've put together this blog post - to provide insights into what to expect from the Creator Economy in 2023. In this post, we'll take a look at six key trends and developments that we predict will shape this year. While a lot of media attention goes to high profile creators like Mr. Beast or Charli D’Amelio, we see these creators as outliers that could be immune to the changes that affect most creators. In our predictions, we'll be focusing on the average creator, and how they can adapt to the changing landscape of the Creator Economy.
Creators who rely on sponsored posts for their only source of income may find themselves struggling in 2023. As the creator economy continues to grow, so does the number of content creators vying for sponsorship deals. Over the past few months, as many creators have already started to notice, recession warnings are causing brands to slash their influencer marketing budgets. As a result, there is less money available to pay creators for sponsored content. With a higher supply of creators and a lower demand for deals to be made, simple economics indicate that creators will start rethinking their reliance on sponsorships.
The writing has been on the wall for some time, but corporate austerity measures are adding fuel to the fire. Last year, 68.8% of creators reported that brand deals are their highest earning source. However, despite this, there are not a lot of opportunities for earnings, with 80.7% of creators posting fewer than 30 sponsored posts, often at lower rates than prior years. By the end of this year, it’s still likely that sponsored content will remain broadly the highest earning source, but this is because of large outliers earning tens of thousands of dollars per post. We predict that sponsored posts will be the primary source of income for fewer creators, as smaller creators are forced to explore alternative revenue streams to pay the bills.
Creator funds are programs that aim to compensate creators based on their performance metrics. While the premise sounds great, the process by which payments are decided is often a black box, which can lead to questions about fairness and transparency. Despite this, creator funds have been adopted by most major platforms in the past few years. Platforms such as TikTok, YouTube, Snap, Pinterest, LinkedIn, and Clubhouse all have their own versions of creator funds.
Over the last few years, the number of participating creators on each platform has grown significantly, while the funds themselves have remained stagnant. This means that the maximum amount a creator can earn from these funds is slowly decreasing, despite growth in their audience. While some creators have been able to generate significant revenue from these funds, it’s becoming clear that relying solely on them is not a sustainable long-term strategy. Recently, in August of 2022, the Spotify Greenroom fund, which was created to pay live audio creators for their content, was shut down.
Perhaps the most well-known creator fund is the TikTok Creator Fund. In a YouTube video by Hank Green, he revealed that his earnings from the TikTok Creator Fund were cut in half in only a year. He pointed out that he was earning only $0.025 per 1000 views and argued that creator funds "are dramatically under-paying creators.” Many creators often feel that the TikTok Creator Fund actually even suppresses their videos, as the algorithm seeks to minimize the amount the company would have to pay out.
Green emphasizes that this is a paradoxical situation where the more successful TikTok becomes, the less successful TikTokers become. Ultimately, this is how all creator funds work. They incentivize the creator to make the platform more successful, but the incentives decrease over time, resulting in an untenable earnings source for creators.
As the creator economy continues to expand and evolve, it's becoming increasingly apparent that brands are recognizing the value in becoming their own influencers. While many brands have traditionally relied on influencers to promote their products and services, more and more are now realizing the benefits of having a distinct personality on social media.
In fact, we're already seeing some great examples of this. Take Duolingo, for instance, which has amassed a huge following on social media thanks to its playful, irreverent approach to language learning. Or consider the ongoing Twitter wars between fast food brands, which have generated tons of buzz and engagement online.
As we look to the future of the creator economy, it's likely that brands will continue to invest in building out their social media presence, with some even dedicating entire departments to internally-generated content. This could include anything from social media managers and full-time content creators to videographers and graphic designers.
Of course, all of this is contingent on the economy stabilizing by the end of the year. If the current trends continue, it's possible that we could see more brands scaling back on their marketing budgets, rather than investing heavily in social media content. However, for those brands that do choose to go all-in on their social media strategy, the potential rewards could be significant. By creating a strong, authentic presence on social media, brands can engage with their audiences in new and exciting ways, building deeper connections and driving increased brand loyalty.
As the Creator Economy continues to grow, diversification of earnings is becoming increasingly essential for creators. A recent Forbes article argued that creators will need to start generating revenue through multiple sources in order to succeed in the future. This diversification of earnings is even more critical now, as the market for sponsored posts is becoming more challenging to navigate due to recession fears and an increasing number of creators competing for a limited number of deals.
Creators can diversify their earnings by developing their own physical or digital products, courses, advising sessions, and affiliate links. These options will require more work on the creator's part, but it can provide a more stable income in the long run. With earnings diversification comes platform diversification. Creators should rely on multiple sources of income from multiple platforms, so they aren’t dependent on any one particular company. This is especially a concern for TikTok creators, which has been under on-again, off-again regulatory scrutiny for several years.
When evaluating new platforms, creators will also be more considerate. Creator economy venture capitalist Li Jin advises creators to focus on no more than seven channels to keep work manageable. It’s important to maintain a consistent brand, even if the style of content distribution changes. Gone are the days when creators hop on a new trend and expect to succeed (cough, cough, NFTs). This is not to say that new trends never work. NFTs represented a great opportunity for some creators, so long as they understood the digital product and were able to provide real value. Going forward, creators will adopt technology that is intuitive to them and will be consistent with their personal brand and creative direction.
It is also important to note that the number of professional creators is expected to rise quickly. While only 4% of creators currently see themselves as professionals, that number is expected to increase, even as more casual creators enter the market. In a 2022 year-end podcast, TechCrunch editor Alex Wilhelm once again contended that “the passion economy is unsustainable,” arguing that no one talks about creators anymore. Through a diversified and thoughtful approach, more and more creators will be able to dive full time into their content careers and retake their position at the forefront of online engagement.
In recent years, creators have been taking back creative control, and one emergent trend that reflects this is the rise of creator-led communities. According to an Influencer Marketing Hub survey, over a third of creators (35.3%) say that creating the best content they can is their top priority, and they are seeking a more direct line of contact with their audiences. As a result, communities are becoming increasingly essential for creators who want to connect with their fans.
As we discussed in a separate blog, the power of communities cannot be underestimated. For creators, communities provide an opportunity to build a loyal following, engage with fans, and receive feedback on their work. Communities can turn an audience into passionate supporters and advocates for their work.
Audiences, too, are looking for deeper connections with creators. According to the same IMH survey, 34.9% of creators report that connecting with their audience is their top priority, and fans are increasingly seeking out authentic and meaningful interactions with the creators they admire. Creator-led communities provide a way for audiences to get to know the person behind the content, and to feel like they are part of something bigger.
In conclusion, as creators seek to build deeper connections with their audiences and take back creative control, the trend of creator-led communities is set to grow. For creators, communities provide a valuable way to engage with fans, receive feedback, and diversify their earnings. And for audiences, communities provide a way to connect with the creators they admire and become part of a larger movement. We predict that creator-led communities will see the strongest adoption across all platform types in 2023.
After developing a deep trust in creators, users are becoming more willing to reward them for their authenticity. The previous few years have seen a growing distrust and skepticism in the existing media environment. Social media users often turn to creators, rather than media outlets, for an understanding of what’s going on in their lives. Now, users are making direct rewards to creators, often through tipping, subscriptions, and merchandise orders. This isn’t only true in educational content fields, but in entertainment as well (hello, OnlyFans). Creators are taking this opportunity to monetize their following directly, rather than through advertising or affiliate links.
This is especially good news for micro creators who have built a loyal following by consistently providing valuable content. As creators continue to focus on building authentic, meaningful connections with their audiences, users will be increasingly willing to reward them directly for their hard work and dedication.
Despite the challenging macroeconomic environment, US consumers have proved resilient and continued to demonstrate their willingness to invest in creators they trust. This trend towards user-supported content creators is likely to accelerate in the coming years. As more creators focus on building communities and fostering direct connections with their audiences, users are becoming increasingly engaged and invested in their favorite creators.
User support is particularly abundant in content niches, where authentic creators have proven to be a reliable source of information and advice. Creators with a focused subject provide much more than entertainment value, as their content often includes actionable steps that make users better off.
Like we’ve seen in the last few years, the creator economy is destined for shake ups in 2023. It’s an imperative that creators stay informed and adaptive going forward. We encourage creators to take a close look at what’s worked for them in the past, what’s working for them now, and what they want to work for them in the future. This deliberate approach will help creators craft a sustainable decision-making process that will help grow their content careers. Creators should feel empowered to approach content how they want to, rather than sacrifice their content for earnings.
At Sute, we are committed to supporting entrepreneurship, careers, and financial literacy oriented creators, and we invite you to join our community and connect with like-minded individuals who share your passions and goals.