Crisis in the creator economy

Everything You Need to Know About The Crisis in the Creator Economy

The creator economy finds itself facing significant challenges, but there’s still hope for improvement. Let’s discuss the transformation of the creator economy into something resembling the gig economy. However, we also pointed out that there’s an opportunity to reverse this trend and address the issues at hand.

 

About gig economy

The gig economy, while providing flexibility and breaking down geographical barriers, posed risks such as reduced worker leverage, income instability, lack of rights and protections, and a lack of autonomy. Gig platforms, with their network effects and control over customer data, often acted as gatekeepers to income for workers, potentially undermining hard-won worker protections.

The passion economy emerged as an alternative to the gig economy, emphasizing the creation of online audiences, direct user relationships, and monetization of skills, knowledge, content, and personalized services. Although broader than the creator economy, which primarily focuses on content creation, the two concepts overlap significantly. Creators in the passion economy leverage the tools of the creator economy to build audiences that can be monetized in various ways.

The appeal of the passion economy is clear: creators can reach a global audience with just an internet connection and as few as 1,000 or 100 true fansdedicated fans. Some creators are earning substantial incomes through brand deals, digital content sales, online courses, and more. In the US alone, there are now over 50 million online micro-entrepreneurs. Tech companies are also actively investing in the creator/passion economy, with major social media platforms launching funds, programs, and features to attract and retain creators. Many startups are emerging to serve creators and make it easier for them to earn a living.

Parallels between the gig economy and the creator economy.

Both involve the commoditization of work and the erosion of worker leverage. Large social media platforms act as gatekeepers for creators, offering valuable tools for content creation and discovery but also creating an imbalanced power dynamic. These platforms have transitioned from supporting creator individuality to commoditizing creators, ultimately undermining their success and independence.

Several startups aim to help creators establish independent online properties, increase income from dedicated fans, and reduce reliance on social media platforms. However, these solutions may be incremental, and they don’t address the fundamental issues of the creator economy, especially how creators connect with their communities.

To truly address the challenges of the creator economy, we must understand its evolution and risks. This article’s goal is to encourage the tech community to have a positive impact, empower creators to improve their situations, and urge founders to consider the needs of all stakeholders when building platforms that affect millions of users.

In both the gig and creator economies, we observe parallel issues and risks that have significant implications for workers and creators alike. These common challenges include:

Over-supply and Competition Between Creators

Similar to the gig economy, the creator economy suffers from an oversupply of content creators. Algorithmic feeds constantly present audiences with alternative content options, leading to the commoditization of creators’ content. This results in intense competition among creators to capture audience attention, ultimately leading to content devaluation. While creators aim to build audiences on social media platforms before transitioning to independent properties, moving their audience away from these platforms is a complex process that platforms resist facilitating.

The Exploitation of Creator Labor

Creators, much like gig economy workers, often find themselves in situations where their labor is undervalued and exploited. While some creators receive a share of the revenue generated from their content, they often lack a say in determining pay rates or monetization rules, leading to inequities. This exploitation parallels compensation practices in the gig economy, where workers can earn below minimum wage due to cost and risk-shifting by platform companies.

Insecurity and Volatility

Both gig workers and creators face job and income insecurity. In the gig economy, clients can terminate contracts at any time, and providers can be easily replaced. Similarly, creators are subject to audience fickleness, with users quickly switching to alternative creators if they are dissatisfied. Algorithms that drive social media discovery feeds can change abruptly, further contributing to job insecurity and volatility, which can lead to creator burnout.

         

Intermediation and Taxation

 Creator platforms often act as intermediaries between creators and their fans, giving them the power to determine compensation and monetization criteria. This lack of negotiation power for creators is reminiscent of gig workers’ inability to negotiate pay with platforms. Opaque monetization policies can lead to mistrust among creators. In some cases, creators have reported decreased visibility and audience reach after joining platform-sponsored monetization programs, raising concerns about intentional limitations on earnings. Additionally, the role of follower graphs and intermediaries in content surfacing can result in a lack of attribution for smaller creators or the withholding of earnings by intermediaries claiming to represent creators.

How do we build a healthier creator economy?

To build a healthier creator economy, several key principles and strategies should be embraced:

1. Ownership and Portability:

• Creators should prioritize owning a direct channel of communication with their audiences, such as email lists and RSS feed subscribers, as well as owning the direct monetization relationship with end users (e.g., through Stripe accounts).
• Establishing personal websites with self-hosted domains can help creators build more direct fan relationships.
• Empowering creators and users to have ownership over their data, relationships, content, identities, and interactions can reduce platform lock-in and shift power from platforms to participants.
• Consider community ownership and operation of software, which can involve token distributions or community engagement to confer governance rights. This approach aligns the interests of creators with the platform they co-own.

2. Credibly Neutral Creator Mechanisms:

• Build mechanisms that are credibly neutral, meaning they do not discriminate for or against specific individuals or outcomes.
• Key elements of credible neutrality include not writing specific people or outcomes into the mechanism, making execution open source and publicly verifiable, keeping mechanisms simple, and avoiding frequent changes.
• Apply the “veil of ignorance” thought experiment to assess policies, monetization mechanisms, funds, and product mechanics for fairness and impartiality.
• Platforms should aim for transparent and publicly verifiable algorithms and content moderation policies to maintain credible neutrality.

3. Creator-Friendly Business Models:

• Offer direct monetization models where users pay creators, encouraging creators to align their content with user preferences rather than focusing solely on watch time or virality.
• Explore various monetization models to support a diverse creator middle class, allowing creators to capitalize on superfans and earn passive income.
• Platforms should set take minimally extractive rates, ensuring that creators receive a fair share of their earnings.
• Consider turning stakeholders into shareholders by enabling creators and users to have economic and governance rights in the platform. This alignment of interests can lead to better decision-making and profit distribution.

4. Creator Interdependence and Solidarity:

• Encourage mutual support and cooperation among creators, shifting away from the competitive nature prevalent on centralized social platforms.
• Explore the concept of Creator DAOs (decentralized autonomous organizations), where creators with a shared mission can collaborate and govern collectively. These DAOs can facilitate shared decision-making, revenue sharing, and resource pooling.
• Consider the possibility of Universal Creative Income funded by DAO treasuries to support emerging and diverse creators, reducing reliance on traditional social media platform funds.
• Recognize that implementing these principles may be challenging for existing platforms, as they may disrupt their existing business models and network effects. New entrants with disruptive business models aligned with creator interests may be better positioned to adopt these principles.

What are some potential channels and methods to institutionalize the voice of creators within digital platforms, enabling them to have a more significant influence on governance and decision-making processes?

Strengthening the voice of creators within digital platforms is essential for creating a more inclusive and equitable creator economy. Several approaches and channels can be explored to achieve this goal:

Token-Based Governance: Drawing inspiration from decentralized finance (DeFi) protocols like Uniswap, Yearn, and Compound, platforms could implement token-based governance systems. Creators and users could hold tokens that grant them voting power over platform decisions, including policies, fee structures, and algorithmic changes. This approach ensures that those who actively contribute to the platform have a say in its evolution.

Public Feedback Mechanisms: Platforms can follow Twitter’s example by actively seeking public feedback on policy development and feature implementations. This open-call approach allows creators and users to provide input and suggestions, helping shape the platform’s rules and features to better reflect the needs and preferences of the community.

Advisory Boards: Similar to Airbnb’s Host Advisory Board, platforms can establish advisory boards composed of creators and users. These boards can serve as formal links between platform leadership and the community, participating in regular meetings and forums to present ideas, concerns, and recommendations. Transparency in the selection process of advisory board members is crucial to ensure broad representation.

Blockchain-Based Governance: Leveraging blockchain technology, platforms can implement transparent and decentralized governance models. Creators and users can participate in decision-making processes through blockchain-based voting mechanisms, reducing centralization and increasing transparency.

How can platforms be designed to address and mitigate creator anxiety and insecurity, particularly related to issues such as algorithmic transparency and economic instability?

Designing platforms with a focus on creator well-being and mental health is crucial for building a sustainable creator economy. Here are some strategies to consider:

Algorithmic Transparency: Platforms can increase transparency in how their algorithms work. Regularly communicating updates and changes to the discovery algorithm can help creators understand how their content is being assessed and promoted. This transparency provides creators with a clearer understanding of their performance and fosters a sense of control.

Mental Health Support Programs: Platforms can emulate the example of Streamloots by offering mental health support programs specifically tailored to influencers and creators. These programs can provide resources, counseling, and guidance to help creators cope with the pressures and stresses of their work.

Content Moderation Guidelines: Clear and well-defined content moderation guidelines can help creators navigate potential pitfalls and reduce anxiety related to content removal or demonetization. Providing creators with guidelines and resources for compliance can create a more supportive environment.

Economic Stability Measures: Addressing economic insecurity is vital for creator well-being. Initiatives like Universal Creative Income or the formation of creator cooperatives (DAOs) can provide creators with more stable income sources, reducing financial precarity and the associated stress.

What forms of online collective action can creators explore to advocate for their interests and concerns within the creator economy?

Creators can engage in various forms of collective action to amplify their voices and influence positive changes within the creator economy:

Strikes and Protests: Creators can organize strikes or protests to draw attention to critical issues and advocate for their rights. A coordinated effort can disrupt platforms and prompt them to address creators’ concerns promptly.

Online Platforms for Feedback: Platforms like FYPM, often referred to as “Glassdoor for influencers,” offer creators a platform to share reviews and feedback on their working experiences with brands and agencies. Such platforms help creators collectively expose unfair or exploitative practices.

Creator Associations and Guilds: Creators can form associations or guilds to collectively negotiate with platforms and brands, addressing issues related to compensation, fair treatment, and working conditions. These organizations can serve as unified voices for the creator community.

Social Media Campaigns: Creators can launch social media campaigns and hashtags to raise awareness about specific issues they face. These campaigns can garner public support and attract the attention of platforms and policymakers.

How might content discovery and distribution evolve in a post-social media platform world, and what role can creator collectives and bundles play in this evolution?

In a post-social media platform world, content discovery and distribution can undergo significant changes. Creators may rely less on centralized platforms and explore alternative models:

Creator Collectives and Bundles: Creator collectives and bundles can become important mechanisms for distribution and collaboration. Creators with larger audiences can support emerging ones by sharing audiences and resources. Platforms like “Every” offer both distribution and ownership opportunities, allowing creators to reach wider audiences while maintaining creative independence.

Word-of-mouth and Community Building: As creators gain independence from centralized platforms, they may prioritize community building and word-of-mouth marketing. Building loyal fan bases and strong communities can drive organic growth without heavy reliance on algorithm-driven discovery.

Decentralized Content Platforms: Decentralized content platforms and blockchain-based networks may provide creators with more control over their content and distribution. These platforms could prioritize content ownership, transparency, and equitable compensation for creators.

Specialized Niche Platforms: Creators may flock to specialized platforms and communities that cater to specific niches and interests, fostering a more engaged and targeted audience.

What is the future of the ownship economy?

Ownership is becoming a keystone across all categories of software products, but the playbook is still being written. The Web3 started as a developer phenomenon with layer 1 blockchains. But Chris Dixon predicted with his adage—“what the smartest people do on weekends is what everyone else will do during the week in ten years”—ownership is now extending to all kinds of products and networks.