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The creator economy has undergone serious development. Social media and the rise of websites to paywall or sell works have made it possible for anyone to become a creator. It’s hard to understand how much the sector is really worth, but some put it at around $20 billion and growing fast.
However, given the amount of work that goes into building and monetizing an online community, it’s worth asking: is it possible to make a sustainable living in the creator economy?
Before we go any further, it’s important to distinguish between the creator and the influencer. Of course, there is some overlap between the two — both post content on YouTube, TikTok, Instagram, and other platforms. But creators tend to be more geared towards artistic interests. They primarily make a good, service, or content for their audience. An influencer, on the other hand, aims to influence their audience through content, as they often make money through brand partnerships or by referring followers to specific products.
Over the last decade, it has become much easier for creators – visual artists, writers, musicians, comedians, crafters – to connect directly with consumers who want to support their work. (Full disclosure, I’ve been a combination influencer and online creator for almost a decade. It started as a blog that grew into four book deals, speaking engagements, classes, and a newsletter.)
The creation of Etsy feels like an early reversal where suddenly anyone smart could sell a product directly to consumers. They weren’t limited to one geographic location or flea market or gallery. You could set your own prices. Sure, Etsy took a cut, but it unleashed a sense of being entrepreneurial in a scalable way.
Today, there are numerous ways to monetize your skills without needing the backing of a big company. Newsletters can go behind paywalls via platforms like Substack, Ghost or even ConvertKit. Podcasters, musicians, comedians, YouTubers, and anyone else can create a Patreon or Buy Me a Coffee account to encourage their community to support their work financially.
But actually making a living from these platforms is a mystery to most developers.
For example, Substack states that it typically expects 5% to 10% of free subscribers to convert to paid subscribers. Creators have control over pricing, but charging $5 to $7 per month for a regular newsletter seems to be the norm. Keep in mind that $5 from a paying subscriber is diluted to $4.05 after Substack’s 10% cut and 2.9% + $0.30 from the payment processor.
On the surface, that sounds like it could be lucrative. You get 500 people to become paid subscribers, and you might see $2,025 a month after fees but before taxes. Depending on how much output a creator generates, that can be a tidy sum for a minimal amount of work.
Personally, that’s not my experience though. Despite average open rates of over 50% for my free newsletter and a low unsubscribe rate, the conversion from free to paid subscribers is nowhere near 5%. Granted, it’s not even two months old, but so far I’ve put in a lot of work (two newsletters a week) for little money. And I’m not the only one suspicious of the 10% conversion to paid subscribers. It’s also true that there are Substack superstars who can rake in thousands of dollars a month from paying subscribers.
Most creators know that it takes more than an income stream to create a sustainable livelihood. This could mean multiple streams of income within the creative economy or having a more stable day job to subsidize other projects.
Patreon published a 2022 Creator Census with responses from 13,000 of its creators. Respondents indicated that, on average, they earn 41% of their income on Patreon. The remaining 59% was split between teaching/coaching, touring, brand partnerships, book sales, merchandise, advertising revenue, subscriptions from other platforms, digital downloads, commissions and “a job related to my creative pursuits”. My personal income stream pie chart would include most of these segments.
Creators need to understand that putting in an immense amount of work on a creative project may not yield all of your income, let alone make you rich. Having a quality product, being consistent, being an early adopter, and having some luck seems to help the most in earning enough to climb to the top. All those hours of creation can lead to other opportunities. But in today’s creator economy, you have to be prepared for what happens when they don’t.
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This column does not necessarily represent the opinion of the editors or of Bloomberg LP and its owners.
Erin Lowry is a Bloomberg Opinion columnist covering personal finance. She is the author of Broke Millennial.
For more stories like this, visit bloomberg.com/opinion
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