The Creator Economy: A Reality Check

"The internet gave everyone a voice… and now the Creator Economy is charging us rent for using it." - Bo Burnham

I’ve never started a project with the primary objective of making money.

The driving force has always been to make something new.

That’s why we’ve never taken outside investment.

Everything has been bootstrapped.

No strings. Full control.

I can (usually) figure that part out later once the project is up and running.

I’m not saying this is the best way. It’s not for everybody.

With Yoga With Adriene, we had no external funding, no fancy equipment, just a shared vision for what we wanted to create.

For the first few years, the cash was only flowing in one direction - out.

We kept making new videos every week. But at the same time we were experimenting and exploring and figuring out how this might work as an actual business.

While we waited for ad revenue to slowly increase, we created and launched paid courses, we sold t-shirts, we held live events and eventually we built our own SVOD service. Looking back, these decisions were not only critical for growth - it was an invaluable learning and growth experience for both of us.

Creation first.

Cashflow second.

This is how my mind has always worked. And it’s the same for a lot of Creators that I meet. They’re in it for the love of the game, creating because they are driven to do it. They’re figuring out the money as they go.

These are my kind of people.

Unfortunately, this mindset is easy to exploit.

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What are we talking about when we talk about the “Creator Economy”?

"The Creator Economy is great in theory, but in practice, it often leads to a winner-takes-all market, where a small fraction of creators capture the majority of attention and income." - Li Jin (Founder, Atelier Ventures)

I don’t know when the term “creator economy” became so prevalent. I am willing to wager that a creator didn’t come up with it. We do know that YouTube started using the word “Creator” in 2011 because they didn’t like the sound of the word “YouTuber.” The “Creator Economy” termed pick up a lot of velocity once venture capital started entering the space. Over $2 billion has been invested in Creator Economy start-ups (platforms like Substack, Teachable, etc.).

It probably sounds great in a pitch deck.

The Creator Economy is estimated to be worth over $250 billion globally. This includes revenue from platforms like YouTube, TikTok, Instagram, and Patreon, as well as platform subscription fees, brand deals, merchandise, and direct audience monetization.

At first glance, it seems amazing: a way for creative people to do what they love and make money doing it. This is the dream.

But an economy is a system comprised of the production, distribution, and consumption of goods and services. Let’s break this down in creator terms:

1. Production: Creators. These are the people creating work for audiences to engage and connect with. Creators usually start because they want to make and share something with the world. Over time, some build businesses via ad revenue, brand integrations, selling products, etc.

2. Distribution: Corporations. These are the companies that make the platforms to distribute content and the tools creators use to build a business. This is where the vast majority of the money is made. Whether through companies buying ad space, creators paying to use platforms, or agents brokering deals, this is where most of the money is.

3. Consumption: Audience. These are the people who engage with the content usually via corporate platforms and tools. The audience pays with attention, which is monetized via advertising and sponsorships. Sometimes, they also buy products, but the real value is their attention.

"The Creator Economy is a myth for most. Platforms like YouTube and Instagram rake in billions, while creators struggle to make ends meet." - Scott Galloway

Ultimately, the system depends on the audience’s attention and the creators’ willingness to create. The attention drives the entire ecosystem.

The attention and the money flow upward.

The bulk of it ends up with the corporations.

None of this is inherently bad, but it’s important to distinguish between these layers. We’re all part of this ecosystem, but our interests aren’t always aligned for mutual benefit.

Recent studies show that while creators contribute billions of hours of content, the platforms hosting them often take the lion’s share of the profits. For example, YouTube is by far the best platform for direct creator monetization and even they take 45% of ad revenue, leaving creators with just 55%. When you factor in production costs, the creators often end up with far less than what their content is worth in terms of generated attention.

There are over 50 million content creators worldwide. This includes professional influencers, streamers, YouTubers, podcasters, bloggers, and other creators who monetize their content. Of these 50 million creators, only 2 million make a full-time living.

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The Rise of the Hyphenate

"I put every bit of my creative energy into my business, just like I do my movies, because I believe they are extensions of each other." - Tyler Perry

A 2023 study by Influencer Marketing Hub found that only 10% of creators earn enough to support themselves full-time. This highlights one of the key challenges in the creator economy: it's tough to make an actual living. Those who do break through often become hyphenates. They have learned to combine various skills or jobs (e.g., content creator, entrepreneur, marketer) to grow and sustain their business.

You may have started out as a YouTuber or Instagram influencer, but before you know it you’ve got an actual business.

Now you’re a creator-entrepreneur.

Before you know it, you’re a creator-celebrity-CEO.

I used to call myself a writer-director. That evolved into writer-producer-director. Now I’m more of a producer-entrepreneur. But I’ve always had a hyphen.

And you probably do, too.

To truly succeed, you have to become more than one thing.

I never expected to know as much about business as I do now. And I never would have expected to enjoy it as much as I do.

Navigating the creator economy requires ongoing personal evolution. To get to a certain level, it’s no longer enough to just create, you also have to develop business skills, build your brand, and leverage your creative work to sustain yourself.

The problem is that it’s difficult to find accurate resources and information on how to navigate this new economy.

The Corporate layer depends on the ongoing work of creators. They also depend on the fact that creative people love what they do and will do it for pennies on the dollar -if necessary.

Just like rich people benefit from poor people not really knowing how money works, these corporations benefit from Creators not really knowing how the whole ecosystem works. They may pretend otherwise. But keep in mind, your “buddy” who’s negotiating a great brand deal for you is working a day job. They’ve probably got a great salary, health insurance, stock options, and other benefits. As an independent Creator, you probably don’t have any of these things. They will continue to get a paycheck no matter what happens with the deal.

Your goals are not mutually aligned.

I made a decision in the early days to look at other Creators as allies rather than adversaries. I wanted to help wherever I could. Because of this decision, I’ve built a close-knit group that has been exchanging knowledge and experiences for years. This has been invaluable, not just for business growth but for emotional sanity.

The writing I publish here is a continuation of that desire to connect and share with other creators.

We may all be in the same industry, but there is plenty to go around.

Let’s continue to explore this new world together.

And let's have each other's back.

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PS - This is more of a conceptual/mindset piece than I normally write. This is an attempt to articulate something that has been on my mind for awhile. In the future, I will continue to pull on this thread and see where it takes me. I’d love to know if any of this resonates with you. Even if you disagree with me! Do you consider yourself a hyphenate? How do you label yourself?

Next time I’ll be back with more stories from behind-the scenes. In fact, I just got back from a trip to Austin where we were in production on a bunch of new videos at our production HQ.