Is the Creator Economy Rigged? Tips to Level Up Your Game

The creator economy generates a lot of buzz. Even children want to get into this coveted industry! A Harris Poll/LEGO survey found that more kids want to be YouTubers than astronauts when they grow up. But do they know how to win in Creator Economy's Income Concentration Game?

And why not? Not only is it fun to make videos about your passions, but there’s a chance to make a serious income. The creator economy is currently worth over $100 billion, and it’s generating more revenue day by day. Although the digital creator economy is relatively new, it’s currently showing a healthy growth of 48% annually, which is way above the U.S. economic growth of 9.1%.

Income Potential in the Creator Economy

Clearly, the creator economy is huge, there’s one perk. Additionally, it seems as though online platforms shower their creators with an exorbitant amount of money. For example, Google has paid out over $30 billion to creators in just the last three years, Facebook $1 billion, and TikTok pledged $200 million toward their creator fund.

And then there are the top earners on each platform. The top 5 YouTubers make between $28.5 million (Unspeakable) and $54 million (MrBeast) and the top 5 TikTokers make between $5 million (Josh Richards) and $17.5 million (Chris D’Amelio). On Instagram, creators can make up to $4,000 per month just from Reels!

It’s no secret that a six-figure salary is possible in the creator economy. However, it’s way less common than you might think.

Most Creators Struggle to Pay the Bills

Why do most creators struggle to pay the bills in an industry that appears to have limitless potential? Our research tells us that less than 4% of creators make enough to “quit their day job” and be full-time content creators. Furthermore, a minuscule 3% of YouTube creators earn enough to rise above the 2022 U.S. poverty line of $13,590.

A minuscule 3% of YouTube creators earn enough to rise above the 2022 U.S. poverty line of $13,590.

Many creators were excited to hear that their favorite platforms, like TikTok, launched creator programs. In these programs, the platform will directly pay users who make popular or viral content. Unfortunately, the creator fund payouts have been a bit disappointing to many users.

TikTok users who amassed hundreds of thousands of views per post earned only a few dollars for each video. Unfortunately, they are unable to get answers from the platform because TikTok isn’t clear about how it distributes money from the creator fund to actual creators.

Extreme Income Concentration and inequality

This creates income inequality within this blossoming economy. The disproportionate majority of total advertising revenue and creator fund budget goes to the very top creators. This is analogous, but much more extreme, to how the top 10% of the richest people in the United States own the majority of the nation’s wealth (70%).

Most platforms don’t disclose their user statistics, but some relevant data is available and illustrating the creator economy reality:

• Less than 10% of YouTube channels have over 1,000 subscribers – the minimum number of subscribers needed to qualify for content monetization. This means that only 10% of YouTube channels make 100% of all creator ads earnings on that platform. Further research suggests that the top 1% of channels account for 60-70% of YouTube viewership and earnings.
• At Twitch, recent data shows that the top 1% of earners take home 60% of money earned on the platform, and the top 10% of earners are estimated to take home 80-90% of all earnings. Only 5% of Twitch users made more than $1,000 in 2021. This even excludes all accounts that didn’t produce earnings.
• At Gumroad, the top 1% of creators earned about 60% of all earnings in 2020. And top the 10% took home about 92% of the total earnings.
• In the world of podcasting, the top 1% of podcasters see 99% of all downloads and revenue.

Compare this to South Africa, the country with the highest income inequality in the world, where the top 1% of earners take home almost 20% of the wealth and the top 10% of the richest people own 65% of the wealth. Clearly the income inequality in the creator economy is much more extreme than in the country with the world’s largest income disparity.

Clearly the income inequality in the creator economy is much more extreme than in the country with the world’s largest income disparity.

You might be thinking that it’s unfair to compare the creator economy to entire countries, so let’s compare it to the film industry: In 2021, the top 1% of movies earned 27% of all domestic box office earnings while the top 10% of movies earned 85% of all earnings. The creator economy still proves to have the most extreme concentration of income.

Reasons for Income Inequality in the Creator Economy

Our research tells us that there are four factors driving inequality in the creator economy:

1. The Economics of Superstars

The Economy of Superstars is a phenomenon that occurs when a very small number of people dominate their fields. Simply said, people tend to gravitate towards the perceived “best of the best” to consume what so many others already know and love.

2. Platform Preferences

Platform algorithms appear to push traffic toward known creators with already high engagement rates. For example, 70% of YouTube content is delivered to fans by the algorithm. This makes it difficult for new or smaller creators to break through and gain popularity.

3. Low content distribution costs

Low content distribution costs make it very easy for a favored creator to ship content to an unlimited size of audience. Meaning, they don’t have to pay to send their content across seas or reach millions of people. They just have to hit the “publish” button.

4. Low entry barriers

Extremely low entry barriers coupled with a global scale create a super competitive environment and seemingly endless pool of talent. In other words, there are a ton of people competing for the same audience.

Although these four reasons for income inequality are here to stay, there is still hope for creators who want to make it big.

Overcoming Adversity as a Content Creator

How do you stand out as a content creator, increase reach, maximize engagement, and make more money? It’s possible!

There is a lot of debate and some very good arguments for making change. However, almost all potential solutions call for content sharing platforms to change how they operate. As a creator, should you bet your future on the hope that these platforms will change their established models? No.

As a creator, should you bet your future on the hope that these platforms will change their established models? No.

At CRREO, we believe that every creator should focus on what they can do to succeed in this environment rather than hoping that platforms will adjust accordingly. Build a successful creator career or business with what you can influence. CRREO is here to help.

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