The creator economy is failing to spread the wealth
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The creator economy was supposed to democratize media, but it turns out that a small portion of creators still reap the most revenue for their work across multiple platforms.
Why it matters: New tipping and micropayments features will hopefully make it easier for smaller creators to get paid. But for now, much of the creator economy is still supported by pricier subscriptions, forcing consumers to be selective.
Driving the news: Data revealed as a part of a massive Twitch hack last week found that this year the top 1% of all streamers earn more than half of all revenue on the platform, per the Wall Street Journal.
- Video: While a handful of creators have made substantial money, the vast majority of earners on Twitch have made less than $120 this year so far, per the report.
- Newsletters: The top ten publications on Substack collectively make more than $20 million a year in subscription revenue, while less popular newsletters typically make tens of thousands annually.
- Podcasts: The top 1% of podcast earners make the vast majority of podcast ad revenue, although efforts to broaden podcast revenue through new creator programs at Apple and Spotify will hopefully help more creators get paid.
- Social: A report from TechCrunch last month found that Twitter's new "Super Followers" feature, which allows people to tip their favorite creators, only brought in $6,000 in its first two weeks.
The big picture: What's happening now with the creator economy mirrors all of the previous waves of digital media economies built before it via social media, blogging and websites.
- New platforms have long offered hope of empowering smaller voices, only to see the top creators reap the most benefits.
- Internet theorist Clay Shirky famously dubbed this phenomenon the "power law distribution" in 2003.
The bottom line: "In systems where many people are free to choose between many options, a small subset of the whole will get a disproportionate amount of traffic (or attention, or income), even if no members of the system actively work towards such an outcome," Shirky wrote.
- "This has nothing to do with moral weakness, selling out, or any other psychological explanation. The very act of choosing, spread widely enough and freely enough, creates a power law distribution."
What to watch: The same phenomenon is happening today in the news media. While bigger publications like The New York Times, The Washington Post and The Wall Street Journal attract millions of digital subscribers, smaller regional papers are struggling to keep up, despite offering a differentiated product.
