Zahir Khoja, CEO, Wave.
The creator economy has been a topic of discussion lately, with high failure rates for creator-focused startups along with reports of a slowdown in VC funding (registration required). But a bigger picture view suggests a couple of key challenges: An economic downturn inevitably changes consumer behavior, making it difficult for niche, creator-oriented startups to find their place. And, while there are an abundance of tools on the market right now that may provide some value, the majority fail to address the most pressing pain points creators face today.
Creators are the fastest-growing segment of small business, and 1 in 4 people worldwide contribute to the creator economy. Despite this enormous growth, financial literacy, cash flow and funding are widespread challenges among this cohort. How can businesses step up to better serve this audience? It begins with an acknowledgement that creators are small-business owners, and have needs distinct from everyday consumers. They will be a critical economic engine in the future, and must be regarded that way.
Address creators’ true pain points.
The top 1% of creators with massive followings dominate the news cycle and earn substantial wages from platforms like YouTube, but they don’t represent the vast majority. In fact, only a fraction of creators earn enough from major platforms to sustain themselves, and those who don’t require multiple revenue streams and access to funding to achieve long-term sustainability.
On YouTube, Forbes estimates that a creator might make $5 for every 1,000 video views, which simply isn’t enough when we consider the cost of living and inflation. Creators need a longer income runway and diverse revenue streams, so that if a recession hits, or a brand cuts their marketing budget, a creator’s income isn’t crushed by factors beyond their control. Offering other services, like virtual consultations, merchandise, freelance writing or design, content memberships and more can help “recession-proof” a creator’s business. The companies looking to serve creators who invest in understanding the complex realities of the 99% will be better set up for long term success.
One of the most rewarding parts of my job as the CEO is the opportunity to regularly meet with our customers, many of whom are content creators, to better understand their challenges and to ensure my company is keeping their needs in mind as we build new solutions. One creator I have worked with wisely shared that creatives get into their line of work because they’re passionate about their craft, but the business acumen is what keeps her viable. By making sure they use the right tools, bring in the right expertise and ensure they have more than one revenue stream, no single mistake should be able to sink them financially. This is why understanding audience needs and catering product offerings to suit creators’ real challenges is essential for any business serving this cohort to thrive.
It’s not all doom and gloom.
Despite reports of certain startups either failing or needing to pivot, the fact is, the creator economy continues to grow and evolve. An increasing number of individuals aspire to become creators—one study even found more than 27% of Gen Z youth in America plan to become social media influencers after finishing school.
I believe, given the move to remote work and the recessionary environment we’re in, the appeal of participating in the creator economy will only increase as creative types look for new ways to monetize their passions and gain recognition for their work.
One thing I’ve noticed is that the market is increasingly saturated with content. This provides creators the opportunity to focus on niche communities, which in turn, enables businesses to cater to these specialized creators and drive revenue. A recent Linktree report found that 62% of creators said that specializing has been helpful for their engagement—and I believe this trend will only grow.
In addition, my experience has shown that creators are resilient in the face of headwinds impacting the broader economy. Relying on content and ideas rather than selling physical goods can be a boon for creators during these challenging economic times.
Flexibility and adaptability to these shifting market dynamics will help businesses that cater to creators stay innovative. While my company focuses on money management, other businesses might be wise to consider other gaps in a creator’s journey–such as copyright protection, fraud protection and lending.
Where do we go from here?
Creators and creative entrepreneurs make up a large portion of many companies’ customer bases. Like any maturing industry, there will be challenges and opportunities.
Based on my experience, here are a few tips for those looking to fill these gaps:
• Recognize that this audience is more than what their titles might suggest; they’re digital-first entrepreneurs. In fact, they share many of the same challenges as other small-business owners, and should be regarded as such.
• Offer services that can add value to this group’s pursuits, such as access to capital and loans, simplified money management and business analytics.
• Don’t be quick to dismiss this group, and make an effort to understand their needs, unlike some decision-makers less entrenched in social media.
• Help your team view this audience through a more holistic lens by zoning in on the overlooked aspects of their pursuits. As a leader, this is critical.
Social commerce isn’t going anywhere, and creators represent a highly valuable segment for the fintechs and financial institutions that step up to serve them.
In summary, businesses can ensure their longevity by addressing creators’ most imminent needs and adapting to market realities. In this ever-evolving landscape, companies that cater to creators and their unique ecosystem will always find a place for themselves.
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