What is the Creator Economy, and Why it Matters?

Traditional media has dominated the worlds of entertainment and news for a considerable amount of time. The majority of what most of us read, watched, and listened to was controlled by a relatively small number of media corporations.  This is when the creator economy is not yet part of the picture. 

The internet changed everything. Slowly, media decentralized. We now love consuming lots of online content, which traditional media companies do not control anymore. Much is written, spoken, or filmed by content creators. 

We earned the confidence to create our own material. Now, we make and distribute information outside traditional companies. Hence, the creator economy is a game-changer. 

In this article, you will learn: 

  1. What is the creator economy? 
  2. A brief history of the creator economy 
  3. How does the creator economy work? 
  4. Why does the creator economy matter?
  5. 4 ways to earn money in the creator economy 
  6. And many more… 

What is the creator economy? 

As the name suggests, the creator economy is precisely what it sounds like: an economy built by creators.

Many creators have a simple studio set up in their apartment or house. Although many of them have started building their own media companies, it is still common for content creators to film their content in the comfort of their homes. 

Even though the creator economy was barely established a decade ago, more than 50 million people worldwide consider themselves creators. According to a recent survey, more American children (29 percent) aspire to be a YouTube star when they grow up than an astronaut (11 percent).

It is important to note that the creation of the internet does not entirely correspond with the birth of the creator economy. It was a long period before people realized the internet's full potential. 

Indeed, you may compare it to Web 2.0, when the internet's fundamental paradigm shift occurred. After discovering new potential uses like social media and video-sharing, people started using it solely for storing information. The creator economy was born due to Web 2.0's abundance of ways for people to express themselves online.

Let us delve deeper into its history in the following section. 

A Brief History of the Creator Economy 

The birth of social media platforms 

Since the late 2000s, YouTube, Instagram, iTunes, Spotify, Snapchat, Twitter, Medium, Twitch, TikTok, etc., have emerged. Platforms solved creators' distribution problems by investing extensively in recommendation and curation systems.

Big production corporations no longer decide what content to make and who to target. These platforms helped Maker and Fullscreen grow. They gathered creators and gave them audience development tools before being bought for hundreds of millions. The platforms also required multimedia editing tools to refine their content material. 

Development of content monetization 

Some platforms shared traditional ad revenue with creators, while others left it up to them to commercialize, resulting in sponsored content and groups.  This industry includes influencer agencies, sponsorship markets, and others. 

Influencer marketing is expected to reach $15 billion by 2022, making it one of the fastest-growing business sectors. Influencer marketing became more popular, and more companies paid for it. 

Business opportunities for content creators

Fandoms that follow creators off-platform allow them to become full-fledged businesses with different sources of revenue other than advertisements. Creators can now make money by selling premium content, merchandising, books/ebooks/newsletters, or providing services such as coaching, consulting, speaking engagements, etc. 

Instead of being compensated with ad revenue shares from platforms like YouTube in exchange for bringing in an audience, creators are now being paid through brand sponsorship and collaboration. 

Their fans or subscribers also pay them in the form of tips in exchange for providing entertainment and community outside of the platforms themselves.

Now that you have a clear understanding of the history of the creator economy let us discuss how it actually works. 

How does the creator economy work? 

The basic idea that underpins the creator economy is not complicated at all. Create something, then utilize that content or product to make money, and you will have your mini-economy all to yourself.

You have complete control over the content material you produce online, which may be comedic videos, a blog, a vlog, music, yoga courses, or instructional videos. The list might go on forever.

After this, you will publish the content by sharing it on one of the creator economy platforms that are currently available. Some examples of these sites include YouTube, Instagram, TikTok, and online community platforms like Backspace

After posting your content, you can now monetize it, allowing you to make a potentially lucrative income.

One of the ways that the internet has transformed things is by making content accessible to a far broader audience. This meant that creators could start focusing on audiences that were even more specific to their niches.

The population of the United States sits around 33 million strong. Even if only 1/100th of a percent of that total turns out to be interested, there will still be 33,100 persons in the audience.

A single video generated with the camera on your phone might generate advertising revenue of $3,100 if just one percent of those people pay an average of ten dollars each to see it. This would be possible with just one video.

It is not difficult to envision the possibilities, which is perhaps why more than 50 million people are already participating in the creator economy.

Why does the creator economy matter? 

In this post-pandemic environment, determining where we are headed from here has simply sped up. People have become more ready to adapt to digital life, which has, in turn, provided a boost for content creators and increased community engagement

Because of this, we are beginning to witness increased opportunities, which will only continue to grow as time goes on. Some of these opportunities include the following:

  • Increasing the number of potential sources of income
  • There are now more ways for fans and creators to communicate.
  • Reducing the amount of time spent on social media and more on online communities
  • A more mutually beneficial relationship between creators and their audiences.

To put it another way, Web 3.0 opens up a whole new world of possibilities. Creators and their communities take center stage in a decentralized digital world.

4 Ways to Earn Money in the Creator Economy 

It is possible to generate money by creating content. Here are the ways how you can do it: 


Those awful YouTube ads pop up when you are in the middle of watching a video? They can be annoying, but they serve an essential purpose for content creators. 

YouTube offers a profit-sharing program to encourage content creators to include advertisements in their videos. When an ad is shown, both parties receive a portion of the money the advertiser pays for it.

Approximately $18 in advertising income will be generated for every 1,000 views, according to Influencer MarketingHub. A single video can easily garner over 100,000 views, equating to more than $1,800 in advertising revenue per video.

Consider that a single channel may post numerous video content per week, and it is easy to understand how a sizable sum might be earned.


People will be eager to pay a monthly subscription if you consistently provide high-quality material.

Subscriptions are not always required to view all of a content creator's work.

While some of their content is available to everyone, the "premium" stuff is typically locked behind a paywall. This serves as bait to entice visitors to purchase additional content.

There are a variety of subscription business models, including online communities like Backspace. 

Paid Sponsorship 

It is an excellent opportunity for brands and businesses to tap into a vast audience that many content creators have.

That is why brands offer paid sponsorship and collaboration to content creators relevant to their businesses. They ask content creators and influencers to create content that is beneficial to the company. 

The product and the sponsor's name can be mentioned while promoting a sponsored video. As a direct result, the brand's visibility will rise and the company's revenue.

If you have a significant following, you have the power to demand a lot of money from potential sponsors.

Live Streaming 

With the advent of live streaming, the creator economy has taken on new guises. One of the most effective ways for content creators to reach a broad audience is live streaming.

Anyone may create a Twitch account and begin broadcasting their gaming. Playing against people from all around the world is what most of these streamers do. Streaming superstars are few and far between, but most gamers are simply like you and me, who like playing online. 

They may not even be excellent players at all. Despite this, they attract millions of viewers. Why? Because their games captivate the attention of others. Their commentary and self-analysis sometimes interest viewers more than their skill at the game itself.

Build your career in the creator economy with Backspace! 

We feel that raising conversion rates requires strong community engagement. At Backspace, our goal is to facilitate the direct connection between the content creators and their followers or audience. By providing a platform for its followers, Backspace fosters a higher level of community engagement in the creator economy. 

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