Can you make a living in the creator economy?
Before going any further, it is important to make the difference between the creator and the influencer. Of course, there’s an overlap between the two – both post content on YouTube, TikTok, Instagram and other platforms. But creators are generally more aligned with artistic interests. They primarily manufacture a good, service or content for their audience. An influencer, on the other hand, aims to influence their audience through content, as they often earn money through brand partnerships or by referring subscribers to certain products.
Over the past decade, it’s become much easier for creators – visual artists, writers, musicians, comedians, artisans – to connect directly with consumers who want to support their work. (Full disclosure, I’ve been a combination influencer and online creator for nearly a decade. It started as a blog, which led to four book offerings, speaking engagements, courses, and a newsletter.)
The creation of Etsy feels like an early change in the tide where suddenly anyone could sell a product directly to consumers. You weren’t confined to one geographic location or one flea market or gallery. You can set your own prices. Sure, Etsy took a slice, but it sparked a sense of entrepreneurship in an evolutionary way.
Today, there are many options to monetize your skills without the need for the support of a large company. Newsletters can pass behind paywalls via platforms such as Substack, Ghost or even ConvertKit. Podcasters, musicians, comedians, YouTubers and anyone else can create a Patreon or Buy Me a Coffee account to encourage their community to financially support their work.
But making a living from these platforms is the conundrum for most creators.
Substack, for example, states that it typically expects 5% to 10% of free subscribers to convert to paid subscribers. Creators have control over pricing, but charging $5-$7 per month for a regular newsletter seems to be the norm. Keep in mind that $5 from a paying subscriber dilutes to $4.05 after Substack’s 10% discount and the payment processor’s 2.9% + $0.30.
At first glance, it seems to be lucrative. You get 500 people to become paid subscribers and you could see $2,025 per month after fees but before taxes. Depending on the amount of output generated by a creator, this could be a pretty penny for a minimal amount of work.
Personally, that has not been my experience. Despite average open rates above 50% for my free newsletter and a low unsubscribe rate, the conversion from free subscriber to paid subscriber is far from 5%. Granted, it’s not even two months old, but so far I’ve been putting in a lot of work (two newsletters a week) for little money. And I’m not the only one suspicious of the 10% conversion claim to paying subscribers. It is also true that there are Substack superstars who can rake in thousands of dollars a month from paid subscribers.
Most creators know that it will take more than one stream of income to create a sustainable life. This could mean multiple streams of income within the creator economy or having a more stable day job to subsidize other projects.
Patreon released a 2022 “Creator Census” with responses from 13,000 of its creators. Respondents said they earned an average of 41% of their income on Patreon. The remaining 59% was sliced and diced between teaching/coaching, touring, brand partnerships, book sales, merchandise, ad revenue, other platform subscriptions, digital downloads , commissions and “work related to my creative activities”. My personal revenue stream pie chart would include most of these slices.
Creators need to understand that an immense amount of work on a creative project may not bring in all of your income, let alone make you rich. Having a quality product, being consistent, being an early adopter, and being lucky seem to help the most in earning enough to climb to the top. All these hours of creation can lead to other opportunities. But in today’s creator economy, you have to be prepared for what will happen if they don’t.
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This column does not necessarily reflect the opinion of the Editorial Board or of Bloomberg LP and its owners.
Erin Lowry is a Bloomberg Opinion columnist covering personal finance. She is the author of “Broke Millennial”.
More stories like this are available at bloomberg.com/opinion