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By every indication, 2023 is shaping up to be a difficult year for the creator economy, but not a hopeless one. VC investment in Q4 of 2022 was down 79% from the same period in 2021; social media platforms have dramatically slashed their programs for creators; brands are curtailing their spending, particularly with mid- to lower-tier creators; and creator tech platforms have been cutting costs. It’s a confluence of events that would lead any rational person to think things are bad and only getting worse.
That might be the case this year, but most creators don’t spend their days thinking about the macroeconomic headwinds the industry is facing. Most are focused on the reason they wanted to enter the space in the first place—creating something engaging and interesting for their communities to enjoy.
The notion that many creators are focusing on doing what they love instead of sacrificing themselves at the altar of virality may be a bit of a platitude, but it’s logical when you consider everything creators are going to have to contend with this year. It takes a tremendous amount of resiliency, confidence and experimentation to become a successful creator, and the most successful have had to adapt over many years.
With that in mind, I suggest the difficult times in 2023 will serve as a catalyst toward significant maturation of the space: Actions in the industry will force reactions from creators and ultimately shape what the industry will look like for many years to come.
The creator economy is no longer the darling of the VC space. The shift happened quickly, as many VCs focused their attention on Web3, crypto and, more recently, generative AI. With 79% less money floating around, platforms, networks, agencies and tech companies are going to have to do more with less and retrench in terms of value they provide. Simply put, many of these organizations will not make it, but the ones that do will be stronger, better suited to solving real problems and providing direct monetization opportunities.
Every major social media platform has made cuts to their creator programs under the guise of austerity measures, but the truth is these platforms and their underlying business models were always directly at odds with the sense of engagement and community most creators hope to foster. The lack of these programs, coupled with algorithmic shifts, platform toxicity, monetization policy changes and arguments over check mark color, will continue to make it harder for even the most popular creators to make money simply by posting. I wouldn’t expect these programs to be reinstated until the platforms themselves start to see a measurable impact on the traffic they need to maintain their advertising ecosystem, and even then it will be a hollow gesture.
Most brands and their agencies have already begun tightening their belts, particularly as it relates to speculative spending with emerging creators. With 46.7 million people considering themselves creators, there has always been an extremely long tail, but we’re going to see the earning gap grow even wider as brands make fewer bets with better known creators to reduce their risk.
There is one caveat here, as I strongly believe career-adjacent creators—say, a real estate agent by day, TikTok star by night—will see significant growth, akin to the growth we’ve seen in the media space with b-to-b publications. With fewer brand dollars floating around, creators with the highest gravity will likely end up with a larger portion of the spend.
While the wild VC spending of 2021 has, in large part, come to a sobering conclusion, the platforms focused most acutely on creator empowerment and community engagement will continue to thrive. The lack of lofty valuations and frothy raises will create space for influential creators to become founders, partners and investors in platforms, further deepening their equity in the industry and guiding product development in a creator-centric direction.
Even prior to social media platforms curtailing their creator programs, building your business exclusively on their land meant you would be renting the relationship with your audience versus owning it. The end of these programs clearly signals to most creators that their contribution is being devalued and the strong foundations they felt they had built are beginning to erode. This, coupled with the ramped up toxicity, white noise and unpredictable algorithm shifts, will prove to be the final straw for many creators who look to create enduring businesses (and data) that they control. It’s unrealistic to think that creators would abandon their primary social platforms, but the shift we are seeing clearly indicates that the savviest creators are using them as top-of-the-funnel marketing opportunities designed to drive fans to experiences the creator owns and more directly monetizes.
The concept of ownership will continue to be paramount for most creators, particularly as the low-hanging fruit presented by brand sponsorship dries up. Someone like MrBeast has proven you can successfully cut out the middleman by leveraging the affinity of your community to sell products or merchandise that you have created versus those you’ve endorsed. In 2023, we should expect to see a significant growth in creator direct-to-consumer executions and platforms that support those efforts.
The ecosystem is complex, but the theme for 2023 is simple: With fewer resources, creators, technologies and brands will be forced to evolve quickly. For platforms, it means retrenching in your mission to empower creators; for brands, it means rethinking the notion of quality versus quantity; and for creators themselves, it means taking ownership and getting back to what you love, even if it means ignoring the headwinds.
For marketers, particularly those with the agility to capitalize on the rapidly changing landscape, 2023 will present several opportunities. The largest creators will continue to attract the lion’s share of the conservative bets placed in the creator space, but fan identification and loyalty toward those creators in the meatier part of the bell curve won’t change. That earnings gap means there will be significant opportunities for strategic partnerships focused on quality.
On the platform level, that same trend is likely to continue. Marketers who focus on adding value to private creator communities on platforms like Discord, versus extracting it via brand placement on traditional social channels, will likely see an attractive return on investment and the opportunity to create much more enduring affinity with those audiences.
Ultimately, as speculative VC and brand money stays on the sidelines during this evolution, many marketers will come to the realization that by empowering creators to bet on themselves, they can have an outsized impact in the space and manifest opportunities that would have taken years in a more bullish environment.