While the impact of the pandemic on small businesses was severe, in many cases forcing companies to close, sometimes permanently, a surprising trend saw business formation in the US increase in mid-2020.
Entrepreneurship has soared as many unemployed creatives have sought out alternative, independent sources of income. And even in 2022, as the economy slows, entrepreneurship is on the rise.
We had a common experience, and with TikTok, we were able to express it with a very low barrier to entry.
—Samir Chaudry
Remote work increased everyone’s screen time, and the creator economy was bolstered by our collective isolation and need for connection.
It was the perfect storm for creators to build the one-to-many online relationships that define them. “We had a common experience, and with TikTok, we were able to express that with a very low barrier to entry,” Samir says.
Portrait of LaurDIY wearing a sweatshirt and cap from her product collection
LaurDIY built a following on various social platforms (and through an HBO show) while growing her brand of products sold through her own e-commerce store and retailers like Target.
LaurDIY/Fanjoy
Entrepreneurship increased as many unemployed canadian email addresses creators looked for alternative sources of income.
What young people naturally recognized (that perhaps a Reel is just as interesting as the television screen) came to light in conversations about modern culture.
Meet the middle class of the creator economy
Illustration of light streaming through two windows that look like price tags to illuminate some flowers
The highest-earning influencers paint an unrealistic picture of what is possible. Only a small fraction can fund lavish lifestyles through advertising revenue and promoted content alone.
For the rest (the “ middle class of the creator economy,” as Li Jin writes in this article), a mix of income sources is the reality.
Creators can monetize social audiences directly on the platform in multiple ways, including ads, subscriptions (e.g. Patreon), sponsored content, mentions (e.g. Cameo), and tips.
A new breed of creators is moving their audiences into less volatile spaces. Through a website or online store , creators can grow communities and exchange value to establish a closer, more direct relationship with their fans.
This includes giving subscribers access to exclusive content or virtual events, selling fan club subscriptions or merchandise, and creating sponsored content on the site for partner brands.
Income diversification for creators
While creators now have countless tools to build and access audiences, they mostly don’t own them. “The permissionless internet we all celebrate has reached its limits,” says entrepreneur and investor Hugo Amsellem.
While many creators have already realized the benefits of diversifying their income, one survey found that only 5% of creators reported their own brand as their primary source of income.
Community is a creator’s most valuable asset. “If you’re building a community, they will follow you,” says Samir. True fans often look for ways to support their favorite creators beyond just “liking” them.
Branded merchandise and communities are a gateway for audiences to recognize and connect with other fans, while strengthening relationships. It’s a shift that can’t happen soon enough.
Entrepreneurship in the creator economy
Even before they started, creators solved one of the biggest pain points facing traditional entrepreneurs: getting attention. The success of the creator economy relies on these embedded buyers, eager to own a piece of their idols.
The barrier to entry for traditional entrepreneurial activities is lower for those who have acquired a business education through osmosis.
Creators are, by necessity, experts at marketing, customer (audience) retention, brand building, and deal negotiation. Many (dancers, athletes, comedians, etc.) who never considered themselves entrepreneurs figured out some of the hardest parts as they went.