The creator economy is a thriving sector of independent content creators who earn income by sharing their work on digital platforms like YouTube, TikTok, and Instagram. This rapidly expanding industry is expected to reach $480 billion in market value by 2027. Many of its key participants are from Generation Z, with two out of three young people in this demographic identifying as content creators.
What often begins as a hobby for most creators increasingly becomes a full-time job. But are young creators prepared for the organizational side of their work? And, does the industry have the necessary infrastructure to support this transition? This is where experienced executives and investors step in to help.
Challenges faced by the industry
Driven mainly by young people, the industry faces one important problem—the majority of creators do not yet have a business approach. In communicating with creators, we often see that they do not fully understand their opportunities or the seriousness of the game they are in. And that’s fine—many of them initially did not aim to build a successful business; they simply followed their passion for creativity. As a result, the majority of them struggle because they do not know how to monetize their content
On the other hand, those who have succeeded in monetizing their activities face another issue. Managing revenue streams and finances simultaneously becomes particularly challenging for top creators. As their income grows, a range of ‘non-creative’ issues come into play—banking matters, various taxes, accounting records, filing requirements, and many others.
It significantly shifts the focus from creativity and self-expression to routine business matters. Imagine producing regular content for multiple platforms, managing your community, and coordinating collaborations—all of this creative work is already a full-time job. Now, on top of that, you also need to understand the legal aspects of entrepreneurship, the potential impact and requirements of various taxes, stay aware of reporting obligations, manage cash flow, and respond to bank inquiries. This is time-consuming and overwhelming, especially if you lack the necessary knowledge, which is often the case, particularly in an industry that is not yet fully regulated.
This highlights a significant gap: the lack of tech infrastructure necessary for the industry’s growth—specifically, fintech solutions tailored to the creator economy. The field is unique, and many existing fintech products simply don’t meet young creators’ needs. Gen Z creators require specialized fintech solutions, with simplicity in user experience (UX) as a top priority. For example, it would be challenging for a 16-year-old influencer to manage business affairs using a standard banking app designed for professionals. New tools should cater to their basic knowledge, rather than adding complexity in the form of extra skill requirements.
Executives Gen Z creators to scale
Seasoned executives bring much-needed expertise to the industry. Their role is to handle the ‘boring’ operational issues creators face and build the infrastructure necessary for their growth. Their experience allows them to identify opportunities for expansion and development, while their professional networks can significantly shorten the time needed to achieve key goals. What may be out of reach for small industry participants becomes much more accessible with the help of professional investors and funds. This could include entering new markets, launching new products, or securing larger advertising contracts.
It’s important to remember that creators are highly driven individuals. When they enter the business world with a strong, professional team behind them that understands the industry’s intricacies, they avoid feeling overwhelmed. Instead, they can focus more on their creativity and thrive even further.
Industry players need consolidation to grow
Today, mentors and investors clearly see the industry’s potential and are actively supporting both content creators and startups in the field. Notably, in just the first part of 2024, creator economy startups have already raised as much capital as they did throughout all of 2023.
However, the industry as a whole, being relatively young, remains fragmented. To address this and foster further growth, consolidation is needed—bringing the sector together into fewer, more efficient hubs. This is where experienced executives and investors can play a vital role, bridging the gap between different market participants to create a more cohesive industry.
With their support, startups can connect with key industry players and stakeholders, gaining valuable insights into how to tailor their solutions specifically for creators. These experts are also able to identify and address unique market needs, helping to develop specialized tools and resources.
For example, they build the financial infrastructure for the creator economy by backing fintech startups that offer customized solutions. This enables creators to navigate cross-border transactions, manage income in various currencies and cryptocurrencies, and handle taxes—areas where traditional fintech solutions often fall short. This is how tools designed specifically for streamers or user-friendly donation management apps come into existence.
These efforts extend beyond finance, encompassing areas like content creation, management, analytics, and audience engagement. By supporting initiatives in these areas, investors help drive the overall growth and maturation of the industry.
Turning passion into a profitable business
Summing up, the creative economy allows both content creators and traditional investors to collaborate and drive the industry. For further creator economy evolution and development, there is a strong need for a holistic view of the industry from the outside. This will make the economy work better and allow for smarter investments, with funds being distributed to the most promising startups and projects.
This teamwork benefits everyone. Startups gain access to major players and stakeholders, as funds can take small initiatives to a new level, and creators gain additional opportunities to monetize their creativity and reach a wider audience. Investors, in turn, gain access to fresh ideas and new markets. In the end, these partnerships help create a stronger, more profitable industry with room for long-term growth and innovation.
