Issue #10 - May 21

What Creator Funds mean for the future of the Creator Economy

Recently YouTube announced their own $100M Creator Fund focused on their newly launched TikTok competitor, Shorts. This details of the fund are a bit murky: it’ll run through 2022 and distribute money to “1000s” of creators each month who get the most views and create the most engagement. Past those basics, the details are wanting: how is the money apportioned, will the whole $100M be spent, can a creator make money more than once, etc.. This brings YouTube in line with other major platforms that have announced Creator Funds:

  • YouTube - $100M

  • Snap - $365M ($1M per day)

  • TikTok - $1B

  • Facebook - $25M (supporting Black creators), $5M Writers Fund

  • Clubhouse - 750K (50 x $15K grants)

  • Substack - $1M from Substack Local + Commitment Unknown for Substack PRO

  • Pinterest - 500K

Looking at the trend and not the specific announcement, some interesting concepts come to the foreground:

  • The disparity in fund size shows you a lot about how deeply embedded creators are to the psyche of the company. It’s no surprise that Pinterest has a small fund as they have been the least aggressive about positioning creators as important to their business.

  • Facebook is the notable platform player without a big commitment to creators. They may still be working on an announcement or this could reflect a combination of their historic reticence to help creators monetize mixed with some subtle hubris about Reels’ ability to compete with TikTok without needing to pay for the help. Could Zuck’s public embrace of the creator perhaps be an intentional time-buyer while they figure out their broader creator economy strategy?

  • It’s interesting how larger platforms are using funds to target specific creator formats (YouTube for Shorts, Facebook for writing) as a mechanism to jump start the flywheel.

  • Once again, LinkedIn does not even appear on this list.

  • The increasing sizes of creator funds should be an alarm bell for the creator economy. We worry this starts to look like music tech where anyone who wants to use music in their platform has to have a massive war chest to pay the labels. This has prevented a lot of innovation in music tech (see the demise of Turntable as an example).

  • Is UGC truly dead? Have we reached a point now where anyone who wants to build a platform where creators create content on their platform has to lead with dollars?

  • How diverse will these fund payouts really be? Creator view counts are relative to their category. The best whiskey influencer in the world is never going to garner the same views as a more broad-based entertainment creator.

  • How transparent will these funds be? As the platforms constantly look to develop content area that they see emerging (e.g. ASMR, GenZ financial education) will they just use these funds to boost attention from creators in these areas. In other words, is this just their creator programming budget masked as a more altruistic endeavor.

  • Could we be witnessing the emergence of a new “content equity” dividend model. Much like some companies provide a dividend to their shareholders, once can look at Creator Funds as a dividend to a different type of equity holder in the business. Rather than investing their money, creators have invested their time and content “into” the platform. As creator funds are deployed and the results are calculated, we could see a much larger push in this direction where platforms allocate a notable portion of their income into a creator dividend which continues to spin the flywheel.

  • Will this result in expander economics or extractor economics? Will YouTube’s shorts fund generate 1000s of net new creators who flock to the new format to try and establish themselves or will this drive 1000s of creators to try and siphon traffic from other platforms to shorts?

  • Is the fundamentally a genius profitable economic investment by the platform companies (Substack has alluded to the fact that it has been for them) and will it be adopted by other media companies. If the PGA’s experiment works we’d say this is just the beginning of “attention funds”.

As always, if you like what we have to say please share with your friends. If you don’t like what we have to say, reply back and let us know!

- Niel and Ryan