The past year hasn’t been great for social media platforms and creator-focused startups, as businesses like Snapchat, Patreon, Cameo, and Meta all underwent massive layoffs in tandem with the rest of the digital industry. Ad revenue on YouTube is falling, and creative funding for websites like Pinterest has run out.

On the surface, things might be horrible, but the creator economy is more than simply a trendy term that is losing favour with venture capitalists. Creators are still earning a living outside the restrictions of traditional media despite platform issues, and this trend will only accelerate in 2023.

Youtube aims big for short video creators

The greatest creator news of 2022 occurred when YouTube announced that makers of short-form content would now be eligible for the YouTube Partner Program, making it possible for them to start making money from advertisements. Beginning in early 2023, creators who reach a new Shorts-specific barrier of 1,000 subscribers and 10 million Shorts views over 90 days will be eligible to apply to the YouTube Partner Program. These creators will receive 45% of the money made from their films’ advertisements as Partner Program participants.

This is significant because it is well known that short-form video is challenging to commercialise. For instance, TikTok pays its creators with the $200 million Creator Fund, which was launched in the summer of 2020. At the time, TikTok stated that it intended to quintuple the pool internationally and increase it to $1 billion in the United States over the following three years. That might seem like a lot of money, but over the last three years, YouTube has paid artists more than $30 billion in ad income.

How is TikTok getting affected?

In terms of short-form video, TikTok has long held the top spot, and to compete, Snapchat, Instagram, and YouTube mostly imitated the upstart. But once they can truly make money from ads there, producers will be encouraged to swarm to YouTube Shorts. What’s best? Never before has TikTok faced such pressure to adopt the trend.

The relationship between creators and venture capital will persist

Even if investments in companies operating in the creator economy may be declining, creators are nonetheless engaging with venture capital in ways that are rarely seen by their audiences. The family of Charli D’Amelio has also started investing. It is hardly unexpected that Mr Beast is looking for funding at a unicorn-sized valuation considering that other incredibly successful creators have achieved the same.

Many creators are growing their businesses with the aid of firms like Creative Juice, Spotter, and Jellysmack in less extreme circumstances. These businesses offer up-front cash in exchange for temporary ownership of a creator’s YouTube back catalogue, which entitles the company to all ad revenue from all of the creator’s videos. These companies operate similarly to venture capital companies. They invest in artists who they believe will turn an inflow of cash into more money, so benefiting both parties.

Despite receiving significant funding rounds and enormous values, the business models used by these companies are still in their infancy, and creators should proceed with prudence, as they do in every commercial transaction.