Startup Ideas and Trends

Less than 4% of the estimated 50 million creators earn a living from their creations. While that might not seem fair, it couldn’t be any other way.

Success as a professional creator requires levels of patience and fortitude that only a tiny percentage at the top of the power-law distribution have.

This is good.

There is a clear path to creator success built on a very simple idea; Don’t give up.

As Jake McNeill from Creative Hackers says,

You’re not competing with 100% of the creators in your niche. You’re competing with circa 8-10% who don’t quit.

There Will Never be a Creator Middle Class and Why That’s Good

According to Signalfire, less than 4% of the estimated 50 million creators earn a living from their creations.

Is it fair that creators like 10-year-old Ryan Kaji earn tens of millions of dollars when millions make almost nothing? His branded merchandise made over $250 million last year.

How about MrBeast and his new $10 million dollar video studio and ranch? He earned $54 million dollars last year when so many creators are struggling to build an audience?

Then there is Joe Rogan’s $100 million deal with Spotify. Shouldn’t that money be split over thousands of lessor known creators? Why is one person worth so much?

Wouldn’t it be great if every new creator easily found success and started earning a livable income in a short time with minimal effort? Isn’t that the implied argument for the creator economy middle class?

Creator Economics

In 2020, the top 1% of creators on Gumroad earned about 60% of payouts. The top 10% earned 92% of the total disbursed. Out of about 45,917 creators on the platform, 43,877 made less than $10,000. (source)

Last year’s Twitch hack reveals similar numbers. The top 1% earned almost 60% of the total $889 million paid out to streamers. The Wall Street Journal reports that 75% made less than $120.

97.5% of YouTubers earn less than $12,140 per year. (source)

There are more than 60,000 tracks uploaded to Spotify every day. In 2019, the platform hosted over 8 million creators. Only 7500 of those 8 million earn more than $100,000 per year. (source)

SnapChat has paid out more than $250 million to over 12,000 creators through its Snapchat Spotlight programs. That is 12,000 creators out of an estimated 293 million daily active users worldwide.

The median number of downloads for podcast episodes is 124. The top 1% get 99% of downloads. (source)

TikTok influencer Zach King recently shared that he earns about $23 per day with 66 million followers. This was 20.4 million views over a 7 day period.

The total size of the creator economy continues to expand, but it’s clear that only a small percentage at the top are getting the vast majority of rewards. This might not seem fair, but could it be any other way?

The Long Tail is Very, Very Long

There will always be a small percentage at the top that reap the majority of rewards.

Clay Shirky outlined this dynamic many years ago,

In systems where many people are free to choose between many options, a small subset of the whole will get a disproportionate amount of traffic (or attention, or income), even if no members of the system actively work towards such an outcome. The very act of choosing, spread widely enough and freely enough, creates a power law distribution.

Shirky goes on to say that “freedom of choice makes stars inevitable.”

It’s the familiar long tail made popular by Chis Anderson’s book and the same dynamics of the Pareto Principle.

Shirky points out that this power-law distribution would occur naturally even if all the options were of equal quality. The likes, shares, links, and mentions of older content heavily influence what people will consume in the future. Popular content continues to be favored precisely because it is popular.

Think of this positive feedback as a preference premium. The system assumes that later users come into an environment shaped by earlier users; the thousand-and-first user will not be selecting blogs at random, but will rather be affected, even if unconsciously, by the preference premiums built up in the system previously.

Add in the superior quality of best creators compared to the mediocre middle and the power-law distribution becomes even more pronounced.

Li Jin in the Harvard Business Review article “The Creator Economy Needs a Middle Class” acknowledged this superstar phenomenon by quoting Sherwin Rosen’s 1981 paper.

The phenomenon of Superstars, wherein relatively small numbers of people earn enormous amounts of money and dominate the activities in which they engage, seems to be increasingly important in the modern world.

Rosen’s basic argument is that average talent is not a substitute for top performers. “Hearing a succession of mediocre singers does not add up to a single outstanding performance.”

This superstar phenomenon is further compounded by The Mathew Effect where the rich get richer or the popular become more popular.

Whereby individuals probabilistically accrue a total reward (eg., popularity, friends, wealth) in proportion to their existing degree. This has the net effect of it being increasingly difficult for low ranked individuals to increase their totals, as they have fewer resources to risk over time; and increasingly easy for high rank individuals to preserve a large total, as they have a large amount to risk.

Nick Maggiulli writes that Richard Bachman’s best-selling book previously sold a respectable 28,000 copies. When it became known that Stephen King was the real author, Bachman books went on to sell over 3 million copies.

Similarly, The Cuckoo’s Calling by Robert Galbraith was 4,709 on Amazon’s bestseller list until it was discovered that J.K. Rowling was the author. The book then climbed to number 3 on Amazon with sales increasing 150,000%.

“Winners keep winning” in the creator economy.

Creating is Hard

Growing a successful business is hard. The failure rate of startups is 90%.

Constantly producing content based on your talent and personality is even harder. Creator burnout and depression is a real and growing problem.

Creators like MrBeast, Ryan Kaji, and Joe Rogan earned their position at the top of the creator pyramid through hard work and talent. Most creators give up before they barely get started.

MrBeast published his first video in 2012 when he was 12 years old. It took 5 years before his first viral video. He now has 715 videos published. Many with production budgets in the 6 and 7 figures.

Ryan Kaji started in 2015 when he was 3 years old.  A year later both his parents quit their jobs to make videos full-time. Ryan’s World now has 2066 published videos on their main channel, plus other channels.

Joe Rogan began performing comedy in 1988 and started podcasting in 2009. He has decades of professional entertainment experience and has published more than 1700 podcast episodes.

If you look at the estimated 2 million podcasts,

• 26% only published 1 episode.
• 44% published fewer than 3 episodes.
• 36% have published more than 10 episodes.
• 37.6% of podcasters are active 3+ years. (source)

You can’t have a middle class of creators if most give up so early.

Ali Abdaal writes that,

“the average channel with 1k to 10k subscribers has made 152 videos. So until you’ve made 152 videos, you don’t really have the right to complain that you’re not growing on YouTube. Only once you’ve hit this milestone should you begin thinking about how to tweak things to improve your engagement and growth.”

Tom Kenny cites research where the top performing 5 percent of researchers, entertainers, politicians, and athletes created 400 percent more than average.

Andrea Bosoni put it more succinctly,

On the internet 90% consume, 9% engage and 1% create. Writing just one tweet every day puts you ahead of 99%.

It’s not just quantity that makes top creators successful. Look at some of the titles of MrBeast’s videos:

• $456,000 Squid Game In Real Life!
• Would You Sit In Snakes For $10,000?
• I Ate $100,000 Golden Ice Cream
• I Put 1,000,000 Christmas Lights On A House (World Record)

Outrageous videos like this attract an audience and encourage shares. MrBeast is a master of delivering what the internet wants to see.

Ryan’s World focused on the lucrative children’s market. If you have young children, you know that kids will watch the same video over and over again. Check out Blippi and Like Nastya for more examples of opportunities with kid-focused videos. English is not even Nastya’s first language.

Joe Rogan’s standup comedy, acting, and MMA experience all helped him develop the skills and build an audience to attract interesting people to interview. His success is not an accident.

MrBeast, Ryan’s World, and Joe Rogan are combinations of talent, effort, persistence, business acumen, and good timing directed at a lucrative niche.  Only a tiny percentage of creators will have all of those necessary ingredients.

There has never been a better time to be a creator.

While it’s difficult to build an audience and make money from your creations, we’ve never had this much opportunity.

It’s essentially free to publish your ideas to the world. You can write a book, publish a newsletter, film a movie, upload songs to Spotify, become an influencer, start a podcast, mint an NFT, form a DAO, or anything else you can imagine.

You don’t need permission and you don’t have to wait to be discovered.

The most talented, most interesting, and best-promoted creators will rise to the top over time. Time being a critical factor.

Success as a professional creator requires levels of patience and fortitude that only a tiny percentage at the top of the power-law distribution have.

This is good.

There is a clear path to creator success built on a very simple idea; Don’t give up.

As Jake McNeill from Creative Hackers says,

You’re not competing with 100% of the creators in your niche. You’re competing with circa 8-10% who don’t quit.

We don’t need a middle class of average creators. There is no shortage of weak content online.

We all benefit when great creators succeed. David Perrell calls this The Paradox of Abundance:

The average quality of information is getting worse and worse. But the best stuff is getting better and better.

The path to success in every creator field is to “become so good they can’t ignore you.”

The best part is that exceptional creators can earn exceptional rewards well beyond middle-class expectations. That opportunity is available to us all with the right amount of hard work, talent, and luck.

I’m not entitled to be paid for writing this article or publishing my newsletter. It’s unreasonable to demand a middle-class income irrespective of my ability to sell my ideas.

Maybe I’ll find a way to turn this into a viable business or maybe I’ll have to try something else. Either way, just showing up day after day to play the creator game means I’m winning.