The dean of studies of the creative class has analyzed the rise of the Creator Economy to reveal which cities are winning—and how we can foster a broad middle class.
By Richard Florida7 minute Read
Nearly 60 million Americans—as much as 40% to 50% of the workforce in some cities—are members of the Creative Class, meaning they are directly employed to work with their intelligence and creativity, in fields spanning the arts and culture, science and innovation, and the knowledge-based professions. This is up from just 10% to 15% of the U.S. workforce in 1980.
The more recent rise of online creators and the Creator Economy is the digital manifestation of the rise of creativity as a key element in our economy, society, and everyday lives. Although creators are often thought of as merely digital influencers, they’re better understood as anyone who makes and publishes unique content online, whether that’s videos, films, art, music, designs, text, games, or any other media that audiences can access and respond to. Therefore, the Creator Economy is the economic, social, and professional ecosystem that creators work in, including such digital platforms as Facebook, YouTube, Instagram, TikTok, Twitter, LinkedIn, Substack, and Patreon; the digital tools and apps that they use; the startup companies that are constantly advancing their technologies; and the people and companies that support creators’ work and help them monetize it, from videographers and makeup artists to business managers, accountants, and branding consultants.
The scale and scope of the Creative Economy is large—and it is growing. More than 85 million Americans and more than 300 million people across nine large nations were estimated to post their creative content online in 2022. Roughly 17 million creators were found to actually earn revenue on nine major digital platforms as of 2017. The overall size of the Creator Economy was pegged to be more than $100 billion; and almost $15 billion in venture capital has been invested in some 300 Creator Economy startups since 2021.
But what’s less appreciated is how key elements of the Creator Economy are geographically clustered.
The Creator Economy hubs where the money is flowing
The headquarters of the leading digital platforms are highly concentrated in the San Francisco Bay Area. A smaller cluster, including Snapchat and TikTok’s American headquarters, can be found in Los Angeles. Though Creator Economy startups can be found in 65 global cities, just three city-regions—the San Francisco, Bay Area, Los Angeles, and New York—account for nearly two-thirds of all global venture capital investment in them.
The same three city-regions that lead in venture capital investment also have the largest numbers of startups—Los Angeles with 63, New York with 60, and San Francisco with 48. Next in line is London with 14 Creator Economy startups, followed by Chicago (seven), and Atlanta and Bangalore (with six each). Four cities, Austin, Miami, Denver-Boulder, and Tel Aviv, are home to five Creator Economy startups, and San Diego is home to four. Three other cities—Nashville, Seattle, and the Wilmington, Delaware area—are home to three startups; and Denver, Las Vegas, Sacramento, Vancouver, and Singapore each have two. Thirty-nine other cities—14 in the United States and 25 in other countries—are the headquarters for one Creator Economy startup, and 15 startups (1% overall) are purely virtual, reflecting the shift to remote work brought on by the pandemic.
Talent migration—and rising power—in the Creator Economy
While creators themselves are much more widely distributed than the platforms and startups that support their work, our interviews with leading creators and executives from Creator Economy companies, as well as our analysis of relevant data, identify Los Angeles and New York as by far the leading locations for Creators. Smaller Creator clusters can be found in U.S. cities like Nashville, Miami, Atlanta and Las Vegas, and global cities such as London, Berlin, Seoul, Shanghai, and Tokyo. Several creators we interviewed told us that they chose to relocate to Los Angeles to gain access to the city’s broad entertainment ecosystem of production companies, agents, managers, and support staff, and even more so, the many other creators who live there. One comedian told us that she had temporarily moved from Los Angeles to the New York area so she could build her network and further hone her craft in the city’s many clubs. A relatively common pattern we heard was that a Los Angeles or New York location is more advantageous early in a creator’s career, but once they are established, many move to other places.
The rise of the broader Creative Economy has shifted a large share of power from large firms to talent, a change that the Creator Economy is further accelerating. This has allowed a more diverse universe of talent to emerge, such as musician Steve Lacy, whose genre-crossing hit, “Bad Habit,” edged Harry Styles out of the No. 1 position on the Billboard charts this fall. The 24-year-old Lacy was inspired to learn guitar by playing Guitar Hero; the first band he played in was aptly called The Internet. His 2019 debut album was well received but not widely heard. “Bad Habit” took off after going viral on TikTok.
This does not mean that talent holds all the cards: Traditional gatekeepers still wield a lot of power, as do the platforms themselves, whose proprietary algorithms and editorial and business judgments weigh heavily in the determination of what will and won’t go viral and what share of their earnings creators can collect.
Inequality in the Creator Economy
In fact, the distribution of economic rewards in the Creator Economy is as uneven as in the traditional economy. A vanishingly small percentage of Creator Economy superstars, such as YouTube’s MrBeast and TikTok’s Khaby Lame (the Senegalese-Italian factory worker who lost his job during the pandemic and then rose to fame on the strength of his quirky videos), earn tens of millions annually, but they are exceptions that prove a rule. Just 1.4% of creators make more than $1 million per year; and another 1.5% make between $500,000 and $1 million, according to an Influencer Marketing Hub study. Fully two-thirds of creators earn less than $25,000 annually, and more than a quarter earn less than $1,000. It looks a lot like the winner-take-all pattern that the economist Sherwin Rosen identified all the way back in 1981, in his classic article “The Economics of Superstars.”
Follower counts show a similarly skewed pattern, according to a 2022 ConvertKit survey. More than half (53%) of creators have less than 1,000 subscribers on their email lists. Just 1% have 500,000-plus subscribers on YouTube; just over 9% have more than 10,000 Instagram followers; a little over 6% have more than 10,000 Facebook or Twitter followers.
Despite what is often said about creators’ frenetic pursuit of fame and fortune, most, like members of the Creative Class more broadly, are more intrinsically motivated. In a world where far too many people are socially and emotionally isolated, creators enjoy being embedded in their communities. Virtually all of them want to follow their passions and work on ideas, activities, and projects that give them a sense of purpose; allow them to connect with like-minded others and have control over their schedules. Many are devoted hobbyists who at most expect to supplement their incomes. A growing number are social and political activists, who are principally motivated by the desire to serve causes larger than themselves and have social and political impact. When asked about their most important motivations in a 2022 survey, larger shares of creators listed self-expression (48%), fun (43%), passion (40%), and challenge (34%) than money-making (26%). Twenty percent said they were primarily motivated by a desire to advance a social issue or cause.
Going forward, the key challenge for the Creator Economy is to create a larger and more sustainable “middle class” of creators. With support from platforms and the government, many more creators can earn substantial livelihoods from their creative production than they do today.
A prescription for a healthy Creator Economy
Digital platforms can promote less-established creators by tweaking their algorithms to introduce more discovery into users’ feeds. They can provide additional resources and training to help less-established creators improve their engagement, monetization, and growth opportunities. They can give creators more exposure to data and help them better understand how to use analytics to improve their posts’ performance. They can identify peer communities that can share their experiences and identify best practices, and establish Creator Schools where creators can learn from each other. They must also redouble their efforts to ensure that creators, especially women and people of color, are better protected from harassment.
Public policy can help support creators as well. Federal, state, and local governments can identify, organize, and support clusters or networks of creators, much like their long-standing efforts to support high-tech and arts clusters. They can aid in the development of shared benefit pools for health and other kinds of insurance. Community colleges can develop training programs to help creators build more sustainable enterprises with predictable revenue streams. Governments can also take steps to provide more direct assistance to lower-income creators, members of minority groups, and residents of distressed neighborhoods and communities. The public and non-profit sectors can provide scholarships for less-advantaged creators.
Taken From https://www.fastcompany.com
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