Not every creator economy startup is built for creators

Ten years ago, if you were a scrappy kid somehow making a living off of YouTube ad revenue and brand deals, you were probably told you didn’t have a real job. Now, if monetizing your creative output is how you pay your rent, you’re part of the creator economy, a buzzy new industry.

An often-cited landmark report from the venture capital firm SignalFire says that creators are the fastest-growing type of small business. Despite the creator economy only really forming a decade ago, there are now 50 million people who consider themselves “creators,” and more American children want to be YouTube stars (29%) than astronauts (11%), per SignalFire. So it makes sense that more and more startups are cropping up to provide tools for creators — it’s an opportunity to cash in on a growing market, and savvy entrepreneurs want to make money.

As this market has expanded, I’ve written about credit card companies for creators, community-building tools and companies that help you design a product to sell, among other ventures. But as my inbox teems with too many creator-focused startup pitches, products and opportunities to ever even consider, I’ve noticed a troubling trend — not all of these businesses are actually good for the creators they intend to serve. Some might actually be pretty predatory.

For example, if an all-in-one creator platform folds, what does that mean for creators who put all their eggs in that basket? How do major tech acquisitions impact the people who monetize on those platforms? As venture capitalists invest in creators as though they’re startups, how can those creators protect themselves from exploitative terms and conditions?

Startups need to have a backup plan to make sure that if they don’t become the next Patreon, the creators who trusted them won’t be doomed. I’ve started asking these questions to any startup that purports to be a “one-stop shop” or an “all-in-one solution” to the creator economy. Fourthwall had a good answer.

The company said that it has three months of emergency operating expenses set aside to ensure that if they were to fail, they could help transition creators to other platforms. Fourthwall also said it would also make its platform open source if this were to happen. But regardless, this friction isn’t exactly helpful.

The inherent tension within the creator economy lies between the promise of financial freedom and the realization this freedom comes at a cost. As more startups aim to connect talent with brand deals, build monetization tools and develop new social platforms, creators need to know what to look out for to avoid a bad situation — and startups themselves need to think as though they’re in a creator’s shoes, understanding that if a creator trusts them with their business, then they have a moral and financial obligation not to screw it up.

‘A platform is not your friend’

When Spotify bought the popular podcast creation service Anchor in 2019, podcasters panicked. But Amanda McLoughlin, CEO of the independent podcast collective Multitude Productions, had seen massive acquisitions like this happen before. Since the early days of YouTube, McLoughlin has been a creator herself, so she’s seen the industry change from both creative and business perspectives. One defining moment in her early life as an internet creator was when Google bought YouTube in 2006.

“Before 9 a.m., I got a dozen messages from friends and colleagues worried about what such a large and unexpected consolidation means for those of us trying to make a living in podcasting,” McLoughlin wrote at the time. So she rehashed the lessons she learned from the YouTube acquisition: Diversify your income streams, don’t trust individual platforms too much and believe in your own value.