The creator economy was supposed to supplant traditional media and entertainment business models. Instead of being hired to work for a company, writers, comedians, filmmakers and other creators of content could go straight to their audience, charging a subscription for access to their work. Platforms facilitated publishing and payments and took a cut of income in return. Patreon, Substack, Cameo and OnlyFans carved out their own niche.
But just as in the real economy, inflation is hitting the creator economy hard. Competition for content is fierce. San Francisco-based creator platform start-up Patreon grew to employ more than 450 people before making the decision this week to cut its workforce by almost a fifth.
Chief executive Jack Conte blames the job cuts on a “broader economic slowdown”. But it may also be more difficult to sign up new podcasters, bloggers and artists. More social media companies are offering to pay creators directly. TikTok has its own Creator Fund, for example. They offer a larger potential audience too.
Patreon, which targets artists over influencers, has spent increasing sums marketing itself to build up a stable of over 250,000 creators. These creators pay out up to 12 per cent of their income plus a payments processing fee. Lockdowns sent more artists online, along with their audience. That lifted Patreon’s user numbers.
Created in 2013, Patreon raised funds at a $4bn valuation last year — more than triple its previous value. The money was earmarked for rapid expansion. It planned to more than double in size to over 1,000 employees by the end of 2022. It had designs on more international content, video and perhaps crypto.
Conte is right that investors across private technology companies are pulling back. Funding has fallen in the past two quarters, according to CB Insights data. In the past quarter, global funding was $108.5bn, the lowest quarterly sum since early 2021. But the return of in-person entertainment and competition for content creators are dragging on Patreon too. What sounded like a simple premise — connecting creators to their audience — is proving expensive.