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This week, On Tech will examine economics, sometimes referred to as Internet Creator Economy. There are people who are so good at creating entertainment or information online that they try to make it a job. Have your favorite comedians on Instagram, Plant Forger on TikTok or YouTube stunt performer creators.
Some of you may be thinking: That Have a job That is. These online seekers are testing the Internet’s promise to enable anyone to make a living from creative businesses. We are entertained by the work of the producers, and they influence what we buy, the music we listen to, and how the products are promoted.
Internet professionals are also the spearhead of what works and what doesn’t in digital life as we know it. More and more creators are now saying that they want to divide the wealth of online companies – and we should listen.
Let me back up.
We mostly work for free on the internet.
We have no Facebook, Instagram, YouTube, TikTok or Reddit without volunteer posts, memes and gardening groups. Some people have found ways to make money from online popularity, including selling merchandise, getting paid by their fans, and signing promotional deals outside of major Internet sites.
But shouldn’t all online stars – and perhaps the rest of us who post online – share in the fortunes of Internet companies?
YouTube found a way. Since 2007, the Google site has sold ads on YouTube and, after reaching a certain level of popularity, has paid more than half the money to video makers. While YouTube makes more money, so do video makers.
Other companies, especially Facebook and the streaming site Twitch, reduce the number of video makers in their advertising money. But YouTube is the only major digital service that systematically redistributes a large portion of its revenue to the people who make its products.
Last week, popular internet personality Hank Green made a video comparing what is paid (well) to him on YouTube and what is paid from TikTok (not so good), in which a lump shared for the producers. Is the amount that the company buckets. Out under the complex formula.
Green’s point was that as TikTok earns more, creators effectively earn a smaller portion of what the company brings. Implicit in his video was the question of why more companies don’t do what YouTube does and share the bulk of their advertising revenue.
All the internet companies now say that creators are crucial to keep users entertained and loyal and they are trying to make it easier for fans to pay producers or buy their products.
It’s all potentially useful. But Internet companies often make money from advertising. Green imagines that creators are forcing more of these companies to share their advertising dollars directly with those who stock their virtual shelves. It can create a healthier and more resilient online life for all of us and create better jobs for those who are trying to make a living online from their work.
Green told me, “There is a business case for revenue sharing and there is also a fairness case.
Green pointed out in his video that since most of the videos run YouTube ads, it is easier for YouTube to distribute advertising money to creators. It will be more difficult for TikTok, Instagram or other sites that do not use ads in the same way. YouTube’s revenue-sharing model is also an option only for the most popular video makers.
Green knows that YouTube-style revenue sharing is not the cure for everything that goes wrong with the Internet. And like any workforce, not all creators want the same thing. Some agree with Green that YouTube-style revenue sharing is a good way for them to have a more stable and sustainable life. Others said they prefer Tiktok’s fund for creators or Twitch’s way of letting people make money from live streamed videos.
Investor Lee Jin told me that the best way to have a healthy digital economy is not for Internet companies to redistribute their revenue differently, but to eliminate companies’ absolute power over online creative work.
There is also a financial lease argument: if a company does not pay, why would it leave? There will always be some hungry young people who are happy to create content online for free.
But this is a moment when the established standards of the Internet are being questioned. Let’s expand on the economics of who gets paid, and why, to keep the Internet entertaining and useful for all of us.
Coming on Wednesday, Apple’s application commission reduces creators’ earnings. And Thursday: How an online personality makes money from digital work, in a thousand different ways.
Before we go
This great horned owl keeps its eggs delicious on windy days. (Ear lumps blown too much in the wind.)