As the pandemic impacted employment in the last year, creators emerged on various online platforms — sharing content and building fan bases along the way. This growing sector covers everything from gamers, bloggers, photographers, and social media stars — all dedicated to their craft full-time. The amount of “how-to videos”, tutorials, and in-field guidance is changing the way we learn, educate ourselves, and gain life-long skills.

The potential and paths for creators to be successful globally can come from a high volume of followers or small subset of avid fans that highly engage with content on a daily basis. These online micro-entrepreneurs now number over 50 million in the US alone.

Creators generate earnings by promoting other products and services in their content. Corporate sponsors are actively playing in this field by contributing more of their annual marketing budget to influencer campaigns on social media (instead of traditional formats of TV, radio, and print). Some creators today are earning millions of dollars per year through engaging in brand deals, selling digital content, creating courses, and more. Additionally, all social media platforms are rallying around creators — increasing incentives and programs, and launching new features to keep content flowing throughout the week.

Despite the ability to make a living away from the traditional workforce, there are multiple challenges in the creator economy being able to thrive as a whole group — instead of a few mega influencers seeing tremendous success. Fortunately, emerging startups are tackling top issues head-on and looking to win over creators by stabilizing income, providing benefits programs, and custom financial services.

CREATOR ECONOMY

In today’s online landscape, creators aren’t limited to certain products (i.e. clothing, makeup) or content formats (such as short-form videos). There are multiple communities and platforms available to establish and connect with followers from around the world. Here’s a breakdown by category and platforms:

• Writers: Medium, Revue, Letterdrop, Steady, Tales;

• Musicians: Splice, Stem, Sonix, GarageBand, Mastered;

• Fitness: Playbook, Magisto, Strydal, Salut, Superset;

• Course Creators: Skillshare, Teachable, Virtually, Podia, Thinkific;

• Podcasting: GetVokl, Podbean, Megaphone, Castbox, Anchor;

• Gaming: Maestro, Combo, Roblox, Epic Games, Unity;

• Livestreaming: Twitch, Loots, Crowdcast, Uscreen, Lightstream;

• Influencers: Looped, iFans, Cameo, Later, TipSnaps;

There are also separate add-on platforms available to all content creators looking for additional revenue streams or managing their overall business:

• Crypto & Finance: Foundation, Rally, Karat, Cent, Roll;

• eCommerce: Etsy, Shopify, Printful, Sellfy, Gumroad;

• Management tools: CloutJam, Stir, Milkshake, Collective, Memberful;

Creators have expanded past social media giants and streaming to niche and audience based platforms that provide a close-knit connection to followers, improved engagement per post, and enhanced revenue potential.

CORE NEED: Getting Paid ON TIME

For creators that experience initial success, early monetization comes from the platforms in which they post content (e.g. YouTube, Facebook, TikTok, Instagram, Medium). Payout rates are determined by these companies based on views and user engagement, but the criteria and policies are not easily to follow. This makes it difficult for creators to estimate a steady monthly income by setting a goal for content produced. They take what they’re given from platforms and look for other monetization opportunities.

As creators gain a strong following, brands reach out for sponsorship campaigns in which their product is mentioned or highlighted in a new post or video. These projects provide stable income to influencers, but the timing of payment is typically not immediate. The marketing departments at companies can lag on invoicing timelines (up to 90 days) with little recourse from creators. Irregular pay periods make it difficult to cover urgent needs (such as rent and utility) bills in the next 30 days.

Fortunately, new fintech startups are tacking this core issue of streamlining payments on behalf of creators. Apps are offering invoicing solutions to receive electronic payouts from a completed project by the next day. No need for mailed invoices or numerous emails sent with instructions — a specific link is provided that enables the fund transfer.

The same fintechs are then using the data insights from invoicing to extend a line of credit to creators based on upcoming payouts. This “income smoothing” category has its own subset niches such as salary streaming, revenue-based financing, and alternative credit.

Companies such as Willa and Karat Finance are leading the pack when it comes to paying creators. A fee is charged (a % of the invoice) and these firms proceed with automated collection efforts. Some of these startups limit risk to well-known brands that contracted with influencers.

Until brands of all sizes shift the mindset of creators as part of in-house marketing team, there will still be risk in delayed payments.

FILLING THE BENEFITS GAP

The creator economy is breaking away from traditional employment norms of a set hourly wage and scheduled work week. In the same manner, this emerging workforce is also missing out on standard work benefits outside of compensation. These include tax withholding, health insurance (medical, dental, vision), disability coverage (short or long-term), 401(k) or retirement savings, and discounts from commuter and health savings accounts.

In the benefits sector, gig workers, freelancers, and creatives all get lumped into one category (as contractors) due to varying workload and income streams. This group is at a disadvantage when it comes to worker rights and protection, demanding higher pay, and filing grievances. There are startups focused on benefits for contractors, but none have specifically targeted the creator demographic and how their needs differ from gig workers.

Benefits and wellness platforms (such as Catch, Avibra, and Jauntin) offers programs for a monthly subscription fee without deductible. Individuals are provided affordable health services such as 24/7 access to physicians through telemedicine, no-cost prescriptions, and no-cost mental health and assistance services. Creators can minimize the impact from large out-of-pocket healthcare expenses at a nominal recurring fee.

Some media platforms are proactively partnering with benefits programs in their site to increase awareness of this gap for creators. Learnings and shortcomings from the gig economy (i.e. workers at Lyft, Uber, DoorDash, Instacart) are being applied early for the creator economy.

BANKING the CREATOR community

Traditional banks don’t understand the transactional needs of creators. Better banking services that account for how these individuals earn money, use their card for spend, and save funds for tax withholding are in high demand. Legacy banking relationships require accountholders to maintain a minimum balance OR receive a monthly direct deposit (electronically via ACH) above a certain amount. Creators lack recurring, predictable income to qualify for no-cost traditional banking.

The fintech sector is ushering multiple challenger and neobank options for creators to tap into, which address core needs of cash flow stability, banking, and even financial wellness products (such as retirement accounts). In Europe, XPO launched an influencer-focused digital banking app with invoice-financing — users can get paid within 24 hours of finishing a project.

Another platform in Europe is Juni — a neobank targeting eCommerce and digital marketing creators and companies. By providing an all-inclusive dashboard for its clients to see transaction activity, insights and recommendations can be made by Juni on spending allocation. Card offerings connected to Juni accounts can be customized with limits, purchase categories, and rewards. Creators utilzing a compelling card product would focus monthly spend in one platform and increase the interchange revenue paid to Juni or other card providers.

In the US, Lili is building brand awareness as neobank for all freelancers. It’s pro account provides cashback rewards, invoice tools, split categorization (of business and personal expenses), overdraft protection, and a high-yield savings account. Other neobanks in the US with similar offerings are Oxygen and Lance.

For creator-focused fintechs that have yet to provide a deposit account or card, the addition would be natural fit for clients with built-in loyalty AND underserved by financial institutions. Despite providing a credit-based offering, many creators already via these companies as their bank — helping them cover expenses and budget properly.

WHAT’s NEXT in fintech for CREATORS?

As the existing fintech solutions for creators iterate and mature, improved underwriting and risk profiling of creators will yield benefits for the ecosystem as a whole. More individuals will be able to qualify for credit based on their track record of work and growth. Companies with lower default rates can in turn lower financing costs for creators. These credit products will be able to report to credit bureaus and help creators start building credit as individuals or business entities.

With credit offerings as a better fit, fintech firms can turn their attention to custom deposit solutions with full-service banking features. Creators can accept payment directly into their account via every payment rail (ACH, wires, card networks, checks) as well as adding cryptocurrency (for deposit or payouts). Rewards on debit/credit cards can align with categories and merchants where users purchase most — such as tools for content creation, web hosting, and advertising.

As the creator economy continues to expand over the next decade, the demand for custom services will only increase going forward. The platforms and fintech companies the directly and seamlessly address the needs of this audience will see long-term success in engagement and growth.

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