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For three June days, the epicenter of the
creator economy coalesced here, in the heart

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of sprawling Southern California.

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Gone for three years, the return of VidCon
to the Anaheim Convention Center was a big

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deal.

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Since its inaugural year—piloted by John
and Hank Green on a tight budget, and attended

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by a thousand and change in a Hyatt basement
in 2010—each VidCon, effectively mirroring

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the growing industry itself, has one-upped
the last.

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More attendees, bigger creators, and glitzier
booths each year became the norm from 2010

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to 2019.

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Considering such an upward trajectory, along
with the growth of the creator industry in

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its absence, this VidCon was much anticipated—and
broadly, it didn’t disappoint.

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It was, however, different.\h

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Like VidCons before, companies competed for
attention with photo booths, free snacks,

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and interactive attractions; fans showed up
in droves; and creators pulled healthy audiences

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to scheduled talks.

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But it felt different—and major media outlets
took note.

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Many identified the change in presenting sponsor
from YouTube to TikTok as a potential changing

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of the guard, while others noted a relative
dearth of big-name YouTubers in attendance.

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What everyone covering the event missed was
perhaps the biggest change of all.

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Away from the conference floor itself and
tucked away upstairs and offsite, platforms,

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companies, and agencies quietly competed for
creators’ attention in exclusive, backstage

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lounges and parties set up by the likes of
Meta, JellySmack, YouTube, Karat, and Snapchat.

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In the three year absence, the creator economy
had grown into a matured, diversified, $100

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billion business.

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But behind all the pomp and circumstance of
the big events; the stiff competition between

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the different platforms; and the wining-and-dining
by agencies, companies, and brands is, of

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course, the creator, their content, and their
income.\h

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As an example, let’s say there’s a YouTube
creator with two million subscribers who averages

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one million views per video.

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How do they make money, and how much?

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The well-known core of any YouTuber’s income
is Adsense—the system that serves the ads

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before, during, or after videos.

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This hypothetical channel could expect to
earn about $4,000 in Adsense revenue for their

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million views, based on a typical revenue
per mille rate, or RPM, of $4—meaning they

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earn $4 per thousand views.

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However, there is wild inconsistency on Adsense
RPM’s from creator to creator.

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The Adsense system’s selling point for advertisers
is its ability to target ads to be served

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to audiences with particular geographies,
demographics, or interests.

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So, creator income all has to do with how
valuable their audience is to advertisers.

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Advertisers only pay 1/5th the average to
reach customers in Brazil—likely as Brazilian

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spending power is lower—so if our hypothetical
channel was produced in Portuguese, and therefore

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had a big chunk of its audience in Brazil,
it likely would earn a lower-than-average

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RPM.

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On those million views, the creator might
only earn $1,200.

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Meanwhile, advertisers value audiences with
particular interests quite highly.

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Creators making videos about business or finance
tend to have quite high RPMs, because there

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are loads of investment platforms, banks,
crypto companies, and others competing to

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get those valuable advertising spots seen
by an older, wealthier, financially-savvy

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audience.

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If our creator made a US-based, english-language
personal-finance channel, they might earn

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$8,000 in Adsense on those million views.

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But for the sake of realism, let’s assume
the average—let’s assume a $4 RPM, translating

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to $4,000 in Adsense income.\h

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But there’s plenty of opportunity to dramatically
grow the value of those million views.

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Perhaps the most common is sponsorship.

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Early into the development of the creator
economy, advertising agencies noticed something:

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the most effective means of selling something
off of the attention a creator’s work attracts

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is through the creator.

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Between a 45-second externally-produced Adsense
ad before the video versus a 45-second sponsorship

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voiced by the creator at the end, the latter
overwhelmingly leads to more sign ups.

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With this recognition, the influencer marketing
business was born.\h

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Influencer marketing is a little more complex
than Adsense.

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Typically, YouTube sponsorship is used by
brands looking for sign-ups—it’s conversion

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marketing, not awareness marketing.

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You wouldn’t expect Coke, for example, to
sponsor a YouTube video because their marketing

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focuses on assuring people think about Coke
so they buy it when the opportunity arises,

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rather than getting people to buy a Coke at
that exact moment.

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More often than not, the companies that do
find YouTube influencer marketing worthwhile

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are either online subscription services—Audible,
CuriosityStream, Squarespace, BetterHelp—or

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direct to consumer subscription brands—HelloFresh,
Dollar Shave Club, Shaker & Spoon.

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With the subscription model boosting the lifetime
value of an individual customer, Dollar Shave

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Club can afford to spend more to get a given
customer than Gillette, for example.\h

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Why this works for them is because of that
link in the description.

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Most sponsorships include a certain percent
discount when users sign up through the creator’s

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dedicated link.

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Not only does this drive increased performance,
but it also assures that the hugely-valuable

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data tracking an individual spot’s effectiveness
stays accurate as it incentivizes users to

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follow the dedicated link, rather than the
primary sign-up flow.

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Almost every brand.com/creator link operates
as a tracking URL, capturing data about how

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many people click through, how many people
sign up, and even how long those sign-ups

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stick around as customers.

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These individualized data allow for a level
of optimization far above what’s possible

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with TV, radio, or billboards, and provide
a simple mechanism to monitor whether the

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campaign is actually providing a return on
investment.\h

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But what these data have also illuminated
is the huge degree of spread in the worth

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of a view from creator to creator.

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What influences this more than anything is
the strength of the parasocial relationship.

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Parasocial relationships are a well-documented
psychological phenomena where individuals

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start to feel as if they have a genuine relationship
with a personality that they have repeated

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exposure to through media, even when they
have never met or interacted with said personality.

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People trust their friends, and so they also
trust those that they have a parasocial relationship

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with.

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Therefore, the stronger the parasocial relationship,
the more effective a given call to action

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is.

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YouTube creators can and do make certain content
decisions to improve the parasocial relationship.

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Being on-camera boosts it.

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So does injecting more personality into videos.

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Speaking in a less-scripted manner does too.

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Even keeping visual quality relatively simple
has proved successful in boosting the parasocial

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relationship, as it can help make videos feel
like they’re made by a person, rather than

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a company.\h

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For creators, the process of figuring out
what a given sponsorship is worth is complicated.

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It all starts, of course, with the sponsor,
but most companies’ marketing divisions

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are set up to write big checks to outside
ad agencies that design and execute a given

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campaign.

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Even with individual YouTube sponsorships
running well in the tens or even hundreds

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of thousands of dollars, these companies are
used to working in the millions so they generally

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contract a specialized influencer marketing
agency like Semaphore, the Outloud Group,

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or Veritone One to divide up the check and
run the campaign.

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If a personal finance app is running a $2
million campaign with a $35 target cost per

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acquisition, the agency’s job is to properly
price, book, and manage the individual spots

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to drive 57,143 or more conversions into paying
customers.\h

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The performance variability for sponsorships
is even greater than even that of Adsense,

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but with this sort of target CPA and this
sort of product, creators often range between

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500 and 5,000 views per conversion.

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An agency might see that our hypothetical
channel averages a million views and would

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therefore likely drive about 400 conversions,
so based on the $35 CPA, the creator probably

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deserves about $14,000 for a sponsorship.

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However, in practice, the creator only sees
some of that.

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Agencies can typically charge whatever commission
they want—while taking 10 or 20 percent

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is common, they could take 30 or 40 percent
too as long as they can find creators willing

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to accept that offer.

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In fact, they don’t even need to disclose
what commission they take—they could just

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offer the number post-commission.

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In practice, well-established, major agencies
have been found taking 50% commissions without

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disclosure, meaning on that $14,000 spot,
they’d keep $7,000.

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There’s also not a strong market mechanism
to assure that prices stay correlated to performance.

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Most agencies and sponsors keep the data to
themselves, so if a creator’s sponsorship

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performance improves—as it often does through
time as the parasocial relationship deepens—prices

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only adjust if the agency agrees to it, and
only the agency typically knows if the performance

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has truly improved enough to justify it.

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Agencies will boost rates if they’re worried
the creator will turn down the offer, but

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the power dynamic is undoubtedly weighted
towards the agency’s side, and contractually,

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they typically work for the brand, not the
creator.

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While larger creators have managers or agents
who know how much their client’s sponsorship

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slots are truly worth, younger or newer creators
often have zero idea and have not yet established

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a network of colleagues with whom they can
gut-check rates.

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They’re therefore in a prime position to
be taken advantage of at the exact moment

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when they feel like their dreams are being
fulfilled—$7,000 sounds amazing until you

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find out it started as $14,000.

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Of course, YouTube isn’t the only platform
where creators are now making a living.

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Twitch, Meta, TikTok, and Snap have each recognized
that their platforms only go as far as the

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creators they attract, and this realization
has effectively started a race for talent.

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And again, this year’s VidCon offers hints
as to how this race is playing out.

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The fact that a panel dedicated to demystifying
the algorithm with Jimmy Donaldson, aka MrBeast,

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and Todd Beaupre, YouTube’s director of
product management, reached maximum venue

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capacity speaks to the platform’s continued
pull.

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As one attendee explained, while they had
developed a TikTok profile with more than

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half a million followers, they were at the
panel because they wanted the stable income

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that YouTube could provide.

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TikTok might be taking off, but at this point,
YouTube still holds an important advantage,

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and it's one that’s grounded in the platform’s
past.

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By 2011—the year Snapchat was founded and
Twitch was launched as the gaming offshoot

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of Justin.tv—YouTube had surpassed three
billion views a day and had begun experimenting

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with monetizing channels beyond exclusive
partners.

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\hA year later, it opened the YouTube Partner
Program to everyone, allowing all creators

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an opportunity to make money off their products—a
remarkably prescient recognition that the

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platform only went as far as the creators
populating it.\h\h\h\h\h\h

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Then, in 2013, an ascendent platform threatened
to undercut YouTube the way Twitter had undercut

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blogs—by promoting short form.

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Vine’s simple interface and its adherence
to a strict six-second cap on videos took

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off—making it the fastest growing app in
2013, and home to 200 million monthly users

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in 2015.

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The only problem was that neither the platform
nor its popular creators could make money.

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Vine fostered talent and developed fame, but
nobody could figure out how to build anysort

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of monetizable rapport with an audience in
only six seconds.

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Instead, advertisers and creators pivoted
to more expansive platforms like YouTube and

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Instagram.\h\h

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Within this early wave of potential YouTube
competitors, it was only Twitch that figured

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out how to successfully monetize the platform
in a manner that attracted and retained talent.

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With video game-streaming personalities as
Twitch’s main draw, keeping talent on the

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platform was of life-or-death importance to
the site.

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Along with the option to run ads on their
streams, Twitch kept its creators by developing

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a host of revenue-generating routes that included
memberships, donations, affiliate links, and

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direct paid subscriptions to their favorite
channels.

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This approach has turned the platform into
one of the industry’s most powerful, as

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roughly 300,000 of the two million self-identified
professional creators exist primarily on Twitch.\h

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While YouTube and Twitch proved the commercial
viability of long form video and streaming,

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recognizing the unmet potential of short form
has proved both alluring and elusive.

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The very same year that Vine officially shutdown,
TikTok appeared in American app stores.

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The rise of the Vine-like, easy-to-use, hyper-creative,
hyper-consumable platform hasn’t been anything

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00:11:30,040 --> 00:11:31,410
short of meteoric.

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00:11:31,410 --> 00:11:39,290
In Q1 of 2021, TikTok was downloaded 315 million
times world-wide—the most of any app in

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a quarter ever.

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00:11:41,029 --> 00:11:45,290
And yet, for the vast majority of TikTok creators
without powerful brand partnerships, making

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consistent money through their success on
the app is difficult.

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00:11:48,920 --> 00:11:52,529
Paid music promotions from record labels,
sponsored posts, and cash gifts direct from

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audiences during live streams offer little
stability and limited growth potential.

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00:11:56,800 --> 00:12:02,300
To alleviate some of the monetization pains,
TikTok introduced a $200 million creator fund

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00:12:02,300 --> 00:12:03,300
in 2020.

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00:12:03,300 --> 00:12:05,860
But because TikTok uses in-feed ads untethered
to individual content, it’s difficult to

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00:12:05,860 --> 00:12:09,839
attribute the success of an advertisement
to a given creator, and thus, difficult to

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00:12:09,839 --> 00:12:12,320
dole out payment in relation to performance.

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00:12:12,320 --> 00:12:16,320
Additionally, with the fund having a hard
cap, the more successful creators inhabit

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the ecosystem, the fewer dollars there are
to spread around.

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00:12:19,830 --> 00:12:23,690
As Hank Green pointed out, because of this
static pool and the app’s continued growth,

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his TikToks, as of January of 2022, made about
2.5 cents per thousand views, a worryingly

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00:12:29,449 --> 00:12:34,240
low number by itself, but one made increasingly
troubling by the fact that he used to make

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00:12:34,240 --> 00:12:36,320
5 cents per thousand views.\h

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00:12:36,320 --> 00:12:40,610
TikTokers are making money, but it’s a dollar
hard-earned, leaving the door ajar in the

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race for their users’ creative output.

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00:12:43,019 --> 00:12:48,890
In 2020, Meta launched Reels, Snap launched
Spotlight, and YouTube launched YouTube Shorts.

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00:12:48,890 --> 00:12:51,649
All were new features that closely resembled
TikTok.

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00:12:51,649 --> 00:12:57,529
In the year following its launch, Spotlight
paid out over $250 million from its creator

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00:12:57,529 --> 00:12:58,529
fund.

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00:12:58,529 --> 00:13:03,940
In 2021, Meta announced plans to invest $1
billion in its Facebook and Instagram creators,

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00:13:03,940 --> 00:13:06,740
including a bonus program for Reels based
on performance.

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00:13:06,740 --> 00:13:12,610
As of 2022, though, the future of short form
video is still very much up in the air.

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What is certain is that creators today have
more options than ever before, and thus, more

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leverage than ever before.

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With various platforms that cover various
mediums at their disposal, financially successful

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creators have gone from being thought of as
multimedia aberrations in the 2010s, to ever-critical

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cogs in a growing industry where entertainment
and advertisement so seamlessly overlap.

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Creators of all sizes are spreading from one
platform to multiple, and some are beginning

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to move beyond platforms entirely.\h

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Combining $4,000 in Adsense with $11,200 in
sponsorship, our hypothetical creator currently

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makes about 1.5 cents per view, but simultaneously
both the agency and Google are making about

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0.3 cents on the same view, and then on top
of that, the sponsors and advertisers are

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making more on the profit the marketing generates.

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While it’s impossible to know the exact
number, it’s very possible that each of

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this creator’s views is generating 3 cents
in economic value, and they’re only getting

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half of it.\h

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While shared profits are a normal part of
doing business, creators have recognized that

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the more of those three cents they capture,
the more they earn.

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In practice, what this looks like is creators
becoming their own sponsors.\h

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It started with merch: channels would slap
their logo on a shirt or hat or sticker and

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sell it.

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Some people bought these, but often just the
most devoted fans—our creator that could

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get $11,200 in a sponsorship would likely
only earn $1,000 or $2,000 from replacing

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that sponsor segment with a merch shout-out.

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In response, creators adapted their merchandise
more into clothing lines—Logan Paul, for

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example, runs Maverick Clothing.

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With clothing brands competing against other
clothing brands, this operates more like a

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business than merchandise, so creators often
find this strategy far more effective, and

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sometimes competitive in performance versus
an outside sponsor.

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Logan Paul claimed his brand made between
$30 and $40 million in its first year, while

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our channel might expect to profit around
the same $11,200 from promoting its clothing

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brand as with an outside sponsor.\h

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Taking this to the next level, the predominant
trend of the past few years has been creators

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launching fully-fledged businesses.

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MrBeast started selling burgers cooked by
ghost kitchens on food delivery apps under

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the MrBeast Burger brand, which has since
expanded to over 1,000 locations in the US,

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Canada, UK, and UAE.

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Mark Rober and Vsauce started subscription
box companies called Crunch Labs and the Curiosity

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Box, respectively.

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Johnny Harris co-founded a travel course platform
called Bright Trip.

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The Nelk Boys launched their Happy Dad brand
of hard seltzer.

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Simone Giertz created the Every Day Goal Calendar.

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Even Wendover Productions co-founded the Nebula
streaming service, which operates as an equity

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joint venture with the creators contributing
to the platform—a fact that is made clear

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in its ads for good reason: it works.

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Across the board, what creators have found
is that not only do they get to keep more

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of those 3 cents per view, but also that a
given viewer is more likely to convert into

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a paying customer when the sponsorship is
presented as promoting their own business,

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rather than the highest bidder.

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That’s to say, not only are creators getting
more of the pie, they’re also expanding

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it.

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What was three cents per view might become
four, and therefore what was a $11,200 sponsorship

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on a million views might become $28,000.

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With $32,000 in total income on that one,
hypothetical, million view video, this hypothetical

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creator has effectively earned 3.2 cents per
view.\h

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This is orders of magnitudes more than they
would’ve earned on the same view a decade

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00:16:25,660 --> 00:16:29,459
ago, and yet more orders of magnitude more
than they would’ve earned from a view on

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Facebook, TikTok, Instagram, or elsewhere.

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This is how YouTube creators are now able
to go full-time making channels that previously

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would’ve been but a hobby.

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Newer creators tend to have less optimized
channels, but even assuming 1.5 cents per

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00:16:42,320 --> 00:16:47,339
view, bi-weekly releases of videos achieving
150,000 average views would provide about

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$4,000 in monthly income.

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Simultaneously, it’s these same figures
that allow the absolute largest creators—MrBeast,

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the Paul Brothers, Markiplier, and others—to
generate wealth rivaling that made in the

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mainstream entertainment industry.\h

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This is YouTube’s competitive advantage.

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“YouTuber” is now regularly ranked as
one of kids’ top dream jobs—up there with

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professional athlete, firefighter, and veterinarian.

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00:17:11,100 --> 00:17:15,190
With a massive pinnacle to the dream and a
relatively achievable entry-point, creative

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people will keep choosing YouTube as their
platform of choice over TikTok, Instagram,

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00:17:19,690 --> 00:17:23,760
Twitter, or any other social site, because
as the other platforms are attempting to get

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00:17:23,760 --> 00:17:28,290
creators to work for less, YouTube, through
the years, has successfully developed a platform

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00:17:28,290 --> 00:17:32,900
than earns creators more and more and more.\h

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00:17:32,900 --> 00:17:34,970
Of course, you know what’s coming next.

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This video—along with the payroll expenses,
contractor bills, insurance payments, footage

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00:17:39,070 --> 00:17:44,150
licensing fees, office lease costs, administrative
expenses, and every other unsexy cost that

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00:17:44,150 --> 00:17:48,860
goes into delivering you viewers what you’ve
just seen—was truly, genuinely made possible

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00:17:48,860 --> 00:17:50,470
by our sponsor, Hover.

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One of the reasons I love Hover is because
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Recently, as I was sitting with my writers
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I had my laptop sitting in front of me with
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which took less than sixty seconds and cost
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Through the years, anytime I had a technical
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They also have over 400 domain extensions
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