This article first appeared in Digital Edge, The Edge Malaysia Weekly on April 22, 2024 - April 28, 2024
Quietly, gradually, our ways of consuming information and entertainment have completely shifted. The old Hollywood model of entertainment, and the old system of news cycles via massive media conglomerates, are essentially and fundamentally outdated.
Long past are the days where the power of information and entertainment lay in the hands of a select few executives sitting in a boardroom, deciding which story should be on Monday morning’s front page or which celebrity is the next “It girl”.
The creator economy has changed the very structures of how we have consumed media for decades. Recent research by Omdia shows TikTok overtaking Netflix as the most popular app for those under 35 in the US, with YouTube taking the top spot.
According to the Influencer Marketing Factory, the creator economy in 2023 comprised a substantial 207 million individuals, of which about 45 million are professional creators while the remaining 162 million are considered amateur ones.
Regardless of how much they earn, the power for anyone with a smartphone and an internet connection to publish content has changed the game, for consumers, publishers and businesses. The influencer entertainment industry permeates everything, but it does not stop there. Journalists have gone independent from household-name media giants, choosing instead to write, direct or produce their own news on creator economy platforms like TikTok, Substack and YouTube.
Even niche, traditionally offline trades have found their place in the creator economy: there are pro surfers who no longer need to depend on corporate sponsors and competitions, car detailers — people who deep clean cars — have earned themselves millions of watchers who find comfort in oddly satisfying time lapses. It is the same with farmers in rural China or carpenters in suburban North America who have discovered global audiences eager for their unique content.
What do creators and electric vehicles have in common?
But with the colossal rise of such an economy comes logistic friction. When the adoption of electric vehicles (EVs) rises in any city, there is a scramble for logistics. Are there enough charging spots? Will the city’s electricity grid be sufficient? How safe is it to charge an EV at home? The challenges differ from car to car and city to city. In Hong Kong, where the roads are narrower than in the US, space for roadside charging facilities is limited.
The equivalent for the creator economy is money — essentially, how creators get paid.
Both an electric vehicle and a creator need the fuel — electricity and money — to sustain themselves, but the infrastructure delivering this fuel is either sparse or not keeping up with the pace. According to payment service provider Stripe, more than US$25 billion of payments were made to creators across all major platforms globally last year. But The Fintech Times revealed that 90% of creators still experienced a multitude of challenges when receiving payments.
Why is creator payment infrastructure important?
The creator payment infrastructure is important because the creator economy is important — for both businesses and creators. Robust payment infrastructure is in the creator’s own interest, but businesses should also be cognisant of how important this is for them as more businesses begin harnessing the influence of creators for their marketing strategies.
Spending on creator marketing in Europe has more than quadrupled in the last half decade. In 2020, for example, investments reached US$1.4 billion, marking a 14% increase from the previous year’s value of US$1.3 billion. With creator networks spread across the globe, businesses need a safe, easy way to send money securely and compliantly anywhere, in numerous currencies.
Since being a creator is essentially freelance work, the speed and transparency of payments are key drivers of loyalty and retention. Creators want to be paid efficiently, correctly and securely. Repeated late or incorrect payments from business to the creator could lead to a drop in partnership.
What is so difficult about creator payments and how do we fix it?
There are a few issues.
Cross-border payments mean payment strategies must be adjusted to specific markets, requiring dealing with various back-end systems, licensing issues and technical challenges. Transactions pass through an average of six financial institutions (FIs), and wire transfers take as long as five days to arrive.
Moving money in real time is important since creators usually depend on fast and efficient payments to fund their work, but delays in payment processing are still common.
Tax obligations need to be managed, since creators are still subject to local taxation on earnings. For payment platforms, the challenge is managing withholdings in different jurisdictions.
Financial diversity means complicated processes and juggling multiple payment methods. Emerging markets are a key growth area for creators and businesses, but economic conditions vary widely. For instance, in Asia-Pacific, payment delays took several days due to legacy systems.
Moreover, 70% of the population remains unbanked or underbanked in Southeast Asia, meaning they may not have bank accounts and won’t be able to send or receive money through traditional means.
A robust economy needs robust infrastructure and tech
Imagine the challenges if, instead of relying on centralised infrastructure, EV owners had to use various means of transferring electricity from power companies to their vehicles, dealing with delays and unsafe methods.
Generative AI (GenAI) has been the buzzword of 2023 known for productivity, but what if it could streamline creator payments too? In fact, Adobe has plans in place to pay content creators using Firefly, its new GenAI model for designers. Though the exact details are still unclear, there is no doubt that it has the power to revolutionise the payment industry.
The creator economy is not going anywhere but up, and new payment infrastructures are worth investing in if they help creator platforms become more efficient and flexible in connecting businesses and creators. When there is reliable infrastructure, tech and systems, there is faster expansion, a better experience on both ends and reduced costs. This is the recipe for the creator economy to blossom.
Shawn Balakrishnan is partner for Asia-Pacific at Penta Group, a stakeholder solutions firm
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