The Creator Economy
In this post the writer highlights some of the fundamental changes we are seeing within economics and the directions we are moving towards:
“Creator economy enables individuals to create and share their creations via technology platforms. Under the realm of the creator economy consumers no longer just passively consume, they also actively create and contribute.”
During the early years of 20th century we have experienced the industrial economy that matured during the mid of 20th century into consumer economy. Later at the end of 20th century consumer economy slowly made way to the current phase called by different names like maker economy, engagement economy, or creator economy. The following two famous quotes from the path breaking leaders of these different eras highlight the tremendous shift that has taken place:
“A customer can have a car painted any color he wants as long as it’s black.”– (Henry Ford, 1909)
“One thing I love about customers is that they are divinely discontent. Their expectations are never static – they go up. It’s human nature. We didn’t ascend from our hunter-gatherer days by being satisfied. People have a voracious appetite for a better way, and yesterday’s ‘wow’ quickly becomes today’s ‘ordinary’. (…) You cannot rest on your laurels in this world. Customers won’t have it.” – (Jeff Bezos, 2017)
A close exploration of this evolution offers us some leading indicators of what the future may hold for businesses. In this blog, I will attempt to highlight some of these leading indicators and factors that may play a major role in the upcoming economic evolution. But before digging deep into creator economy, let’s briefly explore the overall evolution.
- Industrial Economy (1900 – 1960): The inception of industrial economy can be attributed to the idea of assembly line pioneered by Henry Ford. Production methods powered by assembly lines enhanced productivity and brought down the product prices dramatically.
- Consumer Economy (1960 – 2005): Post-industrial era, the focus shifted from efficient production to finding large volume of customers. During this time, the penetration of television and other mass media marketing initiatives allowed businesses to create the demand. Further, the launch of credit cards and easy financing schemes allowed customers to utilize the credit system to fund the consumption.
- Creator Economy (2005 onwards): During the initial few years of 21st century with the advent of digital platforms like Google, Facebook, Android, and iOS we moved into the new phase of economic evolution often named as Creator economy. Creator economy enables individuals to create and share their creations via technology platforms. Under the realm of the creator economy consumers no longer just passively consume, they also actively create and contribute.
“Creators are ordinary individual like you and I, who in the course of our daily lives often think we are consuming something but in fact we are creating, or consuming and creating in the same single act.” – Paul Saffo
Some examples where digital platforms enable us to create are following:
- Youtube enables you to create movies and find an audience.
- AirBnB allows you an entry into hospitality business if you have a spare bed room.
- Twitch allows you to record and share your video game play with millions of viewers.
The above examples highlight how digital platforms are enabling many of us to become active creators. Further, let’s dig a little deeper to identity numerous other ways that are enabling every one of us are to become an active creator:
- When you are posting a restaurant review on Yelp, you are creating.
- When you are letting your friends know about your feelings via FB or Twitter, you are creating.
- When you are uploading an image on Instagram, you are creating.
- When you are using the mapping application on your phone, you are creating.
- When you are going out for a run with your fitness tracker, you are creating.
- When you are ordering something from an eCommerce portal, you are creating.
- When you are renting out the spare disk space to a distributed service (like Filecoin), you are creating.
In addition, the advent of innovations like 3D printing, renewable electricity production, increased penetration of IoT infrastructure, and surge of interest in DIY approaches is going to enable multiple new forms of creation in both digital and physical worlds.
Are you a Creator or Are you a Consumer?
Many of us may feel the things highlighted above are acts of consumption and not creation. For example when using our fitness tracker to track our run we are using the tracker, when publishing images on Instagram we are using the Instagram platform, or when using Google maps for navigation we are consuming Google’s service.
All of the above may look real on the surface but if we peel off a few layers we can see how we are creating during all these acts in the following ways:
- When using free social networking services like Facebook, Instagram, Snapchat, Twitter we are constantly creating data streams.
- When using services like Google Maps, iOS applications, or Android platform we are not only creating data streams but also acting as a source of feedback for these organization.
- Whenever we place an order on eCommerce portal we are creating a digital footprint about our needs and personalities.
Further for all these seemingly free services we are paying in one or more of following forms:
- For Google Maps you are trading your privacy for convenience.
- For social networking services you are trading your attention to connect with your friends.
- For messaging services you are again trading your personal profile for communication.
“When you decide to like something, I mean, you may feel you’re sort of innocently putting out your preferences, but actually you’re delivering something of enormous value, which is indicating that, you know, you’d essentially like to be advertised to by this company.” – Tim Wu
Costs of Creation:
In the traditional world, whenever we create something we usually expect to some quid pro quo exchange before we share our creation with either individual or groups. While using many of the existing digital platforms we often feel that they are free. However, in the creative economy we should carefully evaluate the following things before declaring the digital platforms as free:
- Consciously evaluate how much we are creating while using these digital platforms. For example when using a smart home device we should consider the constant data stream created by the device.
- Consciously consider how we are paying for the services that costs us nothing? Are we paying in form of sharing our data streams, are we paying in form of our attention, or in another terms, are we constantly paying by participating in the A/B testing, etc. In addition, are we paying more than we may wish to be paying for these services without even realizing?
“Nothing new comes into our lives without a hidden curse and the more powerful the thing that arrives in our life the more subtle the hidden curse is and thus the greater the responsibility to the innovator to help solve the problem.” – Heraclitus
Pillars of Creator Economy:
The following are the four primary pillars of the creator economy:
- Privacy: Most of the digital platform that enable us to create are driven by the business model that require us to forgo the control of our private data. With time as the consumer consciousness will grow consumers will demand more control on their data and privacy will find place at the heart of creator economy.
- Ownership: Most of the products that we own today like cell phone, fitness devices, car, thermostat, etc. generate constant data streams. We may feel that we are the owner of these devices but actually we act more like a service subscriber without any ownership on the data stream that is being produced by our devices. This idea will experience a sea change as more and more consumers will realize the value of their data.
- Value Exchange: As more and more consumers will take control on their creations they would like to receive tangible value attributed to their creation from the consumers of their creation. This will require new value exchange methods to emerge in the creative economy.
- Personal Reputation: In a world where anyone can create and market their creation, we will soon reach a validation score to demonstrate the reputation of the creator. Creators who will carry high reputation scores will be able to gather more value for their creations.
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