Creator funds suck: Turn creators into shareholders instead
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Instagram versus TikTok: Which platform is better for turning content creators into successful independent businesses?
This article was going to answer that question. But it turns out that was the wrong question—because the answer is that they both suck.
Instagram and TikTok are doing anything they can to attract creators. Anything, that is, except the one thing that would create a fair value exchange between platform and creator: partial ownership of the platform company.
It’s hard to believe that no platform has offered creators a deal worthy of their value since YouTube triggered the era of monetized content creation with its Partner Program in 2007. Sadly, YouTube’s offer of 55% of its ad revenue is the best it gets for creators who may want to rely less on brand sponsorships and more on app payouts.
Unless they want to get locked into creating more content for less income, it’s time creators took collective action to demand more. And as decentralized autonomous organizations (DAOs) mature past their potential for scams, it may be the perfect time for them to do it.
Instagram and TikTok: Satisfying egos, not bank accounts
Instagram and TikTok aren’t like YouTube—you don’t see ads before you watch a piece of content on either platform. So at first glance, it makes sense why neither platform would adopt YouTube’s ad revenue share model.
In July 2020, TikTok announced its $200 million Creator Fund for creators that had at least 10,000 followers. A year later, Instagram launched its own bonuses for Reels, an invite-only program for U.S. creators that promised to pay out $1 billion within a year’s time. Amazing, right?
Except not really … because both funds remained static as more creators joined each fund. That means the more creators access the fund, the less each of them gets. Some creators who made bank on TikTok in 2020 saw their earnings plummet as more creators joined the platform. Victoria Paris (1.3M followers), for instance, posted a chart of her TikTok earnings that showed a decrease of two-thirds in the past year.
On Instagram, access to the fund has been clunky and opaque. One creator noted on Reddit that they were entitled to a $35,000 bonus for a video that received 58 million views, but then received an error message when they tried to act on the notification. There have also been inconsistencies in bonus criteria and follower thresholds, with one creator with 52,000 Instagram followers offered $1,000, while others with similar follower counts were offered $600 or $800.
And while it’s easier to get followers and see high view counts on TikTok, their Creator Fund seems even less valuable compared to the engagement seen on the platform. In January 2022, Hank Green posted a video in which he calculated that if TikTok shared ad revenue the same way YouTube did, creators would be making six times what they do at current rates.
If creators want to build toward platform revenue, it seems their best bet is to grow their following on TikTok and transfer some of that success to YouTube. Rebecca Rogers, a schoolteacher with 2.3M followers on TikTok, says, “I like to think of TikTok as a springboard for other platforms. In all reality if I had to pick one platform to bet all my marbles on in three years, it would be YouTube.”
Is it possible to stabilize revenue as a creator?
It’s normal for creators to accept inconsistencies with app payouts, as they’ve learned not to rely on them in the first place. Brand sponsorships have long been the accepted way to make money on Instagram, so why should creators care if they can’t rely on the app for revenue?
While she’s hopeful about the future of Instagram bonuses, Anna Rios, a registered dietician with more than 86k followers, notes that engagement on sponsored content isn’t what it used to be. “Instagram seems to completely hide sponsored content,” she says, “which leads to extremely low engagement. Instagram has made lots of changes to their algorithm in the past few years that has negatively impacted most content creators by lowering engagement rates.” She adds that recently it does seem the algorithm has changed yet again to increase engagement on sponsored content, but she’s “not sure how long this will last.”
Creators have long accepted that their income is tied to their engagement rates. This acceptance can, ironically, create a false sense of control, a belief that they can see high engagement rates—and lucrative sponsorships—if they’re creative and hardworking enough. But the reality is that engagement rates can suddenly rise or plummet when a platform tweaks its algorithm or format priorities, oftentimes forcing creators to pour even more hours into adapting content to fit new channels and formats.
Platforms and creators alike are in a tough spot as Instagram and TikTok compete with each other to remain relevant. Instagram, for example, all but forced their Reels format onto creators to compete with TikTok. Meanwhile, some Instagram creators who were most successful on the platform weren’t prepared to switch formats. The consequences can feel like whiplash for creators who suddenly don’t see as much income as those who moved over from TikTok and took to Reels like ducks to water.
As the creator labor movement picks up speed, more creators may realize just how much platforms need them. Creators are beginning to see themselves as valuable beyond their performance metrics for brands, which makes sense given how difficult it still is to track non-linear buyer journeys from creator to product purchase.
Could this also mean that creators start to expect more beyond fluctuating incomes dependent on platform whims?
Creators offer as much value as shareholders
When Hank Green released his “So… TikTok Sucks” video, he offered three possible ways creators can get paid what they deserve: collaboration, competition, and collective action. But he left out another important avenue: ownership.
In 2021, TikTok made $4.6 billion. That same year, Instagram made $47.6 billion. Suddenly $200 million and $1 billion creator funds don’t seem as significant.
Given how much platform attention—ahem, revenue—is generated by creators, you could argue that creators generate just as much value as investors—so why not give them partial ownership of the platforms?
Similar to the ideology behind DAOs, if creators owned the platforms they create for, it would incentivize them to contribute quality content while getting paid fairly and working collaboratively to hold each other accountable to community standards.
Web3 is supposed to make it easier for creators to branch out and own monetized channels, which can surely reduce their dependence on Web2 platforms like Instagram and TikTok. But will creators be able to see the same kind of reach without the benefit of centralized attention? Maybe—but if so, we’re years out from this.
In the meantime, social media platforms that want to attract creators to their platforms should consider offering them company shares. Influencers have clearly created enough shareholder value since the creator economy started to take off 15 years ago. Creator funds just don’t cut it as suitable recognition.