What exactly is the creator economy? Can you share with us some stats and key information on this space?
The creator economy allows content creators to earn revenue for their passions, and they are usually supported by software platforms or marketplaces. Some very popular examples in the world include YouTube, Instagram, TikTok, and Spotify, and the new celebrities are more and more often content creators, rather than Hollywood movie stars. Some of them are also influencers who have the power to impact the purchasing decisions of others. There are several ways for them to earn money online, but in most of the cases they do revenue sharing with the platforms that they operate in based on the created content or the subscriptions that people pay to access it.
The growth of the creator economy worldwide is one of the biggest trends right now. Currently, this market is estimated at about USD 100 billion, and in the next five years it is expected to reach USD 4 trillion. Therefore, there’s a huge demand, and the greatest driver behind this trend is the Generation Z, represented by people that were born between the late 1990s and the early 2010s. This is expected to become the most powerful demographic group in terms of purchasing power, and research from Bank of America suggests that the income of Gen Z will grow by 400% over the coming years, and by 2030 it will actually surpass the spending power of Millennials. It’s also noteworthy that this power is concentrated within certain parts of the world, and today nine out of ten Gen Zers live in emerging markets, with a fifth of them living in India. So, there is a big demand to serve this demographic group and to be able to reach out to them by paying them instant, in the preferred currency and preferred local payment method.
Having a closer look at the stats, we see that nine out of ten Gen Zers use social media platforms multiple times per day, and in the past years 66% of them have purchased products that they have discovered on social media. To get a better overview of their purchasing habits, Thunes commissioned a study on Gen Z, and the results are interesting, especially if we’re also looking at the growing number of smartphone devices. Today, there are about 6 billion people who use a smartphone, and 4 billion out of them are active on social media – and these platforms make it very easy for Gen Z and for other demographics as well to create content and monetise it.
How does the creator economy impact digital payments innovation, and what transformations take place within the industry to accommodate the payment expectations of Gen Z in particular?
If we are to look at Gen Z and, more broadly, at content creators and the platforms that are trying to get their attention, we observe that these platforms started to reward the content creators in a very transparent and efficient way. This also means that they need to provide a broad range of payment methods to make sure that, no matter where the content creators are located, they can be reached – be it in Ghana, India, Brazil, or some other place. And the big social media or freelancing platforms constantly aim to improve their monetisation model to streamline the entire experience for Gen Z and for content creators in general. However, to succeed in this space while targeting creators in emerging markets, they need to constantly innovate, because everyone can target creators in Europe or in the US – but as we’ve already seen most of them live in emerging markets and they might not have a bank account. So, you cannot send money in the conventional way, and that is where innovation is needed.
Additionally, for platforms it’s very expensive to send small amounts of money, such as two or three dollars, to content creators in emerging markets. It’s an easy process in Europe or in the US, but if a platform needs to incentivise a creator in Bangladesh or Fiji or other emerging markets, it becomes a very expensive process.
What’s more, in the report that Thunes commissioned recently, we have seen that most of them would like to get their payouts in a mobile wallet to better manage their finances. So, that’s where innovation must come about, as platforms need to be able to reach out to content creators via local mobile wallets, in local currency, instantly.
What are the main monetisation models that cater to the demands of content creators?
Creators can make money through brand partnerships, selling merchandise or services, ads, content subscriptions, and donations, among other things. Most platforms already use these monetisation models, out of which the most important one is brand partnerships, which generates the biggest revenue chunk for creators. Selling merchandise/services is also relevant, whereas advertising takes up the smallest chunk of the revenue that content creators get – under 10%. But regardless of the monetisation stream, each platform needs to find a way to send payouts to these creators, as each of them accumulates a balance for either a brand partnership or an ad, for instance. This operation is usually called ‘mass payouts’, and it can happen once per day or once per week, depending by the platform and the contract with its content creators.
How can Thunes support creator economy platforms in distributing mass payouts and streamlining the payment process, especially when it comes to emerging markets?
Creators and platforms alike need access to a payment network where making a payment is as simple as possible. The platform should also be able to easily integrate and manage the whole payments ecosystem, and both content creators and platforms want to see when the payment reaches the destination, so they need full transparency. Moreover, they need to rely on a provider that can safely process instant transfers and share the cost in advance.
Today, Thunes already powers some of the biggest social media and freelancing platforms by offering a full-service payout solution that helps them pay their creators instantly, in local currency, via their preferred payment methods – be it bank transfers, mobile wallets, or in some countries even cash pickups. The platforms need to do one simple integration with Thunes, instruct Thunes to move the money, and the payment will be as straightforward as a local one – so they won’t need to handle the complexities around cross-border payments. This also applies to emerging markets, where there is a lack of local payments infrastructure.
Therefore, we provide an alternative to the conventional international payment network, and today we do this in 126 countries, via about 300 payment methods. And what we’ve seen, particularly in the content creators’ use case, is that the demand is huge – and it’s increasing exponentially. There isn’t any doubt that the creator economy boom will continue, and we expect to see more payment innovation in this space. So, it's imperative for Thunes to continue to grow our network and payment infrastructure so we can serve the social media platforms on a global scale.
At Thunes, we are sharing a very comprehensive industry research that we commissioned into the last couple of months, in order to learn more about content economy platforms, Gen Z, and how they manage their finances. You can find more about it via the links below:
Press release
Gen Z report
About Bogdan Dinu
As a seasoned product and fintech executive, Bogdan Dinu has more than 15 years of experience in the global payments market. He is currently the Chief Product Officer at Thunes and drives innovation in cross-border payments, leveraging technology to deliver solutions in emerging markets.
About Thunes
Thunes is a B2B company that powers payments for the world’s fastest-growing businesses. Thanks to a single API connection, customers reach new markets and multiple payment options in over 125 countries without the need for countless integrations to multiple systems. Today, more than 100 banks, payment service providers (PSPs), money transfer operators (MTOs), mobile wallet operators, platforms, and fintech companies around the world use us to process cross-border payments in a cheaper, faster, more transparent, and more secure way.
Every day we send out a free e-mail with the most important headlines of the last 24 hours.
Subscribe now