This article is part of the On Tech newsletter. Here is a collection of previous columns.
This week, On Tech will examine the economics of what is sometimes called the Internet creation economy. There are people who are so good at making online entertainment or information that they try to make it a job. Your favorite comedian on Instagram, plant head on TikTok or YouTube stunt artist are creators.
Some of you may be thinking: To is a job? It is. These online professionals test the Internet’s promise to enable anyone to earn a living from creative pursuits. We are entertained by the work of the creators, and they influence what we buy, the music we listen to, and how products are promoted.
Internet professionals are also at the forefront of the spear of what works and what is not with the digital life as we know it. Several creators now say they want a chance to share in the riches of online businesses – and we should listen.
Let me back up.
We mostly work for free on the internet.
There is no Facebook, Instagram, YouTube, TikTok or Reddit without the posts, memes and garden groups that we make voluntarily. Some people have figured out ways to monetize online popularity, including by selling goods, getting paid by their fans, and signing promotional deals outside of the major internet sites.
But shouldn’t all online stars – and perhaps the rest of us who post online – share in the wealth of Internet businesses?
YouTube figured out a way. Since 2007, the Google site has been selling ads on YouTube and handing over more than half the money to people who make videos when they reach a certain level of popularity. When YouTube makes more money, so do these video producers.
Other companies, especially Facebook and the streaming site Twitch, are cutting a small number of video producers into their advertising money. But YouTube remains the only major digital service that systematically diverts a large portion of its revenue to people who manufacture its products.
Last week, popular internet personality Hank Green made a video comparing what he gets paid on YouTube (well) with what he gets paid from TikTok (not so good), which has a shared lump sum to creators that the company pays. out under a complex formula.
Green’s point was that as TikTok earns more, creators effectively earn a smaller share of what the company brings in. Implicit in his video was a question as to why more companies are not doing what YouTube is doing and sharing a sizable portion of their advertising revenue.
All internet companies now say that creators are essential to keep users entertained and loyal and they are trying to make it easier for fans to pay creators or buy their products.
It’s all potentially useful. But internet companies make a lot of money from ads. Green envisions creators coming together to pressure more of these companies to directly share their ad dollars with the people who keep their virtual shelves in stock. It could create a healthier and more robust online life for all of us and better jobs for the people who are trying to make a living from their work online.
“There is a business case that needs to be made to share revenue and there is also a fairness case,” Green told me.
Green pointed out in his video that because YouTube ads run in most videos, it’s more straightforward for YouTube to split the ad money up to creators. It would be harder for TikTok, Instagram or other sites that do not use ads in the same way. YouTube’s revenue sharing model is also an option for only the most popular video producers.
Green knows that YouTube-style revenue sharing will not be a cure for all that is wrong with the Internet. And like any other workforce, not all creators want the same thing. Some agreed with Green that YouTube-style revenue sharing is a great way for them to earn a more stable and sustainable life. Others said they preferred TikTok’s fund for creators or Twitch’s ways to let people monetize live-streamed videos.
Investor Li Jin told me that the best path to healthy digital economies is not for Internet companies to redistribute their income differently, but to wipe out the absolute power of companies over online creative work.
There is also an economic mercenary argument: Why would a company give up money if it was not necessary? There will always be some hungry young people who are happy to do things online for nothing.
But this is a moment when established norms for the Internet are being questioned. Let’s extend it to the economy of who gets paid, and for what, to make the internet fun and useful for all of us.
Coming on Wednesday: Apple’s app commissions erode creators’ earnings. And Thursday: How an Online Personality Makes Money at Digital Work, in a Zillion Different Ways.
Before we go…
Hugs to this
This great horned owl keeps its egg toasty on a windy day. (The earplugs that blow in the wind are just too much.)