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Hank Green takes over Chelsea’s Tuesday show to talk about the creator economy, the finances of making content on platforms like YouTube and TikTok, and the exchange of uploading stuff for free.

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Hello, I'm Hank Green.

I've been a YouTuber for a very long time, and I asked Chelsea last week if I could take over The Financial Diet for a day because I just want to talk to more people about the creator economy, the gig economy, and making money online in general. There are now tens of millions of people who make some portion of their living being an independent creator on the internet.

They make things, they post it on a content platform, and some way money comes to them. I've been doing that for 15 years now, and yet, somehow, it seems that most people, including people who do this for a living, do not correctly understand the relationship between the creator and the platform on which they post their content. This is an extremely common business relationship.

It's an increasing way that people are making a substantial portion of their incomes, but almost everyone is getting it wrong. The creator economy this year is going to generate about $100 billion. That is similar in size to the motion picture industry, and it's a world that a lot of people, maybe you watching, are involved with somehow.

But despite that, I think that we have misunderstood how this economy actually functions and what the relationships between the parties are. It makes a lot more sense if we understand that. So let's take a little bit of time to figure it out.

So, a person who creates content on a platform will often take their creative identity from that platform. They are a TikToker, or an Instagrammer, or a YouTuber. But while I think constructing that identity makes some sense, that's not what you are.

You are a content licensor, and the platform is the licensee. Whenever you post content on a platform, you are offering that platform a license to that content. The platform, somewhat implicitly at this point, agrees and that license grants them certain rights to your content.

They can host it, and share it, display it, and monetize it. They do not own it, though they do own the systems on which it is shared. An Instagrammer owns their photos and videos, but they do not own their Instagram account.

A YouTuber is a person who owns intellectual property and licenses it to YouTube. That license allows YouTube to sell advertisements against that content, and this is the foundation of their business model, and also of what we are coming to call the creator economy. Because look, none of these platforms exist without the content that is posted to them.

They thrive when the content is compelling, when it attracts and retains attention, and so platforms create systems that encourage both new and established creators to work hard to create compelling content. And those systems, at their root, have two different rewards. One of them is attention and the other one is money.

Sometimes attention is enough. Like no one's getting paid for their tweets, but theoretically people are getting something out of tweeting them or else they wouldn't do it. Other platforms, though, especially those that ask for more than 280 characters from their creators at a time, they offer more.

Instagram, for example, doesn't share revenue, but there are lots of opportunities for making money on Instagram. There's just a really robust brand deal economy there, it's taken a long time to build. Instagram helped to build it so that there would be reasons to create better, and more compelling, and higher quality content on the platform.

This same thing goes for YouTube, where there is a really robust brand deal economy, and also they sweeten the pot by sharing 55% of the revenue generated by advertisements on videos with the creator who posted that video. But all of this economy has grown up around a really simple arrangement. Content platforms provide opportunity for creators, and creators provide content for the platforms.

But that is not to say that they are obligated to provide opportunity to any specific creator. They're not here to help any individual succeed. They want creators to succeed on their platform because success on the platform looks like creating content that is compelling to people and keeps them watching and connected to the content.

And if they're connected to the content, then they are connected to the platform. What we are arriving at here is that platforms don't work for creators, and creators don't work for platforms. A YouTuber does not work for YouTube.

TikTok doesn't tell a TikToker what to create, though they might give them advice. Instagram gives creators an opportunity to build a business on their platform by having some systems that might surface your content to new audiences, but it doesn't do that to reward the creator, ultimately it is doing that in service of Instagram. And if it stops doing that for an individual creator, that can feel really unfair.

Because the idea was that we're working together, and you, Instagram, are helping me, the creator, build my business. But that's not what they're doing. Instagram is helping Instagram build its business.

If there's another creator out there that helps them do that better, if there is another strategy out there that helps them do that better, it isn't cruel or mean to say that they will take those opportunities. Because that's what the business relationship is. I think sometimes the way that these platforms pitch themselves to creators does make a little bit of a false narrative that's about, we are here to help you do your thing.

But honestly, this works because creators and platforms want a lot of the same things. But it is important to remember that they do not want all of the same things. Indeed the creator economy is very much like the gig economy, except instead of the app telling you exactly what task it would like you to perform, the app is just a place that gives you an opportunity to reach people.

And there are various and complicated and constantly changing systems that will reward content in different ways if people find it compelling. Now there are ways in which this is worse than the gig economy. The money is not steady, you have no clear path to the next job, it's less reliable.

There's no guarantee of any money at all. Oftentimes, whether this is unintentional or intentional, the scale of the opportunity is vastly inflated. So this can lead to people working very hard to create content that ultimately can never pay for itself.

But also there are ways that it is better. It's much more actually analogous to a person who is running their own business and then trying to get their product consumed or sold on a marketplace. You, as the person involved in the economy, are in charge of what you do.

And at the end of the process, you have something, whether it is your content or your audience. You can do things with your audience, oftentimes things that generate revenue. So what does this tell us?

Where have we arrived? What can we gain from this? Well, what it teaches mean is that content platforms really only do three things to create their value.

Now, they do other things to monetize that value, but the actual value they add are these three things. They create systems to host content. They create systems to encourage people to create and post that content.

And finally they create systems to surface the content that the users will find compelling. And so, and they understand this, it is their job to convince creators to make and post quality content on their platform. And there are valid in valuable ways to do this, particularly when it involves sharing some of the colossal amounts of money that they make.

Other ways that they do this can be pretty exploitative. Like showing creators rapidly increasing vanity metrics that will make them think that they have a lot of opportunity for potential income that they don't actually have. But it is ultimately the decision of the creator whether or not to make content on one of these platforms.

Many of those people are chasing a dream. But for some people it's a dream that does become real. But it's a lot easier to interface with when you understand it for what it is, which is a business.

Content creators are small business owners. Creators have a job to do. It's to make content that captures people's attention, that holds onto that attention, and that provides people value while you have that attention.

We are there to provide value for our audience, and also, yeah value for the platform.