The Africa Creators Economy Explained
The nascent industry that's not slowing down. This is a look into how companies are transforming the self-monetization boom in Africa, and how the concept of creators economy is making many rich.
Welcome back!
The creator economy is on the rise in Africa. And paving way for other opportunities also - enablers and supporters. As they say; tech is an enabler. Before now, you have to be an established artist to be famous or with a big budget to make things go viral. It’s no longer so - tech has levelled the field.
So…tech is a leveller.
Not to take one from the other, we should grant them the gift of Siamese twins - tech is an enabler and a leveller.
Africa has the world’s fastest-growing, and increasingly urbanized young workforce. These demographics, mix with improved education levels, have led to a rise in the consumption of online services.
Few Facts
Increasing Internet Access. Between 2010 and 2019, more than 300 million Africans gained access to the internet, with nearly 500 million new smartphone connections. In another decade, the number of Internet users in Africa is expected to grow by 11%, representing 16% of the total global amount. [IFC Report]
A person just needs to have a device - advantage of the rise of usage of phones and internet in Africa, to start creating content, upload the content, share the content and the next is they are a star. They’re now a creator…and because the future is mobile, they are in everybody’s face. Well, that depends on algorithms. Algorithms in platforms can be said to be a ‘technical means of sorting posts based on relevancy instead of publish time’.
The pandemic added fuel to existing trends pushing growth in the creators economy allowing for an upward rate of internet content consumption.
Welcome To The Creators Economy.
The creator economy refers to the numerous internet businesses built by independent creators - vloggers, influencers, writers, to monetize themselves, skills or their creations.
There are also companies serving these creators, from content creation tools to analytics platforms to payment processors.
The Platforms. The rise of creators and its effervescence in the creators economy is made possible because of platforms - Facebook, Instagram, Twitter, TikTok and other emerging ones.
Big tech platforms are fighting (and copying themselves) to keep creators on their platforms to drive engagement.
Interesting times. Creators are looking for ways to monetize their content more directly and earn a bigger slice of the overall revenue pie - away from platform dependencies. In the past, how the whole thing used to play out was to 'wait for you as a creator to be discovered'.
That's no longer the case. This makes the emergence of the creator economy exciting. Platforms have democratised the whole thing that a John who nobody knows can whip out something with his phone and boom!…he’s an influencer.
Now, nobody can ignore him. The platforms can’t ignore them again. They now have a voice and a following.
Last year’s end SARS movement in Nigeria could see how influencers help with the fuel - Falz, Mr Macaroni and others.
Brands are paying attention. Unheard of until recently, the profession of influencer (yeah...it is now a profession) is enjoying growing success on the continent. Eager to acquire a young and connected clientele, brands companies are now eyeing the most popular of these new social media celebrities.
Monetization. Everybody is getting paid. It doesn't pay to be famous and be hungry. It was so in the past, now creators can reap the benefit of their hard work. And they do this in many ways - brands campaign, sell product/service, advertising or tips from fans etc.
As a creator, you look like the pivotal point for social platforms to hinged their growth on and this is growing with no plans of stopping soon. There’s no shortage of monetization opportunities for you.
TikTok recently celebrated a Senagalese born Italian raised creator - Khaby Lame hits a milestone - 100M followers.
Some released stats…
In 2020, Gumroad creators earned 142milliion in total with 8 creators earning over $1million and over 170 creators earned at least $100k.
Patreon’s creators now make over $1billion annually.
TikTok announced a $1billion creator fund.
YouTube was the exception, giving creators 55% of ad revenue rather than no revenue sharing at all. It’s paid out $30B to creators in the last 3 years. (CB Insight)
It is estimated that by 2025, the Internet economy will contribute nearly $180 billion to Africa’s economy. (IFC)
How Creators are Monetizing Their Brands
I’ve talked about the creation of content and the viral possibility. It doesn't end there. That’s just the start. You have to actually build a brand to start getting paid enough that you’ll quit your job and go full time.
While it’s easy to start (create) a video on YouTube, Facebook, Tiktok OR a newsletter on Substack, Revue or Bulletin, OR podcast on Clubhouse, Twitter Spaces, Fireside, Reddit Talk or online course, it turns out that running a content business is difficulty and hard work. I mean really hard. In fact, content may be the single worst digital subscription model a solo entrepreneur can choose.
It all started with passion. Passion is alone is not enough. Even if you love writing, speaking, acting, performing or teaching, making content the bedrock of your empire in an age of extreme competition for attention is a recipe for pain and heartache.
It’s beyond the passion economy. It is the creators economy.
The fact is when you stop writing, teaching or recording, people stop paying.
It’s exhausting.
That’s you should start thinking of the business from day one. You should always be in demand. You are sometimes required to burn the midnight oil to keep your audience engaged.
As being an influencer/creator evolved into a more full-fledged career, indirect monetization proved insufficient. Ad deals depend on the notion of brands, most times with strings attached, is bound to fluctuate from month to month, forcing creators to cater to broad audiences, making it difficult for them to double down on specific niches or demographics.
The Platforms are paying.
The current robust creator economy is propelled largely by the tools that allow smaller accounts to monetize their own work more directly. These include - Selar, Fidia, Plaqad, Talent-X and other African emerging startups.
Creators are having prominence. After years of fighting to be taken seriously, they are finally being recognized.
Facebook has the creators fund and says it planned to have invested $1b at the end of 2022. In 2020, Substack offered $100k grants to independent writers and in 2021, announced a $1M initiative to fund local journalists. Nigerian writers - Joey Akan and David Hundeyin were beneficiaries of the grant. Twitter has started adding a Tip Jar to user profiles which is essentially a way to get paid as a creative, and recently, they announced super followers. YouTube launched several ways to help creators get paid.
The battle for creators is unending. I don't want it to stop.
Read these —->
Spotify Greenroom: Live-Audio App Answer to Clubhouse.
Clubhouse announces plans for creator payments
Others…
• Substack writers take home 90% of subscription revenue.
• Twitch partners collect half of their subscription fees.
• Patreon creators get paid between 88% to 95% of their subscriptions.
• OnlyFans creators take home 80% of their earnings.
Let’s Talk About Payment.
In one of our memo, we talked about how the emergence of fintech caused a forward spur for e-commerce in Africa because now a merchant can get paid without worries…and by that, we’ve seen embedded finance has a thing.
The same is happening in the creators economy. They are getting paid. What is a better way to pay them? How - as a creator, do you want to receive payment for your work?
Whether creators are gaming streaming, put up a paywall for analysis on niche internet memes, or selling feet pictures, these creators are pursuing alternative ways of monetization.
A flourishing ecosystem of startups is emerging to meet that demand, from app-specific editing tools to multi-channel analytics to merchandising tech to payment.
The Payment Problem. In Africa, processing payment is an issue that's being solved. One of the reasons content creators in many of these platforms like Substack or Patreon have not really scaled in Africa. Payment is skewed.
For instance, Substack uses Stripe as its payment processor, writers in Nigeria can’t set up a Stripe account to easily monetize their newsletter subscribers. “Akan says he eventually haggled his way into obtaining an American bank account…” - Rest of the World.
Startups are trying to solve it. Two ways - Payments startups like Paystack and Flutterwave making it easy for Africa creators to receive payment. Others like Fidia, Selar, Talent-X and Plaqad make it easy for any African creator to monetize their craft.
Technically, creators need a platform to host their content and a more effective way to monetize and manage their money - e.g. tax.
Rise of the platforms (startups) in Africa solving for the creators economy
Selar an eCommerce tool creatives & entrepreneurs use to sell their content, products and services across borders without any hassle.
Fidia enables creators to receive payments, sell digital products and accept membership subscriptions from their audience.
Plaqad Discover and collaborate with top influencers, content creators and publishers from all over the world and begin your journey to making your voice heard.
Shukran is a platform that gets you earnings from people who enjoy your creative work regardless of your audience size or algorithm.
Honeycoin Helping Creators & Gen Z build wealth and manage their money is what we do.
Talent-X finds the best projects to empower producers, filmmakers, investors and distributors to create the best African content that will capture the hearts of the people worldwide.
Africacreatores Sell digital products, physical products and multiple services from a single platform.
Amaze makes impossible connections possible; helping bridge the gap between celebrities and their fans.
Minly allows users to buy personalised video messages and shoutouts from their favourite celebrities.
*Watch this space for our deep dive into the stats of the startups and investors powering the creator economy in Africa - the drive, the funding and the numbers.
You also have Paystack Commerce and Flutterwave Stores playing as a platform and payment processor.
These platforms are making the numbers too.
In 2020, Selar grew to 17k users and $270k in revenue, and in 2021 they already paid $1M to creators with 60k users.
Beyond payment…Investment
We’ve started noticing that investors are not blind to the creators economy either. Somehow, I feel the first in - wins. Investors are not sleeping. Investing in this nascent sector - a chance to bet on the future success of an internet personality - has been gaining steam.
The creator economy has seen a record $1.3B in funding in 2021 alone. - CB Insight
Egyptian startup Minly, a platform empowering stars to create authentic, personalised connections with their fans across the MENA region, announced last month - July, that they’ve closed an oversubscribed US$3.6 million seed round.
Amaze - Africa’s Cameo, announced recently that it got undisclosed investment from the likes of Don Jazzy, I&I VC, Bisola Aiyeola and the Temple Company.
The craziness of an idea.
TakeHumanIPO. A type of exchange to let fans buy and sell shares of people. It sells investments in social media personalities, entrepreneurs and venture capitalists.
According to The Information…
Soccer legend Pelé went live on HumanIPO, selling 10 shares of $PELE for $10,000 each. Shares of $PELE have risen 1.5% in the last week, to $10,150 today. That’s better than the 0.3% rise in the S&P 500 over the last five days.
Sheridan Clayborne, the 21-year-old cofounder of 401k match service Lendtable, will sell shares of himself at $100 a share. The startup takes a commission of between 1% and 10% from the creator raising money and a 0.5% fee from investors when they buy or sell shares.
Rel Brands help creators start their own retail brands. The concept sounds similar to Pietra, which handle the logistics of creating a product line.
What next…
At this stage, the Africa creator economy is still fairly nascent, but investors are beginning to take note given the recent investment in the space - Minly and Amaze. We should expect media giants to roll out more monetization tools in an effort to keep creators and their fans engaged on their platforms. In that same fate, creators are likely going to favour becoming platform-agnostic and become independent brands to make certain they're less dependent on any one platform. And get paid how they desired.
Here's what else is going on
Deals
Pngme, a platform that provides financial institutions and fintech startups with users data via its API and machine learning infrastructure, has announced a $15 million Series A.
PayQin, a cross-border payment startup that operates a comprehensive e-wallet service for the underbanked in West Africa, is announcing a new €300K seed investment round that takes the company’s funding up to $1 million.
What we overheard
Pantami recently took members of the board of NITDA to Turkey, in a bid to bribe them to get his controversial bill to scale through.
Ghana-based payments startup Waya is seeing month-on-month growth of between 20 per cent in its three existing markets, prompting it to launch expansion activities into three additional African countries.
The Central Bank of Nigeria has just frozen the bank accounts of Nigerian fintech platforms Risevest, Bamboo, Trove and Chaka for the next six months.
What We’re Reading and Watching
• Gen Z LinkedIn is full of parodies and snark (Bloomberg)
• Social media fraud: The influencers promoting criminal scams (BBC)
Thank you for reading the Edition Newsletter! I’d love your feedback, ideas and tips:omamuzo@thespicenetwork.com
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About Edition
Everything you need to know about the booming Africa tech and creator economy, from the platforms to the people to the deals. Start reading for free.
About Omamuzo Samson
Omamuzo Samson is a writer at The Edition writing about the tech and creator economy. He also works as a Product Marketer at Curacel. Based in Lagos, he can be reached at omamuzo@thespicenetwork.com or on LinkedIn at omamuzo-samson.
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