R Pal Social media platforms are revisiting creator funds, but as the model falters, it raises questions about long-term sustainability and revenue-sharing alternatives.
Creator funds are making a comeback. In 2020, TikTok pioneered the concept, sparking a trend across platforms, with names like Substack and the Billion Dollar Boy agency launching their own versions this year. The premise was simple: incentivize creators with cash to produce content, generating engagement and, ideally, platform loyalty. However, recent trends suggest the allure of quick payouts is fading, and the long-term viability of creator funds is under scrutiny.
Despite their initial success, TikTok and its competitors—such as YouTube and Snapchat—have gradually moved away from these funds in favor of more sustainable revenue-sharing models. The reasoning? Creator funds, although appealing in the short term, often offer unpredictable and paltry payouts. While platforms initially offered large sums, creators soon realized the compensation didn’t match the effort required, leading to dissatisfaction and disengagement.
YouTube’s shift toward a revenue-share model, where creators earn a cut from ads, represents a more stable financial future for content producers. This model, though requiring a larger upfront investment from platforms, aligns more closely with creators’ interests, offering a percentage of the revenue their content generates, rather than a fixed, one-time payout. Similarly, Snapchat’s decision to wind down its creator fund has been accompanied by a greater focus on offering creators a share of ad revenue through its Spotlight program.
For platforms seeking to build lasting partnerships with creators, offering equity in the form of sustainable revenue models may prove to be a more successful approach than chasing headlines with one-off payouts.
