Social media creators turn to subscription apps due to increasingly competitive, volatile content economy
Patreon CEO Jack Conte
Social media creators are turning to monthly subscription services to generate revenue directly from their followers in an attempt to find a stable source of income in an increasingly competitive and volatile market.
The creator economy peaked in September 2021, according to research published this month by the Bank of America Institute. While the average monthly income for content creators has increased over the past three years, a typical, full-time U.S. employee makes five times as much in monthly income on average.
“This suggests that it’s rare to earn a full-time wage in content creation — let alone get rich,” said the research, which was also conducted by the Bank of America Institute, a think tank that conducts its research using Bank of America customer data.
Analysts at the Bank of America Institute attribute this to a slowdown in paid partnerships, a more competitive market for creators, a decline in online viewership since the pandemic and a concentration of paid partnerships among the top creators.
While internet virality is unpredictable, turning content creation into a full-time career requires meeting certain financial needs, like the ability to pay monthly bills, content creators told CNBC. As a result, creators are looking to diversify their revenue streams, and in addition to paid partnerships, many content creators are increasingly looking to monthly subscription platforms like Substack and Patreon for consistency in their monthly income.
Substack and Patreon have emerged as attractive options because they enable creators to charge their followers directly for their content. Creators can offer their followers different tiers of subscriptions for monthly fees, with each tier including different perks. Since its launch in 2013, Patreon has paid creators over $8 billion, while Substack claims to host more than 4 million paid subscribers.
On TikTok and Meta’s Instagram, creators have to navigate algorithmic models that control when their content is shown, making income from those apps highly volatile. Earnings can fluctuate dramatically, spiking or plummeting based on how these platforms choose to promote their content.
“I can’t rely on that to be what pays my bills,” said Molly Burke, a creator with more than 4 million followers across her social apps. “As an entrepreneur, as a business owner, as a creator, I have to figure out how I’m going to sustain this as a career for as long as possible.”
Molly Burke, a creator known for her videos about living with blindness and navigating daily life.
Social media platforms increasingly rely on algorithms to decide what content users see, based on their past interactions and preferences. These algorithms analyze user behavior to create personalized content feeds, which often prioritize posts that are likely to generate engagement, such as likes or shares.
As a result, many creators feel pressured to make content that caters to the algorithm, even if they believe it lowers the quality of their work, content creators said.
“It ebbs and flows,” Burke said. “Sometimes my TikToks are popping and I’m getting all the views, and then that algorithm just dips for a bit.”
While nearly half of creators work full time, most rely heavily on brand deals for income, with more than two-thirds having brand partnerships as their primary revenue source, according to a separate study by influencer marketing agency NeoReach. The study found that more than 48% of creators earn $15,000 or less annually, even as the global influencer market reached $21 billion in 2023. There are more than 50 million content creators worldwide, Goldman Sachs said in April 2023.
Burke, a creator known for her videos about living with blindness and navigating daily life, has been producing content on the internet for five years. While it’s not her biggest income stream, she uses her Patreon revenue to help cover essential expenses, including rent.
“I feel extremely lucky and grateful that it is a revenue stream that I can rely on, that I know at the bare minimum I can get my rent covered this month,” she said.
Subscription platforms like Patreon address this by allowing creators to bypass the algorithm entirely, connecting directly with their most loyal fans who are willing to pay for exclusive content.
“Membership alone is a huge business for creators,” Patreon founder and CEO Jack Conte said in an interview with CNBC. “It’s creating predictable, reliable, huge sources of revenue for creators at a degree in scale that we’ve never seen before.”
Zach Kornfeld and Keith Habersberger of the Try Guys
JD RENES
The Try Guys, a comedy group known for their challenge-based videos, have 8 million subscribers and 2.7 billion views on YouTube, but in May, they announced the launch of their own streaming service called 2nd Try. The group moved most of its new videos behind a $5-a-month paywall, where subscribers can watch the new content without ads.
In the three months since launching 2nd Try, the company said it is on track to reach profitability.
“We needed to build something that we could at least have some more consistency with,” Try Guys co-founder Keith Habersberger told CNBC.
Apple CEO Tim Cook delivers remarks at the start of the Apple Worldwide Developers Conference (WWDC) on June 10, 2024 in Cupertino, California. Apple will announce plans to incorporate artificial intelligence (AI) into Apple software and hardware. (
Justin Sullivan | Getty Images
Apple has temporarily disabled Apple Intelligence summaries for news apps for users of its beta software in a sign of the challenges the company is dealing with in its AI technology.
The decision to pause AI summaries comes weeks after the BBC highlighted that Apple’s AI system had twisted its news notifications to display inaccurate facts. The pause only affects people using Apple’s beta software, not those using the company’s main operating systems.
News and entertainment apps, such as The New York Times, began showing a short message inside the iPhone settings app on Thursday noting that AI-powered summaries were “temporarily unavailable.”
The pause on one of Apple Intelligence’s core features highlights the challenge Apple faces in the roll out of its artificial intelligence technology, which has been scrutinized by many users on social media.
“With the latest beta software releases of iOS 18.3, iPadOS 18.3, and macOS Sequoia 15.3, Notification summaries for the News & Entertainment category will be temporarily unavailable,” an Apple representative told CNBC in a statement.
The spokesperson noted that Apple is working on improvements to the software that are coming in a future software update. The company did not say when it will roll out its iOS 18.3 software to users of the main version of the iPhone operating system, but it could take weeks, based on Apple’s previous software release patterns.
The decision to temporarily pause the AI summaries comes on the same day that Apple saw its stock close down 4%, marking its worst day of trading since Aug. 5. A reason for the drop was due to notable Apple supply chain analyst Ming-Chi Kuo writing on Monday that the Apple Intelligence suite of features does not appear to be boosting iPhone sales.
Apple Intelligence struggles since launch
The company launched Apple Intelligence in October as the signature feature in its latest line of iPhone models and its answer to Silicon Valley’s AI arms race that kicked off with the launch of OpenAI’s ChatGPT in late 2022.
Apple has used the AI features as the key selling point in its advertisements and marketing for its latest hardware products, but the software has been riddled with issues.
The company says that the entire Apple Intelligence system is in beta, and the update on Thursday added language to say that the AI software can produce unexpected results.
Apple Intelligence includes several features, including image generators, but the one that’s received the most attention is how it can summarize entire stacks of notifications into concise sentences — useful, according to Apple’s marketing materials, for getting through hundreds of group chat notifications without scrolling through the whole discussion.
With the Thursday update, Apple said it will show any AI-summarized notification in italics to distinguish them from other notifications.
In testing, Apple Intelligence summaries weren’t perfect, but the errors were mostly funny and obvious. Problems cropped up when the technology began being used to summarize news, and it displayed false information.
The most egregious well-documented error happened in December, when 22 separate BBC news notifications were combined into a three-part headline that started with “Luigi Mangione shoots himself.” The alleged Brian Thompson assassin has not done that.
The feature also combined headlines from The New York Times into a November notification that falsely said that Israeli Prime minister Benjamin Netanyahu had been arrested, according to a ProPublica reporter’s post on social media.
Another Apple Intelligence notification on Jan. 3 said that darts player Luke Littler had won a world championship, which had yet to take place, according to the BBC. The technology also conflated notifications from BBC’s sports app to say that “Brazilian tennis player, Rafael Nadal, comes out as gay.” Nadal is Spanish and is married to Maria Francisca Perello.
Apple on Thursday also rolled out a new feature that lets users turn off AI summaries for any app by swiping left on the notification from the phone’s lock screen. Users previously could only turn off AI summaries through the settings app.
A Duolingo logo is seen on a smartphone.
Pavlo Gonchar | LightRocket | Getty Images
Duolingo shares rose nearly 7% on Thursday following a large spike in users signing up to learn Mandarin in conjunction with soaring usage of Chinese social media app RedNote, a TikTok rival.
The company confirmed to CNBC that there’s been a 216% increase in Mandarin learners using the app compared to a year earlier. For context, Spanish, one of the most popular languages on the app, has seen a 40% increase over the same period, Duolingo said.
RedNote, or Xiaohongshu, as it’s known in China, has rocketed to become the No. 1 free app on the Apple app store, a position it’s held for most of this week. Rounding out the top five are TikTok’s Lemon8 app, U.S. social media upstart Clapper, OpenAI’s ChatGPT and Meta’s Threads.
Last week, the Supreme Court heard oral arguments in the case involving the future of TikTok in the U.S., and a law that could effectively ban the popular app. The justices appeared to favor upholding the law, and a decision could come as soon as Friday. TikTok is reportedly preparing for a U.S. shutdown on Sunday.
RedNote has so far been the top beneficiary of the American user exodus, seeing its U.S. app downloads increase by 20 times over the last week, according to market intelligence firm Sensor Tower. A Duolingo spokesperson told CNBC that the company’s marketing team is “forward-thinking and already has an active presence on Red, managed by our team in China.”
Duolingo offers online and mobile courses across 42 languages. According to its website, Duolingo has 48.8 million Spanish learners. French is the second most popular language on the app at 27.3 million users, while Chinese is eighth at 10.7 million.
Duolingo shares climbed 43% last year, topping the Nasdaq’s 29% gain.
Snap CEO Evan Spiegel, joins CNBC ‘Power Lunch’ on September 17, 2024.
CNBC
Snap shares closed down 5% on Thursday after the Federal Trade Commission said it would refer a complaint against the company to the Department of Justice.
The FTC’s non-public complaint involves allegations that Snapchat’s My AI chatbot poses “risks and harms to young users,” the commission said in a statement. The complaint stems from the FTC’s compliance reviews with Snap following a 2014 settlement regarding allegations of public deception pertaining to data collection by the company.
As part of the FTC’s compliance reviews of Snap, the agency said it had uncovered the possibility that the company “is violating or is about to violate the law.”
“A proceeding is in the public interest,” the FTC said in its statement.
The FTC did not specify what about the My AI chatbot its complaint was focused on, but the chatbot has previously drawn scrutiny.
A Snap spokesperson pushed back against the FTC’s claims in a statement to CNBC.
“Unfortunately, on the last day of this Administration, a divided FTC decided to vote out a proposed complaint that does not consider any of these efforts, is based on inaccuracies, and lacks concrete evidence,” the Snap spokesperson said. “It also fails to identify any tangible harm and is subject to serious First Amendment concerns.”
The spokesperson added that while the company shares the FTC’s “focus on ensuring the thoughtful development of generative AI,” Snap believes that the “complaint would stifle innovation and competition in a critical and growing sector of the economy.”
Jonathan Raa | AP
Snap debuted the My AI chatbot in 2023. It is powered by the large language models of OpenAI and Google, giving it the ability to answer user questions and provide tips and suggestions similar to ChatGPT and other AI-powered chatting tools.
The chatbot has been noted for providing problematic responses. In one instance while speaking with a reporter who was pretending to be a teenager, the chatbot answered explained how to hide the smell of alcohol and marijuana, The Washington Post reported in 2023. At the time of the chatbot’s initial release, Snap said that My AI, like other AI-powered chatbots, is “prone to hallucination and can be tricked into saying just about anything. Please be aware of its many deficiencies and sorry in advance!”
In Oct. 2023, the United Kingdom’s Information Commissioner’s Office issued a preliminary enforcement notice against Snap, alleging that the company’s My AI-related risk assessment “did not adequately assess the data protection risks posed by the generative AI technology, particularly to children.”
Although the FTC said that it voted during a closed meeting to issue a public statement about it’s case against Snap and its ensuing referral to the DOJ, it noted that FTC commissioners Melissa Holyoak and Andrew Ferguson were absent.
The FTC also pointed to a dissenting statement by Ferguson, who President-elect Donald Trump named in December to replace Lina Khan as the next FTC chair.
Ferguson noted that these kinds of referrals “are not disclosed unless and until the complaint is filed in court by the Department or the Commission.”
“I did not participate in the farcical closed meeting at which this matter was approved,” he wrote.
Ferguson added that he opposes the FTC’s complaint against Snap, but that he can’t “release a detailed analysis of its many problems,” because the case is not public. Ferguson wrote that the complaint’s interpretations of an FTC law is “wrong” and that it is “in direct conflict with the guarantees of the First Amendment.”
If the DOJ files the complaint, Ferguson said he will “release a more detailed statement about this affront to the Constitution and the rule of law.”
Watch: Snap CEO on earnings beat and new advertising products
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