The Platform Economy: Winners, Losers, and Inequality

 Being an influencer when you grow up is already one of the professions children dream of. And it's no surprise, considering that their role models are increasingly far from the TV and more on YouTube, TikTok, or Twitch. However, for the vast majority, that dream will remain just that, as the economic model fostered by the Platform Economy remains particularly unequal, and making a living off them is a privilege only accessible to the top 1%. "Don't be blinded by the numbers we earn, because that's not reality," emphasized popular streamer Ibai Llanos.

I earn about 50 euros a month; to pay the bills, I have a regular job," explains content creator Marta Llanos. In the eyes of Social Security, this young woman is the head of social media and marketing at an academy in Barcelona; In the eyes of her 8,940 subscribers, she's a YouTuber who analyzes current events through socially critical videos, covering everything from the Squid Game boom to the lack of a gender perspective in a homophobic comment by Arévalo. On Twitch, owned by Amazon, streamers earn money through their followers' subscriptions (ranging from €4.99 to €24.99 per month), and the higher the subscription fee, the greater the share the creator takes, which can range from 50% to 80% of the revenue.

What do the platforms pay

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A recent study indicates that up to 62.2% of them feel they are not paid enough for a profession that, rather than an aspirational dream, has become an "unsustainable activity." In recent years, the creator ecosystem has become the "fastest-growing type of small business," according to SignalFire, a boom that has led platforms to introduce new monetization avenues as an incentive to retain their creators. Until September this year, the Alphabet-owned giant (the parent company of Google) has made 20,212 billion dollars from advertisements alone, an all-time high.

Even so, these payment mechanisms are still insufficient and "do not allow you to have a minimum standard of living," explains Janira Planes, communications director of the Wuolah platform. "This leads to increasing inequality among creators." YouTube allocates 55% of its advertising revenue to creators, who earn between €2.50 and just over €4 for every 1,000 views. In order to achieve the minimum wage of €965, a YouTuber should garner more than half a million monthly (and on paper) views on addictive content.

An economy without a middle class

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The mission of platforms is to make money; rewarding creators is a way to achieve that end. “It's a fine line, they walk between providing payment tools to retain them and to keep them from complaining without, in turn, compromising their economic goals,” Planes points out. That doesn't mean it's working. Zach King, one of TikTok's most prolific creators with 66.3 million followers, explained in a video that after generating more than two million views in one week, the platform had paid him around $122, far from the equivalent of the minimum wage. “Without the ability to negotiate, creators are left with nothing but using their own networks to make their protest visible,” notes Planes, who despite accumulating more than 76,000 followers on TikTok earns only a few cents.

That's why experts on the digital ecosystem, such as venture capitalist Li Jin, have insisted on the need to “democratize opportunities” and encourage the emergence of a (now nonexistent) middle class among creators, even promoting a minimum wage. Until that happens, creators, even the most influential ones, need to earn their living outside of the platforms. "What I earn on Twitch is only 15% of my income, but the visibility there helps me find other jobs," explains veteran YouTuber and streamer Roc Massaguer, known as "Outconsumer." Thus, in up to 77% of cases, the main source of income comes from advertising or sponsorship deals with brands, according to data from Influencer Marketing Hub.

The gap between Northern and Southern Europe is widening

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Yet beyond the platforms, life is also a struggle. Reduced to a tool for branding prescription, influencer marketing has risen 700% in Spain since 2018, reports Infoadex. Although investment in this type of advertising is growing, "micro-influencers"—niche content creators with a community of between 5,000 and 100,000 followers—have a harder time. A recent study indicates that up to 62.2% of them feel they are not paid enough for a profession that, rather than an aspirational dream, has become an "unsustainable activity."

In recent years, the creator ecosystem has become the "fastest-growing type of small business," according to SignalFire, a boom that has led platforms to introduce new monetization avenues as an incentive to retain their creators. Even so, these payment mechanisms are still insufficient and "do not allow you to have a minimum standard of living," explains Janira Planes, communications director of the Wuolah platform. "This leads to increasing inequality among creators." YouTube allocates 55% of its advertising revenue to creators, who earn between €2.50 and just over €4 for every 1,000 views.

Conclusion

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Young people and temporary workers are once more the biggest losers in this crisis. As the crisis reached its peak, employers eliminated nearly 25% of all temporary jobs in Spain, while permanent positions remained largely unaffected. In 2021, recovery in jobs has been very rapid, although temporary workers are still three percentage points behind permanent employment. As far as age is concerned, employment losses have once more fallen on young workers almost exclusively, further widening the protection gap when it comes to older workers because of multiple employments.

The women are also in a worse situation than men during this crisis, with more unemployment and ERTEs. It has affected more feminized sectors than the last crisis (with emphasis on construction), and this has meant greater activity loss. And in regards to employment, it fell more among women, albeit since the first quarter of this year, they are leading the way in terms of recovery in employment. Moreover, since schools closed and lockdowns took place, women have spent more hours caring for their children than men. Finally, they are also more likely to be at risk of ERTEs (temporary dismissals), i.e., increased chances of future job loss.