Unshackling the creative sector

News: A report commissioned by YouTube (YT), provide a glimpse of the “creator economy” in India.

Scope of YouTube Channels in India

YouTube platform hosts around 40,000 Indian channels with over 1 lakh subscribers and the number of channels earning revenues in excess of Rs 1 lakh jumped by 60 per cent year-on-year in June 2021.

The cost of setting up a YT channel is negligible. The big influencers end up hiring teams, setting up studios with fancy equipment and exploring alternative marketing and revenue generation options as well.

YouTube created the equivalent of 6.8 lakh full time jobs. It generated a “contribution” of Rs 6,800 crore (roughly $890 million) to India’s gross domestic product in the “creator economy” in India in 2020.

Other Creative Ecosystem

YT is the biggest player in this digital entertainment ecosystem, but it is also paralleled by other creative ecosystems

Indian Movie Industry: In 2019-20 (the pre-Covid year), the Indian movie industry (all languages) generated over Rs 14,000 crore in revenues from ticket sales, channel subscriptions, etc.

TikTok: Despite being banned in India; it still has a huge fanbase in India. Example, dozens of people circumvent the ban to access TikTok, and we can see desi TikTok content popping up on WhatsApp all the time.

Instagram: It is another platform for big influencers. It has a user-base of 180 million-plus. Plus, there’s Spotify, podcasters, and gamers, as well as smaller communities on Twitch.

What are the few challenges faced by the creator economy?

Indian Smartphone Mobile Users: Only about half of India’s mobile users have smartphones

Internet Connectivity: Most of India lives with pathetic 4G speeds, which is a big barrier. In contrast, some 90 countries already have commercial 5G, while India hasn’t even auctioned spectrum.

It can be described as a “hyper-pareto” market: – In these markets 95-99% of the revenue is being cornered by 1-5% of players. It is in contrast to a normal Pareto system, in which 80% of the revenue is accrued by 20% of the players in the system.

The practical barriers for a digital creator are mostly policy-related: TikTok is banned; creators pay 18% GST and fill in lots of intimidating paperwork on revenues.

What can be done?

More attention is required at removing policy barriers and red tape would help creators to maximise their potential.

If 5G rolls out, and smartphone penetration improves, growth rates in this digital creator economy could be turbocharged, despite the already large base of users.

Source: The post is based on the article “Unshackling the creative sector” published in the Business Standard on 12^th March 2022