Unshackling the creative sector

A recent report commissioned by YouTube (YT) details some amazing stats about the “creator economy” in India. According to the research outfit, Oxford Economics, YT created the equivalent of 6.8 lakh full time jobs and generated a “contribution” of Rs 6,800 crore (roughly $890 million) to India’s gross domestic product in 2020.

The study stated that some 40,000 Indian channels now have 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. Some of these numbers are audited facts — YT knows how much it paid out to India-based channels, and also subscribers/ channel data. You may disagree with the methodology and the underlying assumptions about indirect impacts that lead to an estimation of 6.8 lakh job-equivalents.  

But there’s no doubt that these are big numbers. It’s worth comparing them to another creative ecosystem. In 2019-20 (the pre-Covid year), the Indian movie industry (all languages) is said to have generated over Rs 14,000 crore in revenues from ticket sales, channel subscriptions, etc. No credible estimates of job-equivalents exist. Also there’s additional revenue from spinoffs like popular TV shows involving celebrities. Using similar methodology, the indirect revenues would be much higher.

YT covers a much wider range of interests than the movies. There are cooking channels, engineers explaining how to set up a wind turbine, or clean your AC, travel channels, singers, dancers, educationists, investors, chess players (Indian chess videos generated 330 million views on YT last year), animal videos, gamers, short movies, history, fantasy, whatever.

The vast majority of channels make nothing, or nearly nothing, but then there are no entry barriers. It costs nothing to set up a YT channel. The big influencers end up hiring teams, setting up studios with fancy equipment and exploring alternative marketing and revenue generation options as well.

YT is the biggest player in this digital entertainment ecosystem, but it would probably have been run close by TikTok if the short-video channel had not been banned in India. TikTok still has a huge fanbase in India long after it was banned. I’m personally aware of dozens of people who learnt how to circumvent the ban only because they wanted to access TikTok, and you’ll see desi TikTok content popping up on WhatsApp all the time. In addition, there are quite a few big Indian influencers on Instagram, which has a user-base of 180 million-plus.  Plus, there’s Spotify, podcasters, and gamers, as well as smaller communities on Twitch.

All these are fast-growing markets. Even now, only about half of India’s mobile users have smartphones and most of India lives with pathetic 4G speeds, which is a big barrier. 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.  

All these digital ecosystems have some stunning success stories to showcase. An encouraging factor is the sheer breadth of content that has worked. One major “influencer/ creator” may well support many people who do work of some description.

But these are “hyper-pareto” markets, if one might coin a phrase. Instead of 80 per cent of the revenue accruing to 20 per cent of the players as in a normal Pareto system, these markets see 95-99 per cent of the revenue being swallowed up by 1 per cent to 5 per cent of players. Some markets also have major entry barriers —a popular game may cost hundreds of millions of dollars.

The government pays lip service to this ecosystem. Prime Minister Narendra Modi says he wants Indian gaming to make its mark globally and digital India slogans galore are rolled out. But the practical barriers for a digital creator are mostly policy-related.

TikTok is banned; creators pay 18 per cent goods and services tax and fill in lots of intimidating paperwork on revenues; cryptocurrency payments are a grey area likely to attract income tax demands of 30 per cent; some 90 countries already have commercial 5G, while India hasn’t even auctioned spectrum. Less lip service and more attention to removing policy barriers and red tape would help creators maximise their potential.