Why Creators Can Weather a Recession Better Than Big Business Adapting to change, creating strong communities and finding their niche could help creators thrive in a shifting economy. The good news is most are already doing this.

There's no doubt economic storm clouds are gathering.

With the stock market in bear territory and tech stocks — particularly social media companies — losing value, creators who rely on these platforms for income may be nervous. Understandably so.

Not only is the creator economy a new advent since the last major economic downturn in 2008, but many working in the field are also relatively new to the workforce. A recession will be the first of their working lives.

While entering uncharted economic territory may cause apprehension, many creators may find the trade skills they've developed leave them better equipped to weather the storm than less agile entities.

Here's why creators could come out ahead, even in a downturn.

Creators Are the Ultimate Adapters

When it comes to how businesses fare in a recession, size matters.

Plummeting stock values and rising interest rates can pummel global enterprises and wreak havoc on national economies, but smaller businesses are often better positioned to pivot as needed. Low overhead and lean operations make it easier to adapt to shifting economic circumstances. And creators are the ultimate small business people — as recent history shows.

Related: 6 Recession-Proof Business Marketing Strategies

As layoffs mounted and physical businesses were forced to shut down in the early days of the pandemic, legions of entrepreneurs moved to a digital marketplace, the vast majority of whom were solopreneurs or running small teams. Whether pivoting an existing business or starting from scratch, we saw these entrepreneurs rework their entire operations almost overnight and enter the creator space from some unlikely angles. Clothing designers sold handmade masks online, local restaurants advertised menus for pick-up or delivery on social media, and influencers doubled down on creating engaging and entertaining content that caught the attention of brands.

In the process, these entrepreneurs have laid a strong foundation to withstand future economic shocks. Surviving a recession used to require deep pockets and rock-solid business connections, but the economy has changed to favor small and nimble operations that can pivot as demands change. No one is better positioned to do that than creators who, by and large, have built their careers listening to the needs of their communities and providing value accordingly.

Creators Aren't Part of The Global Supply Chain — And That's A Good Thing

We've seen over the past couple of years how disruptions in the global supply chain can affect the economy — the reverse is also true. Inflation and rising fuel prices can have a big impact on businesses that trade in physical goods, those that trade in content and ideas, however, won't be impacted nearly as much.

One advantage creators have is the ability to monetize their ideas and knowledge in addition to, or instead of, physical goods. The explosion in online coaching, whether in the realm of health and fitness, mental health or career, is one example where creators have built thriving businesses based on skill and knowledge. Meanwhile, writers have built and monetized audiences through newsletter subscriptions and musicians earn money through sites like Patreon or partnerships with Spotify.

While it's true a decline in consumer purchasing could affect creators who depend on paying clients or community contributions, many will be able to offset losses by expanding their reach to more followers and implementing new monetization tools, like virtual tips and NFTs.

Related: How Ecommerce Companies Can Grow During a Recession

Creators in the knowledge and service space also have the advantage of tapping into their existing communities to identify opportunities to expand their offerings, whether that's online courses, group coaching or custom art projects. The trick for creators, regardless of macroeconomics, is to stay focused on building their own niche and nurturing the communities they've built.

Creators Can Build a More Equitable Marketplace

Downturns inevitably cause belt-tightening and the creator sphere is not exempt. Large brands may pull back on partnerships for campaigns for instance, and if social media platforms face a decline in ad revenue, they may have less to contribute to creator funds.

However, rather than hinder, these setbacks could actually accelerate the evolution of the creator economy. Right now, only a small percentage of creators — roughly 12% — make more than $50,000 a year from their content. A large number of those creators do so by competing for the same contracts from a handful of global brands. A downturn that causes bigger companies to pull back on creator spending could actually result in the acceleration of the peer-to-peer economy. With the advent of Web3 and blockchain, creators have more tools than ever to monetize directly from their community. A peer-to-peer economy based on genuine shared goals and interests between creators and their audiences, could even the playing field and help the industry mature into something more authentic.

Related: What to Expect from the Markets in a Recession

Economic downturns come with obvious hardships — and the creator economy won't be entirely immune. For one thing, creators may face increased competition if we see more people enter the space out of necessity. But creators are in a position to not only navigate the changing economy but to potentially find themselves in a better place if they stay nimble and tuned into their communities.