Can the creator economy survive the flood of AI slopes?

Online creators and business models were on our minds this week after wildly popular YouTuber MrBeast announced that his company was acquiring fintech startup Step. What followed was a barrage of cease-and-desist letters from Hollywood studios to ByteDance over the launch of its new video creation model, Seedance 2.0.

These seemingly disconnected headlines hint at a media landscape undergoing transformational change as popular YouTubers look to diversify their business models with the threat and promise of increasingly powerful generative AI tools.

In the latest episode of TechCrunch’s Equity podcast, Kirsten Korosec, Rebecca Bellan, and I discussed what’s next for the creator economy and whether there’s room for the next generation of creators to stand out.

“Where is the next saturation point?” Kirsten was curious. “Not all of these people can go out and produce products. So will the pool of successful creators simply get smaller? Or will something else happen, technically speaking? Or will other mediums happen that can find an audience that can make money?”

Below you can read a preview of the conversation, edited for length and clarity.

Anthony: (News) led our colleague Lauren to write a great article talking about the creator business model in general, meaning they no longer rely solely on ad revenue. I think it’s still a pretty big part of their business, but she analyzed some of the most popular YouTubers and noted that each of them is expanding into other revenue streams as well as e-commerce in general.

For example, Mr. The Beast actually has a line of food products, including chocolate, that make him hundreds of millions of dollars and actually made him a profit in 2024, but his media business is loss-making. That whole thing was pretty rough for me.

Kirsten: Mr. If the Beast can’t make a media company profitable, who can? To me, that was an amazing statistic.

I’m not surprised that it’s not necessarily working for creators and influencers because the whole ad revenue business game has just reached its saturation point. I guess my biggest question is what is the next saturation point? Not all of them can go out and produce their products. So is the pool of successful creators simply getting smaller? Or, technically speaking, is there going to be some other medium or something else that will find an audience that can make money?

Rebecca: Interesting. There are many ways to think about what else could happen. Right? Perhaps they could create their own digital twins and make (a different kind of) money by deploying them in various situations.

But when you think about it again, not surprisingly, these people are now celebrities. Right? Someone recently told me on the phone that a lot of the younger generation doesn’t know our celebrities and they know TikTok celebrities. And we’ve seen celebrities selling products and making money from them for years. Right? I used to see Rachel (Ray), she was a celebrity chef and she sold EVOO and olive oil.

We slowed down (equity) ventures last year. They have a creator fund and basically what they’re doing is raising VC funds to essentially support the businesses of creators. If they have a niche, maybe they are really interested in woodworking and have a collection of chisels here.

I think this is an interesting path forward and how we think about it as journalists – how we try to be creators and build brands that can diversify our income. I think it would be terrible to say that out loud.

Anthony: I am smiling, but it is the smile of someone whose soul is slowly turning to ash.

So we took a break from talking about AI, but let us obligingly include it back in the conversation. Apparently, one of the other related developments over the past week is ByteDance, the Chinese company that launched TikTok and is still an investor. I won’t cover everything. They released a new version of their Seedance 2.0 model, which, at least initially, was only available primarily to Chinese users.

But then we started seeing people posting Seedance-generated videos, including the viral video of Brad Pitt fighting Tom Cruise. This sparked the following general conversation: Will Hollywood be destroyed? More specifically, several Hollywood studios, including Netflix, sent a letter to ByteDance saying, “You can’t do this. You’re basically allowing anyone to create videos using any IP, any movie star.” And for a few days there was absolutely no response from ByteDance, but they said, “Sorry, sorry. For some reason we started this without any real guardrails, but we will do better in the future.”

Kirsten: So the timing is perfect because I’m editing the story Rebecca wrote right now. It has nothing to do with Seedance, but something to do with AI and filmmaking. So I will thank Rebecca in the future for responding to this in a timely manner. Rebecca, I know you have a lot more to say than just that Hollywood is mad. Is it more complicated than that?

Rebecca: Yes, of course. I mean, if you tie this into the work of creators, I think a lot of people will be using these tools to create all kinds of content and we’ll be completely inundated. And it will be intense.

But when we talk about it, I think there’s a tension between whether you’re using AI video tools to make movies or commercials or just content in general. This will take a lot less effort than the other two, and it can also democratize access for many people who don’t have the funds, budget, or team to share the many stories they want to tell.

Also, if you’re a small business and you want to make a little shampoo ad (or you have a shampoo ad that’s going viral and don’t want to worry about that) or you sell coffee and you want to make a little ad about that, (this) can give you the tools to do that. Is that a bad thing? Isn’t that a bad thing? Does the world need more content? There are several paths leading down.

Kirsten: Is this a bad thing, Anthony?

Anthony: On the creator side, my general feeling is that this is a reaction to many errors of this kind. To be honest, there are a lot of them. is slop, I think it will continue to be that way. It will be about valuing authenticity. So for these large creators, there’s an opportunity to think, “I have my own digital twin,” rather than, “No, I’m not a wandering digital simulacra, I’m the real Mr. Beast.”

And I think every social network has its ups and downs, but from what I understand, OpenAI’s Sora initially skyrocketed and has been struggling to retain users recently. Because there is a certain emptiness in the experience when it feels like there is no real human being on the other side.

But I think this will make the environment for existing creators to monetize much more difficult(…) and I think it will be especially difficult for new creators because there will be so much more out there. Actually trying to escape would be very difficult.