Emerging Business Models and the Crowdfunding Regulation: Income Crowdfunding on Social Media by Content Creators

Abstract

Also known as influencers, content creators are a new iteration of the gig economy who engage in the generation and monetization of user content. Content monetization reflects a new era of social media business models that allow content creators to engage in the production of cultural content and gain money in the process. The financial success of content creators has traditionally relied on advertising. However, advertising-related content monetization has its perils. Influencer marketing is by now so ubiquitous on social media, that it has developed a negative connotation, stemming from the criticism of the fact that influencers sell their opinions. Seen as a limitation on the provision of independent opinions, some content creators (as they prefer to be called) choose to not engage in advertising, but rather pursue other avenues of making a living on social media through content creation. Crowdfunding is one of these avenues, and it reflects the practice of content creators asking their followers to support them either by a mix of donations or rewards-based contributions. In consequence, creators rely on followers to crowdfund their income as small entrepreneurs. This contribution focuses on the challenges arising out of narrow scope of the new European framework on crowdfunding, which focuses on investment crowdfunding, but which can provide meaningful regulatory inspiration also to practices which define the burgeoning creator economy. In doing so, it maps conceptual frameworks on crowdfunding, first by analysing the material scope of the Crowdfunding Regulation, and second by doing a brief multidisciplinary literature review to report on a variety of definitions regarding the concept of crowdfunding. The paper further looks into a new business model around crowdfunding in the practices of social media content creators (income crowdfunding). While exploring the policy considerations which have led to the narrow scope of Crowdfunding Regulation, the paper critically reflects on the pitfalls these considerations present to the broader landscape of Internet crowdfunding.