Creators (known not so long ago as “influencers) are already well established as content producers. But they rapidly are staking claims in merchandising.

Any number of celebrities have leant their name or brand to alcohol, marijuana and dozens of other categories.

• YouTube star Felix “PewDiePie” Kjellberg(110 million subscribers) has long had licensing across apparel, toys and other products.
• Kids Diana Show (84.3 million) , which features a 6-year-old Russian girl, Diana, and her brother, Roma, unboxing toys, has even yielded a spinoff (Love, Diana Adventures and a Love, Diana – Princess of Play brand) that’s being represented by Pocket.Watch, which is producing 40 episodes and handling licensing of consumer products.
• And then there’s Jimmy “MrBeast” Donaldson (71.2 million), who has parlayed his YouTube-driven fame into a virtual delivery-only food business (using DoorDash, Uber Eats and others), MrBeast Burgers (with Virtual Dining Concepts) and other ventures.

It’s a crowded space; 50 million people globally consider themselves creators, but only about two million make a living at it. Of the 31 million YouTube channels, only about a million have 10,000 or more subscribers. And of Instagram’s one billion accounts, about half a million have 100,000 or more followers.

“People initially dismissed creators [for licensing]; the idea was that the YouTube viewer was going to remain there and you weren’t going to get them to move to Walmart and other linear channels,” says Kerry Tucker, Chief Marketing Officer at Pocket.watch, which also represents Ryan Kaji of Ryan’s World fame (with whom Bonkers Toys launched product at Walmart in 2018) and other kid creators.

“But fandom, no matter where it comes from, moves people to where the creators and characters go.  A lot of creators are building a business from the platform and there is an economy around them that didn’t exist before.”

Not just about mass
But it’s not just about mass. In fact, in most cases it isn’t about mass. “If you are going to Walmart, Target or other mass retailers, you are going have to move pretty significant volume to ensure success for the retailer,” says Kevin Ramsey, CEO of manufacturer Warren James, which supplies merchandise for 30-35 social media creators.

“The really big creators are the ones that have the audience size to do that. But that being said, the business is trickling down to where creators on the rise with smaller audiences can have meaningful direct-to-consumer programs.  If you have 100,000 fans who want to buy your product, that might not be enough for Walmart to be successful, but it’s enough for a dot com to be a massive success with seven figures in sales.”

And as competition for eyeballs and engagement increases, many creators are broadening into licensed merchandise, playing off the characters or alter egos they’ve developed for their platforms, says Tucker. For most, merchandise has always been secondary to creating content. But those with tens of thousands if not millions of followers and subscribers are realizing they can generate significant revenue through direct-to-consumer (DTC) programs that target their fans.

Meet Tucker
Golden retriever Tucker Budzyn isn’t actually a creator; that would be owner Courtney Budzyn. But the dog is said to have a net worth of $1.5 million, and has 3.1 million YouTube subscribers. The dog also gets 950,000 daily views of posts across Facebook, YouTube, Instagram and Twitter created by Courtney and has t-shirts and tote bags bearing his likeness supplied under a revenue sharing agreement with Warren James.

The company supplies apparel from a new factory in Guangzhou, China and operates the creators’ websites.  Warren James, which targets YouTube creators with annual revenue of $1 million or more (typically from advertising on their channels and sites), also produces merchandise for other creators, including the YouTube gaming group Krew (12 million subscribers) and gamer Jessica “Aphmau”  Bravura (10.5 million).

Metrics
In gauging whether creator is ready to branch into licensing, it’s important look past subscriber numbers and look for metrics about audience engagement and whether the creator has brand recognition that can be communicated to a digital audience, says a licensing industry executive. Engagement is measured via “retention rates” — the percentage of viewers that watch an entire YouTube video – which averages 20 minutes — with 70% being the key metric, says Ramsey.

“It’s the delta between traditional licensing and where things are going,” says Russell Binder of Striker Entertainment.  “They are probably not going to be occupying a ton of shelves at your mass market retailers, but they are going to have a very robust direct to consumer business because they can have inventory and service directly.”

As creators start to rise in prominence, venture capitalists are taking notice and providing funding for what in many cases can be a single-person or sparsely staffed operation. For example, Founders Fund invested $15 million earlier this year in Pietra, a startup designed to help creators develop products. And  education technology company Encantos, which released an app earlier this month that features audio, books, games and videos developed by creators for channels or “storyworlds” like “Wally the Worried Walrus” and “La Petit Petra, has raised $8.6 million since its founding in 2015, including $5.7 million in late last year.

“We are at a tipping point where you are seeing more and more of the creator economy permeate more and more of every single industry,” says Encantos CEO Steven Wolfe Pereira. “It will be interesting to see what creators are going to be doing because they are really going to start to make an impact on licensing.”