The Institutionalization of the Creator Economy
Last month, Creative Artists Agency and TPG’s Integrated Media Company announced a commitment of $250 million for the launch of a new holding body called Compound Creative Holdings, whose main aim will be to capture control over those companies led by creators, treating them as media companies. Even though the launch was perceived as a talent phenomenon, the critics have a different opinion. Compound marks the clearest evidence that the creator economy ceases being a cottage business and begins to be viewed as a proper asset class that attracts investments from private investors who see the potential of selling it as a mass product. The significance of these events is well-known to all practitioners, but the emergence of patient capital is the recognition of changes in the industry that came with a warning.
The Mass Maturation of a Multi-Billion-Dollar Category
The numbers speak for themselves. Worldwide revenues in the creator economy are anticipated to reach $323.48 billion by 2026, achieving a compound annual growth rate of 26.2% until they reach about $820 billion by 2030. Goldman Sachs predicts even faster growth due to the narrower scope of its definition, estimating the market to reach half a trillion dollars by 2027. The ad spending of companies has been following suit, with the U.S. ad spending by creators expected to hit $37 billion in 2025, an increase of 26% compared to the previous years, thus more than four times faster than the media industry average. The IAB states that creator marketing is considered a “must-buy” option by 48% of advertisers, putting it on par with social media and paid search.
The internal composition of the category is changing very quickly along with the topline. The full IAB report shows the significant change from campaign creator spending to permanent retainers: 60-70% of the whole creator budgets of enterprises are being used for the ongoing creator payments, with the remainder going towards operating costs and paid distribution. And 34% of large companies spend more than 40% of their budgets on digital creators; the typical creator program at Fortune 500 companies costs $4.7 million, an increase of 38% from 2022. But behind those numbers is an unpleasant reality of the Pareto principle: only 0.1% of creators can earn money due to their channels, while the majority have only minimal monetization. And this concentration is exactly what makes the sector worth investing.
The Institutional Dilemma
Every buyer in the industry comes across the same roadblock: dependency on the founder. In the practice of private firm evaluation, a business whose profits, dealings, and creative vision depend on one person is valued between 10 and 100% lower than similar companies not defined by such dependence—because without that person, the business is left without transferable goodwill. Dr. John Torrens, Professor of entrepreneurship at Syracuse University and acting chair of the Entrepreneurship and Emerging Enterprises Department, calls this the central strategic problem of the industry: entrepreneurs need to convert personal goodwill into enterprise goodwill before—or at least, during—the liquidity event, rather than now of exit.
Dr. Jill Avery from Harvard Business School confirms the same idea in her research about personal branding: that personal branding serves as a growth booster in the initial stages but as a liquidity killer later. In the same way as the HBR studies about personal brand equity imply, businesses that do not embed the opinions of the founder of the business and the system of media and connections with the audience end up with what is called “persona debt,” which is the debt that is revealed when signing the term sheet. Therefore, according to this institution’s playbook, the institution must operate where the creator’s manual usually ends, i.e., creating something that will sustain itself even when the founder is gone, such as, e.g., service manuals, sub-brands, and management teams with respective shares. In addition, the newest achievement in this area of research concerning value chain models of influencer and customer equity also supports the above-mentioned conclusions that the companies that develop direct relationships with others, such as mailing lists and community groups, receive significantly more profit than those relying only on the influence of major networks.
Intellectual Property Capitalization and Persona De-Coupling
The reference model is Harpo Productions and not a YouTube channel. Oprah Winfrey’s holding company distanced her image as a brand (Oprah) as well as the production company (Harpo, Inc.), as well as the distribution platform that owns an equity stake in OWN, which is a joint venture with Warner Bros. Discovery. The process of what owned transaction took place by Discovery buying shares in portions while Harpo retained its talent and IP rights is the best indicator of a stepwise, no-dilution liquidity available for creators to monetize their IPs. There are three distinct value pools, meaning three distinct liquidity ways
Now, creators are applying the same approach. After the split from Night Media, Jimmy Donaldson established his Beast Industries company with a global valuation of about $5 billion and raised over $450 million through Feastables (CPG) and innovations in gaming. This money went straight to investments in the subsidiaries instead of to the person behind the scenes.
The Agency Arms Race
Talent agencies recognize the importance of the new element and clearly state their unwillingness to lose control over ownership without a struggle. UTA initiated UTA.VC in collaboration with Investcorp and PSP Investments, committing to investments in technology providing services for creators’ worth between $500,000 and $4 million, operating at the crossroads of capital and culture. The WME Ventures arm invests from the WME/IMG balance into creator-focused technologies, sports technologies, and format IP. Range Media Partners, supported by Liberty Global, Wildcat Capital, and Playground Productions, had a successful investment round at the beginning of 2024, which set their valuation at nearly $400 million. The investment was used for sports representation and production deals. Night Ventures, which was initially funded with $20 million and supported by creators from Night’s management team, manages to provide various forms of funding and audience for their investments.
All the companies listed above serve as a protection against Compound. If CAA and TPG manage to gather creator companies at the level of a holding company, the assisting agencies need to establish ownership over the related technologies, tools, and IP forms. Otherwise, they will face disintermediation as they did some time ago to the film companies.
The Academic Response
Universities are gradually using the operator playbook approach in their programs. For instance, Syracuse’s Center for the Creator Economy, the pioneering academic program of its kind, was created in 2025 by Syracuse University’s Whitman School of Management and Newhouse School and presents a minor in creator economy, which combines Newhouse’s storytelling and platform curriculum with Whitman’s business ventures and intellectual property programs. Another leading program, USC Annenberg’s master’s in PRISM, places influencers at the center of modern strategic communication and provides an empirical base for the theory of their role through collaboration with the Annenberg Creator Research Network (ACoRN). Furthermore, Arizona State University operates the Cronkite School, which went as far as creating a full Bachelor of Arts program in content creation, which consists of a capstone LA content studio and is commonly seen as a living lab for building an audience.
The bachelor’s program in digital media influence from The University of Texas at San Antonio, introduced in 2024, is structured to concentrate on the initiation of a venture by the creators instead of aiming at a corporate career in marketing. NYU SPS has made it compulsory for their students enrolled in different continuing education programs to take the course named “The Business of Influencer Communication,” while UCLA Extension has offered two of the most popular courses in the industry—Influencer Marketing and Personal Branding for the Becoming Influencer—under one of the most active instructors named Lia Haberman. The academic response to the institutional issue is not emotional, but it is instead focused on training the operators: the individuals responsible for creating this type of material and those who will ultimately form connections with the target audience.
The Creator’s Playbook: Entity, IP, and Governance
The strategic response starts at the entity level, not the audience level. Firms like Skadden and Mintz have begun to advise their clients that establishing an IP holding company is now the minimum requirement for businesses in the creative industry generating revenues in the eight digits. The structural template is quite simple in this case; separate limited liability companies owe their domicile in either Wyoming or Delaware, while all trademarks, copyrights, format rights, and any other IP utilized in the creative business are owned by these companies, with the operating company employing producers, buying advertising, and signing talent contracts. The operating company has to come up with an intercompany licensing agreement granting it the right to use the company’s IP in return for royalties between three and eight percent.
Legal implications become even more important. To validate a trademark, the licensor must demonstrate quality control, and the brand must be an active entity, not just a nominal company that exists on paper. However, creators establishing a trademark in the third year of business will be able to apply the legitimacy of trademarked brands retrospectively over brands created over the past decade. In contrast, those waiting for the process of due diligence to draw attention to the issue will be surprised to find their most valuable brand assets owned by the wrong company.
Owning the Audience Layer: First-Party Distribution as Leverage
The formula used by each institutional buyer in the industry is the same: how much money can be saved through customer acquisition by taking over a particular creator’s audience and how permanent that audience will be in terms of tech changes? The answer will vary sharply depending on whether the creator has full ownership of first-party platforms, which refers to email lists, SMS lists, websites, or any apps they may have. Beehiiv, which sent and received twenty billion emails and earned more than $25 million from creators in 2025, is the best example of the pending change because it believes that subscriber ownership is not locked in and can be transferred. In comparison, Substack keeps subscribers within the app, bringing the possibility to reach a wide audience but without ownership.
The key issue is not the selection of the platform. It is that any audience exposure that cannot be transferred—that is, followers on rented media, views produced by algorithms, and views not attributed to persons—is hard to sell in terms of law and in terms of economics. The buyers, owned audiences have a multiple of the monetized subscribers’ value, while rented audiences have the option price for moving to a different platform. A contemporary creator business that works on an enterprise scale should be able to make a single claim about the number of actual people it can reach without paying any intermediaries. If that number is small compared to the audience that the creator claims to have, the gap in valuations when the business sells will be huge
The Negotiation Table: Reading Institutional Term Sheets
Most of the value exchange takes place in certain clauses that non-expert creators keep misapprehending when institutional funds finally come to their table. Typically, the pointers in the venture capital term sheets prompt the founder to be adamant about four things: the liquidation preference, anti-dilution, composition of the board, and voting rights. In practice, the liquidation preference with the “1x non-participating” clause has now become a common feature for friendly founders, while the participating and multiple preferences are taking away millions in proceeds from exit. It is standard now to have the anti-dilution clause implemented as a weighted average, as the full ratchet clause deprives the ownership in the case of a down round.
The vote is the single most important factor. The latest corporate-governance analysis from Harvard reveals that there has been a consistent trend toward dual-class shares in private and public companies for founders—the shares that give one party ten times more votes than others, which are similar to preferred but different in their ability to affect how the board of directors thinks. Dual-class governance is a must for entrepreneur-driven businesses because there is no way to talk about value without mentioning creativity. Creator states are clearly concentrated around a solution that allows the founder to take in millions or even billions while holding onto the editorial freedom, which was necessary to make that value possible in the first place. The provision that makes dual-class governance easier to accept by wealthy investors is the possibility of phasing out the voting rights at some point in the future with the reduction of shareholder stake. However, it is crucial not to agree to the term sheet that gives voting rights to the investor whose money has been used to invest.
What Creators Must Do to Keep the Equity
The creator economy is not being wiped out by institutional capital; it is being fairly assessed by it. Firms such as Compound Creative Holdings, UTA.VC, WME Ventures, Range Media Partners, and Night Ventures are all, in different ways, taking the same gamble: that the next decade of profit in this sector will belong to whoever controls the businesses behind the creators, not to whoever provides them with financing.
This means that creators are left with a limited but substantial set of strategic alternatives.
Establish brand loyalty before liquidity events occur rather than when they are taking place by assembling an executive team, documenting editorial policies, and allowing a sub-brand to operate whenever possible. Separate the persona from the company legally at the level of entities – brands, subsidiaries, and, if possible, minor equity stakes in media distribution. Ensure that revenues come from across owned and third-party intellectual property, independent audiences, and first-party customer relationship management instead of any aggregator’s dashboards. Treat any institutional offer as a proposition to exchange control for money, and price such exchange as necessary with various voting arrangements and board memberships in accordance with the value still provided by the fund and money brought by investors.
We must remember that it is a big mistake to think of institutionalization either as a help or as a menace. Institutionalization is neither a help nor a menace. It is just a signal that the respective area has reached maturity, which can be associated with mature business disciplines; hence, qualitative business valuations. The creators who can implement that discipline early on will be able to become buyers within a decade and acquire the needed platforms, tools, and businesses connected with their market. Those who are unable to do so will get more sophisticated about selling their business only after a really good business deal is closed.
That is something that the creators who are going to graduate from several schools over the next four years need to realize. Quite probably, these creators do not know anything about these processes.