Substantial tech company layoffs seem to be making their way around the creator economy lately. It's always a major bummer when a company unceremoniously cuts staff — and it's even more nerve-racking when it's a bunch of companies all in the niche we care about.
Twitch and Discord both announced significant layoffs this week, with 500 Twitch employees across the globe losing their job and 170 Discord employees being let go. The latter comes despite the fact that the company has quintupled since 2020. Twitch's layoffs account for a whopping one-third of its employees, while Discord's accounts for about 17 percent.
The companies join a whole swath of other creator economy companies who made significant cuts in 2023. These include Spotify, Tidal, Snap, X, Etsy, ByteDance, 100 Thieves, Bandcamp, LinkedIn, Meta, Cameo, Shopify, Clubhouse, and many, many others.
Ouch.
Why Are So Many Companies In The Creator Economy Letting Go Of Employees?
There are likely a few reasons we're seeing so many tech company layoffs in 2023 and the beginning of 2024. Most of them are pretty frustrating. Stanford professor Jeffrey Pfeffer says a lot of layoffs are simply copycat behavior. "The tech industry layoffs are basically an instance of social contagion, in which companies imitate what others are doing," Pfeffer says. "If you look for reasons for why companies do layoffs, the reason is that everybody else is doing it. Layoffs are the result of imitative behavior and are not particularly evidence-based."
Well that's infuriating. But there are more concrete reasons, too. One of the big reasons we're seeing so many companies let go of employees is because so many hired a lot of employees during the tail end of the pandemic. These massive hiring sprints created unsustainable conditions, including record high salaries. When companies — even massive ones — grow too fast, they also usually end up cutting. So it's more cyclical behavior. But as Forbes notes, for some of the biggest rounds of layoffs, the median experience time was more than 11 years, suggesting it's not just junior hires getting downsized.
And then there are things like fear of future forecasts, major pivots, and yes, to some extent – artificial intelligence. And sometimes companies just won't be able to pay everybody (even though layoffs as a primary cost-cutting measure could be more damaging than helpful in the long run).
How Tech Company Layoffs Affect Content Creators
For starters, layoffs just suck in general. It also sucks that we often see a lot of content creators actually working in the tech industry while they build their digital brand. So it's kind of a double whammy if you're a digital strategist or part of the team at one of these companies and suddenly find yourself both unemployed and shaken about your industry.
The mental toll is real. When a platform like Twitch lays off 500 employees, it doesn't inspire much confidence from the streamers who rely on the platform to pay their bills. And it certainly doesn't bode well for any hopes of better streamer payouts. It can also put a grinding halt to any community engagement initiatives or programs specifically designed to help content creators grow. In some cases we can see a bit of an exodus from a platform, creating a sort of self-fulfilling prophecy (or, you know, bank collapse).
We see similar repercussions in the music industry, where relationships are critical to certain measurements of success. There are countless stories of certain A&R or staff getting let go from a company — and then all of the artists that person dealt with suddenly getting swept under the rug as well. When Spotify let go of individuals in product, advertising, marketing, and content, some artists who relied on those relationships almost certainly took a major blow. And that's the double-edged sword of banking large parts of your business on industry relationships.
These layoffs also affect content creators' ability to maintain their brands in certain digital spaces. For instance, when Twitter laid off thousands of employees, Elon Musk cut significant parts of content moderation teams. This means it's even harder for users to get ahold of somebody if something goes wrong – like an imposter takes over their account, or unwanted content is being distributed illegally.
Ultimately, it just shakes the entire foundation of trust between these platforms and the creators they rely on to, you know, create a demand for them.
How To Keep Your Head Up During The Layoff Waves
It's tough. There's no denying that seeing companies you rely on for a livelihood cut their staff by hundreds of people can make you feel really uneasy. But just remember that these platforms are just means of distribution — the real product is what you bring to the table.
To that extend, it's always a good idea to try to diversify where and how you reach your fans. "First party data" refers to ways to contact your community outside of an application. This means email addresses, phone numbers, physical addresses etc. The more you collect that data, the better off you'll be if one of the primary platforms you use suddenly stops existing.
A lot of the ebbs and flows of the creator economy are out of your control. But as long as you have a good grasp on the fundamentals of how to run your creative business — why you create what you create, who loves what you create, and how you monetize it — you'll be able to survive the seemingly endless twists and turns of this industry.