Collectively, Gumroad creators earned $142 million in 2020, up 94% from 2019. This post discusses the forces that shaped Gumroad's role in the creator economy in 2020 and will direct it going forward, as well as what you can do, today, to become a bigger part of it yourself.
This data is way too interesting, its insights way too actionable, to hide behind jargon and corporate speech patterns. However, there are a few terms we must have in common to communicate clearly on these topics. GMV, or Gross Merchandise Volume, is the total amount of money moved through the platform. In 2020, Gumroad's GMV was $142 million. Next up, an active Gumroad creator, who for this article I'll simply refer to as a "creator," is someone who made at least a penny on Gumroad at any point in 2020. This post is about 45,917 such creators. Finally, everything in this post is denominated in United States Dollars. Further reading and methodology are provided at the end. Let's jump into it!
In the first quarter of 2020, COVID-19 rolled across the globe, shutting down cities and nations. You don't need a recap from me. Gumroad benefitted from an immediate surge in interest in online commerce, both from creators and their customers. Sahil, our CEO, posted graphs of March showing an immense spike in volume processed and number of creators making a sale.
This growth continued throughout the rest of the year. The creator economy was already growing, and quickly, but as COVID accelerated the transition to e-commerce, creators benefitted financially.
In November, Gumroad launched Memberships. What's better than making a sale? Earning a customer who pays you over and over again, giving your creative business known recurring revenue. Memberships enables paid newsletters and communities, courses, and other products that deliver recurring value.
Building Gumroad Memberships was a year-long endeavor, and rather than ship everything at once, we shipped incrementally and iteratively, giving creators each new tool as soon as they were ready. Thus, we don't have a clean "before-and-after" to show creators suddenly using Memberships to earn more than before. However, we're excited to see more and more creators building Memberships products and creating a more stable revenue base for their businesses.
46,000 creators. $142,000,000. Statistics can be misleading. Divide the two numbers, and you get over $3,000 per creator. However, the median creator made only $70 in 2020. In fact, the top 1% of creators earned about 60% of the money in 2020. The top 10% of creators earned nearly 92% of the total GMV.
Here's the distribution:
- 8 creators made at least $1,000,000
- 179 made at least $100,000
- 1,853 made at least $10,000
- 7,945 made at least $1,000
- 20,591 made at least $100
- 45,917 made something!
To give you a further sense of scale: 6,597,160 purchases were successfully processed on Gumroad in 2020, plus an additional 18,151,195 free product purchases. What I'm particularly excited about here is that this means creators have millions of peoples' email addresses to build newsletters, offer discounts, and drive additional revenues in 2021 and beyond.
What sets top creators apart?
A few hundred people, with large audiences and polished products, are able to generate a huge chunk of the economic activity on a platform like Gumroad. In fact, you'll see this pattern reflected across the creator economy. So, if you're a smaller or midsize creator, what can you change to become more like the most successful people in your field?
In December, we asked Gumroad creators to take a wide-ranging community census about how they create. Six hundred creators answered the call. I split responses between creators self-reporting Gumroad income over $1,000 in 2020 (nearly 15 times the median) and those reporting at least one dollar but less than $1,000. We'll call the first group HECs (higher-earning creators) and the others LECs (lower-earning creators).
Here are some key insights that you can apply to your own work:
- HECs averaged 6.6 products for sale as opposed to 5 for LECs. More products = more money, keeping quality and distribution constant.
- 60% of HECs maintain an active email list, as opposed to only 31% of LECs. Email is an incredibly powerful selling tool and an email list is an audience that no one can take away.
- Only 13.4% of HECs said that 2020 was their first year making money as a creator. Stick with it!
- HECs are nearly three times more likely to use affiliates than LECs and almost twice as likely to be an affiliate as LECs. There is complicated cause-and-effect here, it is likely that they are successful with affiliates because they are high earning, rather than the other way around. Affiliates have the potential to magnify existing success.
A few other things we found from the survey:
- Ebooks, videos, and software are by far the three most popular things to create.
- Creators cite their own websites, Twitter, Facebook, Instagram, and YouTube, in that order, as their top sales channels.
- An equal number of creators (96) said Gumroad Discover is a top three sales channel as said Google Search is a top three sals channel. However, social media and self-made websites dwarfed both.
- 20% of respondents said they have replaced their day job with being an independent creator, while another 50% said that they want to.
- A plurality of creators surveyed, over 36%, found out about Gumroad from another creator, as opposed to something like social media or Google. Thank you!
If you prefer stories to statistics, read the journeys of some of Gumroad's most successful creators with the Creator Spotlight series by Justin Mikolay. You can download a free archive on Gumroad.
The creator economy is way bigger than just one site. SignalFire has an interesting overview, though it focuses on mainstream influencer-type creators rather than the more product-focused Gumroad demographic. Many creators make a living without selling products, relying instead on ads, sponsorships, or merchandise deals to generate revenue.
Within our world of product sales, an interesting newer entrant is Cameo. While it has existed for a few years, Cameo exploded in 2020. The platform, which lets customers book personal video messages from celebrities, clearly benefitted from demand that would have usually gone to in-person experiences like signings at conventions, backstage concert passes, and prime seats at sporting events. In 2020, over 150 people made six figures on Cameo, suggesting that the site has attracted people with large existing audiences looking for a new way of monetizing connections with their biggest fans.
Gumroad's more direct competitors like Patreon, Amazon, Substack, Teachable, and many others also benefited from the same forces that helped Gumroad grow in 2020. Believe it or not, we're happy about this! Everyone should have the opportunity to make a living doing what they love, and different platforms enable different types of creators to make different experiences for their audiences.
We have big plans for 2021, just check our public roadmap. However, your plans are our plans. Ultimately, it will be you, the creators, who determine how 2021 and beyond looks for the creator economy.
- https://twitter.com/shl/status/1249762546006913032 Gumroad's growth spiked in March.
- https://gumroad.com/gumroad/p/a-million-dollars-in-a-day-twice-black-friday-and-cyber-monday-field-report November, and Black Friday in particular, are important times for the creator economy.
- https://www.signalfire.com/blog/creator-economy/ research on the creator economy as a whole. Gumroad isn't mentioned, which I of course think is an oversight, but what this report gets right is categorizing the wide range of audience building and monetization options available to creators.
- https://li.substack.com/p/building-the-middle-class-of-the an interesting post that made the rounds recently about what can shift more people into making mid-five and low-six figures per year as independent creators.
Internal metrics are pulled from the internal database using SQL, mostly from a table of validated purchases. When I refer to "2020," I mean midnight on January 1, 2020 to midnight on January 1, 2021, all times UTC.
As for the survey, we prepared the Creator Community Census, beta-tested it internally and with a couple of creators, and then sent it out to the Gumroad email list and posted about it on social media. We posted several further requests for people to take the survey. In total, we received 601 replies, including replies from the beta testing period. With any survey like this, the data that you get is skewed based on the people who replied, these creators were uncommonly engaged with our social media.
We can't take these replies as a representative sample of Gumroad's user base as a whole. For example, I'd expect that respondents to this survey are on average more likely to use Twitter than the creator population as a whole, though I cannot prove that hypothesis. As such, I have to be careful about the questions I ask of the data and how I interpret the answers. Furthermore, all questions were optional, so the data is slightly incomplete, and the data is totally anonymous and unvalidated, though I did scan for suspicious answers.
To account for this, most of the key insights I draw are by comparing two populations within the data set. Specifically, I contrasted one group of 156 replies from creators who reported earning at least $1,000 with Gumroad in 2020 against a group of 213 replies from creators who reported earning between $1 and $1000 with Gumroad in 2020.