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Instagram throws influencers a lifeline with revenue sharing for IGTV ads

May 27, 2020, 5:53 PM UTC

Instagram helped create the $6.5 billion influencer economy—and now the app is taking steps to help it weather the COVID-19 storm.

On Wednesday, Instagram announced new ways for creators to make money on the app. The service plans to debut ads on IGTV, its long-form video function, splitting revenues with creators, and also to launch Instagram Live “badges” that users can buy to support their favorite influencers.

The Facebook-owned company will reportedly share 55% of the revenues from the up-to-15-seconds-long IGTV ads with creators—a move that’s expected to help it better compete with YouTube, which also uses a revenue-sharing model. Instagram plans to start testing the ads next week, launching the program with a small group of influencers.

The platform will also roll out a feature enabling creators to sell badges to their fans on Instagram Live in the U.S. this month, with international markets to follow. Badges, which will appear as icons next to a user’s name during a live video stream, will cost between $0.99 and $4.99.

Instagram’s blog post announcing the changes also notes that it plans to expand its new Live Shopping feature—which lets users tag products in live videos—so that creators can sell their own merchandise.

In a statement, Instagram chief operating officer Justin Osofsky said: “Providing a variety of monetization tools is crucial in order to support all creators on Instagram, from emerging digital stars to established entertainers and everything in between. We’re excited to add these two new revenue streams to the mix of tools for creators to help them generate additional income to fuel their work.”

The expanded options for making money are well timed for influencers, who have been impacted by the sudden cutback in companies’ marketing budgets amid the COVID-19 crisis—not to mention the general uncertainty about how to advertise amid a global pandemic. At the same time, some of the creators who migrated to Instagram Live in the early stages of the lockdown have begun to question the viability of using a platform that doesn’t pay them for their content.

The new revenue streams are also likely to be a boon to Instagram, which has seen use of its video services—and particularly live video—spike during the lockdown. On an April earnings call, Facebook CEO Mark Zuckerberg said that 800 million people now tune into live video on Instagram and Facebook daily. And in Wednesday’s blog post, Instagram noted that Live has posted a 70% increase in views from February to March. The company has had few options to turn that blossoming engagement into revenue—until now.

Instagram has become an increasingly important source of revenue growth for Facebook. Last year, the photo platform brought in an estimated $20 billion, or roughly a quarter of the company’s total revenue, and analysts expect that share to continue to grow.