Instagram announced today it is expanding access to a new monetization feature called Gifts to more creators in the US First tested last year, this feature allows fans to offer a favorite creator direct monetary support in the form of virtual themed gifts. The gifts are purchased in the Instagram app using the virtual currency Stars and can range from just 10 stars to several hundred stars.
While sending Stars was already available in live and on-demand videos, including Reels, the addition of Gifts allows Instagram to better compete with rivals like TikTok, where virtual gifts are already available. It also provides the company with a revenue stream other than advertising, as Instagram creators have to share a portion of the revenue they earn from Instagram.
Creators in the US can check in the settings if they are now eligible to receive gifts through their professional dashboard. If so, they can enable the option if they wish.
On the Web, Stars sell for $0.99 for a pack of 45 and go up from there, but they can also be purchased directly in the Instagram app as in-app purchases.
Image Credits: Instagram
In this morning’s announcement, Instagram noted that the Reels tip feature was the first made public in November. However, it had been noticed long before that. Last fall, the company confirmed to businessroundups.org that it had developed an internal prototype of Gifts, originally called “content appreciation.” It followed the development of other tipping features in the app, including the ability to send stars to creators and the launch of badges in 2020, which added a heart icon next to your name in the comments. But Badges only focused on live videos, while Gifts focused on Reels from its debut.
If available, you will see the “Send Gift” option above the creator’s username on a reel, as seen with the early tester, Hamilton & Olivia.
Image Credits: @hammyandolivia (Opens in a new window)
The virtual tipping program’s focus on Reels may also lead more creators to delve into the format, which is still a priority for Instagram as it battles TikTok. Although the company recently admitted that it may have pushed too many videos on its user last year, it continues to view Reels as a means of driving growth. During Q1 2022 earnings earlier this month, Mark Zuckerberg, CEO of Meta, said Reels video playback on Facebook and Instagram more than doubled by 2022, and the number of people sharing Reels with friends on both apps in the past had more than doubled in six months.
Image Credits: Instagram
But while Reels are becoming more and more popular among users, they pose more of a monetization challenge. Zuckerberg pointed out that Reels’ monetization efficiency is much lower than the Feed’s, meaning that as it grows, it takes time to use a more profitable part of the app and the company loses money. Meta predicted that it wouldn’t be until the end of the year or next year for Reels to grow profitably while keeping up with consumer demand for the format.
Given the situation, it’s easy to see why Instagram would want to hook up another monetization lever to the Reels system, as it is now doing with Gifts.
The company says it aims to make the feature available to more creators over time.
