Instagram announced today it is expanding access to a new monetization feature called Gifts for more creators across the US This feature, which first began testing last year, allows fans to support money directly to their favorite creators in the form of themed virtual gifts. Gifts purchased in the Instagram app with virtual currency star and can range in price from as little as 10 stars to several hundred stars.
While sending Stars are available On live and on-demand videos, including Stories, the addition of Gifts allows Instagram to better compete with competitors like TikTok, where virtual giveaways are already available. It also gives the company another source of revenue besides advertising, as Instagram creators must share a portion of the revenue they earn with Instagram.
Creators in the US will be able to check if they’re currently eligible for Gifts from their Pro Dashboard in their settings. If so, they can enable the option if they so choose.
on the web, Stars on sale for $0.99 for a pack of 45 and go up from there, but they’re also available for purchase directly in the Instagram app as an in-app purchase.
Image credits: Instagram
In this morning’s announcement, Instagram noted that the Reels tipping feature was the first public debut in November. However, it was discovered long before that. Last fall, the company confirmed to TechCrunch it developed an internal prototype of Gifts, originally named “content appreciation”. It follows the development of other critical features in the app, including the ability to send Stars to creators and Launching Badge in 2020, added a heart icon next to your name in the comments. But Badge is aimed solely at live videos, while Gifts has, since launch, focused on Stories.
When available, you’ll see a “Send Gift” option above the creator’s username on Stories, as can be seen with early testers, Hamilton & Olivia.
Image credits: @hammyandolivia (Opens in a new window)
The Reels-focused virtual tip program could also spur more creators to learn about the format, which remains a top priority for Instagram in its battle with TikTok. Although the company recently admitted that it may have pushed too many videos on its users last year, it continues to see Stories as a vehicle for driving growth. In his Q1 2022 earnings report earlier this month, Meta CEO Mark Zuckerberg said that the number of Stories video plays on Facebook and Instagram more than doubled by 2022, and people sharing Stories with you Friends has more than doubled on both apps in the last six months alone.
Image credits: Instagram
But while Stories are gaining user attention, they present more of a challenge in terms of revenue generation. Zuckerberg pointed out that Reels’ monetization performance is much worse than Feed’s, which means that as it grows, it will take time from the more lucrative part of the app, and the company will lose money. Meta predicts that it won’t be able to profitably grow Stories until the end of the year or next year while satisfying consumer demand for the format.
Given the situation, it’s easy to see why Instagram would want to plug another monetization lever into the Reels system, as it currently does with Gifts.
The company says its goal is to continue making the feature available to more creators over time.
