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Unbalanced structure of how influencers make money

There are a lot of influencers on social media, and the community of influencers has grown a lot in recent years.

Data from the Influencer Marketing Hub found that the industry is set to grow to nearly $16.4 billion in 2022, and last year the global number of services related to influencer marketing — or companies that help creators grow their brand — grew by 26%.

There are a lot of major players here, including social platforms, advertisers, influencers, and agencies that manage content creators. As the industry becomes increasingly valuable, different platforms work in different ways to compensate influencers fairly for their content.

Influencer agencies say that micro influencers – someone with between 10,000 and 50,000 followers – can earn anywhere from $40,000 to $100,000 a year. Notable celebrity influencers like Charlie Di Amelio, Addison Ray and Bretman Rock are giving way more.

One way to make money is through brand deals. On platforms like Instagram, a photo of an influencer holding or wearing a product and endorsing it can bring in a decent amount of money. Someone with 1 million followers may charge brands up to $10,000 per post, according to influencer agency Viral Nation.

Over the past couple of years, Instagram has rolled out new monetization features where creators can make money directly through the app instead of just brand partnerships. They introduced their affiliate program where creators could share products with their followers and earn commission from purchases, and also made it easier for creators to sell their own merchandise.

Influencers can also make money from IGTV ads, but Instagram acknowledges that more can be done. By the end of 2022, they plan to invest more than $1 billion in programs that give creators new ways to make money.

Sponsored content and ad revenue are also things YouTube does. Creators can provide sponsored content within their videos: they usually take a few seconds to explain why they love a product, and according to the Federal Trade Commission, they must explicitly say it is sponsored content.

They also get paid from the ads that are shown on their videos. This is because of the YouTube Partner Program. A YouTube user must have 1,000 subscribers and 4,000 public watch hours per year to participate.

Longtime Youtuber Hank Green has many YouTube channels, such as Vlog Brothers, Crash Course and Hanks Channel to name a few. In all channels, he has more than 25 million subscribers. In a recent video, Green provided a little background on why this program was started.

He explained that in 2007, when potential competitors to YouTube began to emerge and try to get creators to move onto their platforms, YouTube created a Partner Program where about half of advertising revenue goes to YouTube and the other half goes to the creator.

Last year, YouTube generated more than $28 billion in ad revenue, half of which went to content creators. Green says about a third of YouTube user revenue comes from these ads alone.

TikTok also has a payment structure for creators called Creator Fund, which YouTube users have described as unfair. It is a set of funds distributed based on the share of the creator in the total views of the platform. “Creators will need at least 100,000 original video views in the last 30 days to be eligible to join the Creator Fund,” says TikTok.

While ads on YouTube run on videos, ads on TikTok run between them, so no single creator can claim to see an ad because of its content. This is why they have to share the money.

TikTok’s US Creators Fund started in 2020 with $200 million, and they say it will grow to more than $1 billion in the next three years. But, this is a fixed amount of money that does not change if TikTok makes more or less profits. As TikTok grows and becomes more successful, Creator Fund does not. The app’s parent company grew 70% in 2021.

Since this funding is distributed evenly in the community, as more creators join the fund, content creators earn less money per view. Safwan Ahmed Mia, a British tech company on TikToker, said it made just over $150 for 25 million views.

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