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Instagram to Take on YouTube Through Ads Where Content Creators Make Money

[PHOTO/ COURTESY]

Instagram is moving into more direct competition with YouTube as it sets to help creators generate revenue directly from IGTV.

As from next week, Instagram will show ads before clips that run on IGTV service for the longer-form videos. The company plans to give the content creators a 55 percent share of the cut from the ads, the same amount YouTube gives its content creators.

Instagram will also test a way for users to purchase digital badges in the live videos. If viewers buy the badges, their names will be highlighted amongst the fans comments identifying them as supporters. For the first few months of the test, the video hosts will receive all the money until Instagram starts getting a share either later this year or in 2021.

Read: Instagram Updates its Notification on Music Copyright Infringement

Influencers typically make their money from promoting brands on their posts, without Instagram’s involvement. However, a lot of that business has dried down during this Covid-19 pandemic period. Some of the most affected include Travel Influencers who are paid to stay in resorts, foodies who are paid to sample food in certain restaurants and many others.

“This has been a trying time, where creators have been there for their fans,” said Justin Osofsky, Instagram chief operating officer. “It’s a time of uncertainty with less paid work generally.”

Apart from supporting its content creators, Instagram and Facebook also hope to generate some revenue based on the increase of users in the social media networks due to the Covid-19 crisis. With more people staying at home, there has been a surge of up to 70 percent in live videos from February to March, the company said in a blog post. However, the content creators had less incentive to do more, as YouTube presents a better way to make money. Now Instagram will leverage the digital talent to make even more money.

Read: Instagram Discontinues Lite App as it Develops New Version

The video ads will start after users click a 15 second video preview in the Instagram feed and are taken to IGTV to watch the full clip. The style is designed to motivate creators to make more interesting clips to make their viewers jump over to IGTV to continue watching.

This could make Instagram a stronger contributor to Facebook’s overall sales. In 2019, the platform’s advertising revenue accounted for a quarter of the group’s total revenue, or about $20 billion.

A lot of users have built their businesses on Instagram using third parties and external help. The social media app has now seen the opportunity to channel some of the online business itself. Food influencers are gaining traction by teaching people how to cook, others are teaching people how to draw, music artistes and DJs are going live with their performances and so on. The audience can now pay to support these efforts by buying badges with three different price points; Sh99, Sh199 and Sh499. The badges will last only for the duration of the video.

“We’re hoping badges will be a tool to support a broad range of uses,” Osofsky said. But, he emphasized, it’s a test and the plan could change. “We’re definitely in the early days.”

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Written by Vanessa Murrey

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