Instagram announced today it’s expanding access to a new monetization feature called Gifts to more creators across the U.S. The feature, which first began testing last year, allows fans to provide a favorite creator with direct monetary support in the form of themed virtual gifts. The gifts are purchased in the Instagram app using the virtual currency Stars and can cost anywhere from just 10 stars to several hundred stars.
While sending Stars was already available across live and on-demand videos, including Reels, the addition of Gifts allows Instagram to better compete against rivals like TikTok, where virtual gifts are already available. It also provides the company with another revenue stream beyond advertising, as Instagram creators have to share a cut of the revenue they earn with Instagram.
Creators in the U.S. will be able to check to see if they’re now eligible to receive Gifts from their Professional Dashboard in settings. If so, they can toggle on the option if they choose.
On the web, Stars sell for $0.99 for a pack of 45 and go up from there, but they’re also available for purchase directly within the Instagram app as in-app purchases.
In this morning’s announcement, Instagram noted the Reels tipping feature was first publicly introduced in November. However, it had been spotted long before that. Last fall, the company confirmed to TechCrunch it had developed an internal prototype of Gifts, originally under the name “content appreciation.” It followed the development of other in-app tipping features, 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 were aimed only at live videos, while Gifts, as of its debut, focused on Reels.
The virtual tipping program’s focus on Reels may also prompt more creators to dabble in the format, which is still a priority for Instagram in its battle with TikTok. Though the company admitted recently that it may have pushed too many videos on its user last year, it continues to see Reels as a means to boost growth. During its Q1 2022 earnings out earlier this month, Meta CEO Mark Zuckerberg said that Reels video plays across Facebook and Instagram had more than doubled in 2022 and people sharing Reels with friends had more than doubled on both apps in just the last six months.
But even though Reels are gaining traction among users, they’ve presented more of a challenge in terms of revenue generation. Zuckerberg pointed out that the monetization efficiency of Reels is much less than the Feed, which means that as it grows, it takes time away from a more profitable part of the app and the company loses money. Meta forecast that it wouldn’t be until year-end or next year that it would be able to profitably grow Reels while keeping up with the consumer demand for the format.
Given the situation, it’s easy to see why Instagram would want to plug in another monetization lever into the Reels system, as it’s now doing with Gifts.
The company says it aims to continue to make the feature available to more creators over time.