Social Media Giants Eye Revenue Share as Influencers Flourish
In the ever-evolving landscape of social media, influencers like Kim Kardashian, with over 360 million Instagram followers, have harnessed their celebrity status to create lucrative side ventures, leaving social media platforms yearning for a slice of the growing influencer economy. Instagram, boasting more than 10 million influencers contributing to a $21 billion marketing sector, is expected to face negotiations with influencers as social media firms seek to tap into these lucrative side hustles amid slowing growth.
Kim Kardashian, a master at leveraging her fame, co-launched private equity firm SKKY Partners in 2023, building on her successful ventures such as Skims, a shapewear company valued at $4 billion since its launch in 2019. The trend extends beyond Kardashian, with numerous influencers generating significant value that platforms like Meta Platforms (Instagram’s parent company) have yet to monetize. While payments directly to individual online stars have seen rapid growth, surpassing advertising revenue for platforms like Instagram, Facebook, YouTube, and Snap, social media giants are looking to reverse the trend and reclaim a share of these earnings.
As Meta Platforms and its counterparts grapple with slowing growth in ad revenue, they recognize the pivotal role influencers play in maintaining user engagement. Initiatives to incentivize paid promotions and adjust algorithms to favor certain posts have been attempted but with limited success. The platforms hold significant leverage through their reach and influence on the trajectory of online stars. X, formerly Twitter, under Elon Musk’s ownership, has implemented changes to boost profiles through paid options, while Instagram altered its app in 2023 to decrease the visibility of specific posts.
Influencers argue that their content contributes to the community on these platforms, and Kardashian’s impact was evident when her objections prompted Instagram to reverse app changes in 2022. However, a symbiotic relationship exists between content creation and distribution, with both parties seeking compensation.
Instagram, as the dominant platform for influencer marketers, is strategically positioned to drive negotiations. The potential revenue at stake is significant, as demonstrated by Skims’ anticipated public offering. Influencers may resist sharing their wealth, but Meta’s CEO, Mark Zuckerberg, holds a powerful card – the ability to remove influencers from platforms that sustain their fame. The impending negotiations may reshape the dynamics between influencers and social media giants in the pursuit of a mutually beneficial revenue-sharing model.