Tipping is taking over the internet
Nearly every major social platform has recently introduced some form of tipping, allowing users to directly support their favorite personalities in real time.
Why it matters: Creators have been fueling engagement on social media platforms for years, but only now that the creator economy is maturing are they actually able to make money directly from their fans.
Driving the news:
- Twitter is working on adding a “Tip Jar” feature within @TwitterSpaces and on users’ main profiles, software engineer Jane Manchun Wong discovered this week. This is in addition to its new "Super Follows" feature, which allows users to charge followers for special content.
- Clubhouse launched a payments feature at the start of the month to help audio creators generate revenue from the platform.
- Facebook said in March it would expand its “Stars” virtual currency, which lets fans reward video and game creators directly for their content.
- Instagram late last year launched "Badges," a virtual gift that users can buy during livestreams to show their support for the creator in real time.
- YouTube has been experimenting with various tipping features including “applause,” and “Super Chats” for years.
Behind the trend: The popularity and availability of payment platforms such as Venmo, CashApp and Stripe are making it easier for tech companies to enable peer-to-peer payments on their platforms.
Be smart: Gamers and adult entertainment platforms have been ahead of this trend for years.
- Twitch and Caffeine have long used tip-like features to drive engagement between gamers and their fans.
- OnlyFans has exploded in popularity over the past year, in large part due to the fact that its direct payment features has created a viable income stream for many of its creators.
The big picture: For creators, getting money from users directly is critical because platforms are not financially incentivized to pay out most people directly.
- Attempts at social media networks that pay people for their content have struggled to gain traction in the past.
- While most of the Big Tech giants have launched creator funds in the past few months, those opportunities are still limited to the most viral performers, not smaller or niche creators.
Our thought bubble: Digital tipping will differ fundamentally from tipping in the real-world services industry, like bartending or taxi cab driving, because digital tipping often accounts for the entire livelihood of online creators.
- It's yet to be seen whether digital tipping eliminates some of the inequities of real-world tipping or exacerbates them.
What to watch: Following in the social media giants' footsteps, music giants are now also getting in on the trend, which is significant given that musicians have for years struggled to make money directly from fans.