When Will Instagram Pay their Creators?

26:05I think you're going to see people, we do. We see people when we don't evolve fast enough, leave us for the competition. I'll give you an example. We look all the time, pick a team, the ranking team, the video creation team, whatever. We look at two things. We look at the top line, how is the trend doing? Are people sharing more on Instagram? And then we look at a back test. So all the changes we make in the six-month window, we will hold out or not launch to 1 % of people. And so you can see what is the value that the team is creating. and then you can also see what the overlying app trend is.

26:41So I'll make up numbers. Let's say we increased how much people are sharing photos and videos by 5%, but the overall amount of photos, according to the back test, but the overall photos and videos shared on Instagram per person per day was totally flat. That means there's a 5 % headwind. That means if you don't do anything, you're losing 5 % every six months. We see that across a lot of different key metrics, which is just a signal of either people moving on or more likely just the competition getting stronger. And so if we don't evolve, you're just going to see us shrink and then that spirals.

27:15There's less people using Instagram, there's less reach to go around, creators start leaving, less people then use Instagram, there's less reach to go around still and you're in a negative feedback cycle. Interesting. The bottom line for the company matters, of course. Obviously you want to keep the core values of the product, but also you need to still be a business. For sure. How do creators make money on Instagram today? Primarily through branded content deals and also increasingly through what we call partner ads. But there's at a high level three ways to make money on all platforms. You can either get paid by a brand or a company.

27:53You can get paid by the platform directly. YouTube is best at that. Or you can get paid by your fans, users. And we have things like subscriptions and tipping, but they're smaller scale. One thing that's interesting in terms of getting paid by companies, historically, it's been primarily brands doing branded advertising. And that's great, but there's a lot of money in advertising that isn't brand dollars. It's what we call direct response. So trying to sell a specific chair or watch or whatever. What partner ads do is allow creators to create content and then opt in to letting brands use that creative as ads, which then benefits from the entire measurement system of our ad system, which is very good for direct response advertisers, which then increases the pool of potential dollars for creators to make by allowing them not only to do off-platform brand deals with big brand awareness campaigns, but also deals with direct response, which is a massive, actually the majority of our business.

28:55Yeah. I'm interested in the breakdown of that because I think when I first started as a creator, actually when I first started, none of them were really a thing. Yeah. But especially on YouTube, for example, made lots of videos, made no money. And then the first version of this was revenue sharing with the platform. Yeah. And the first checks were extremely small, but it was just the easiest bottom way to get like a foot in the door to start to see some revenue from the work that you do. Yeah. And then it felt like you graduated to the point where you were able to work with a brand on something.

29:29What is the breakdown like on Instagram? Is it mostly people working with outside companies and then putting their stuff on Instagram? Yeah, so Facebook has a meaningful rev share business. Instagram doesn't. We've been working on it for years now, and we haven't been able to make it sustainable. And I can go into the details there on what I think sustainable looks like. It just has to break even. We can't just be burning money. Like you said, we are a business. but the vast majority it's easily north of$10 billion a year probably a lot more this is a couple years old at that data point is through off platform deals that creators make directly between them and brands and then they use their reach on Instagram to monetize that way and now what we've seen is we've been able to scale up partner ads, these direct response ads to a really meaningful scale which we hope is just increasing the overall pie We still have subscriptions, we still have tipping, we're still working on what we call bonuses or performance-based payouts, the sort of rev share, but they are much smaller in scale.

30:33Yeah. So how do you grow that rev share piece? Because I think a lot of creators think about that and would love it to be more, but as you say, it's not as sustainable. What are the major things keeping it from being sustainable? So there's three things I think that the program needs to be to make sense, to scale up. One is it just needs to not burn money. So the theory here is that you pay creators, they create more content, then you have more advertising, and then you can make back what you pay creators. I don't need to make money off this. If it's even close to break even or break even, that seems like a great thing to do.

31:11Two, the criteria for being eligible needs to be transparent. It can't be some algorithm, and you're in and I'm not and we have no idea why. It has to be like, all right, you need to hit, might not be like automatic, it might be like you need to average a million views a week or whatever it is, but there needs to be some transparent eligibility. Just be a page that explains it. Exactly. But we need to get the program to be break-even without using algorithmic ways of identifying creators so that you can just actually explain why you are not eligible. And then three of the checks just can't be embarrassing.

31:44Like if I sent you a$4 check, you'd be like, thanks, but now I'm kind of offended. That doesn't have to be that high. It just has to be something that's like, I don't want to be sending a bunch of creators pennies. Yeah. I just think that'll just be a bad look. It's interesting you say that. I heard you say that on Colin and Samir, and I actually disagree. I think... You'd rather get pennies? I would rather get pennies. And it's not really me specifically, but I think as budding creators, because again, it's hard to go off platform and get good at brand deal and manage the inbox and negotiate and do all that.

32:15Yeah. And so to just have like a base way of having like splitting revenue with the platform, even if my first YouTube check was$1.74, like that was motivating in a way for me to see, okay, if I can scale my reach, if I can focus my efforts on certain things, then I know that I can increase what I'm making. Yeah. And obviously it's not going to be a full-time massive chunk of the business for every creator, but I think I'd rather get$4 than$0 if I know that there's a reason I can move it to$10. I might be overreacting to angry DMs I get from people who are in the program, who are like, you make X billion dollars a year, you sent me a check for$9.

33:00Yeah. It's maybe because it's hard to explain exactly how you arrive at the number. Because I know on YouTube, you can very easily determine what ad came from what video and how it's associated with the uploader. Maybe that's harder on Instagram, so it's harder to explain. The attribution is tougher, yeah. But look, I would love to drop one of the criteria to make it more possible. That's not the gate right now. The first two are. But we might get there. Maybe we'll get there in some countries and not other countries. but um i could very well be over rotated on that piece of feedback i'm always trying like we said how do you sift through the signal and the noise there's a lot of strong opinions about what we do particularly from people who rely on us and i get that and so i'm always trying to figure out um when am i just being when am i really focused on what's best overall and when am i might be overreacting to not being not maybe liking getting yelled at and this might be an example fair enough yeah just i you know again the arc on other social networks especially with youtube that i came up on so that's why i referenced that a lot is like when i was first starting sure the one dollar check didn't meaningfully make a difference to me but it was motivating and then eventually it was the biggest part of the business and then when i was able to get the skills to go out and sell to others who wanted to like work with me on ads and manage the inbox and all that yeah that became the next biggest chunk and then the revenue share with the platform became secondary yeah and it's also it's always going to fluctuate like i don't think any smart business depends entirely on the revenue share of the platform yeah but it does represent motivation and a nice like bar to continue to see if it goes up or down you can kind of associate that with the performance of the entire channel so i feel like it is uh something that most i think you're getting a vocal minority being very angry but i think most people would be happier to see something than nothing.

34:55I mean, it's a compelling argument. You're giving me something legitimate to think about, which I think it would not be surprising to me if I was overreacting to a vocal minority. I'm always trying not to, but it's hard. And so just pattern matching in general, the kinds of mistakes we make, that's a common pattern. So you're probably right.

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39:18More often now than they used to. They do? They get you? They get me sometimes. I always thought, like, I never get got by my own ads, obviously. But they still get you. They get me sometimes. Well, because sometimes it's something I didn't know about. It's, like, very tough. I mean, it's perfect. It's, like, I'm a dad. I'm in my 40s. I live in San Francisco. I like gadgets. So they're, like, you know, they're, like, growing. like they go after me with the things that they're pretty good i mean what do i like i what have they got me with uh coffee gear i really like gear that's a popular one i really like coffee i make i got deep into pour over for a couple years i got deep into espresso for a couple years so you know a little tiny coffee grind vacuum that's perfectly designed to like fit into your setup they say just the right thing with just the right picture yeah and i was like oh um my wife always jokes.

40:07We once a year usually have the argument about whether or not Instagram is listening to your microphone. She sometimes doubts my position on that. Yeah. It seems like the ads get really good sometimes. They do. They do. They do. Just for the record. They are not. We're not. Oh, for a couple of reasons. Okay. Hold on. Yeah. Just be careful. Yeah. So you might've been looking for it online because we do work with advertisers who send us data about what people were looking on their website. They want to target those people. So you might be looking for, like we were talking about, a camera lens and then get that lens.

40:45You might have been talking about it with a friend and they might have been looking at it online. That's the one that seems to be the creepiest, but is actually real. Yeah. Where that person's getting ads for it. That person bought it. I talked to them about it. And is it proximity or is it just like my relationship with their It'll most likely happen if you two are similar on paper. So it's like two guys in tech roughly the same age. It's like that kind of thing. And then sometimes it's just people don't realize they actually saw the ad. Because you scroll by them, and sometimes that registers subconsciously, and then you're talking about that area.

41:22That's kind of how advertising works. Those are the three main... But here's the other thing. No one believes me. But the other thing is, if we were listening to your mic, your battery would drain real fast. If the phone was remotely competent, you'd be seeing the little light saying that the thing was on. And it would just be a gross violation of RMC. Most importantly. Yeah. So, like, we don't. But I do have this conversation once in a while. Funny. Okay, so what does the future of Instagram look like? Because there is this evolution happening in social networks. and obviously you've seen, you know, coming from the Instagram of old to what it is today.

41:59What is Instagram in, and I love asking you this because CEOs hate talking about future products, but I'm going to ask you anyway. What is Instagram in five years, 10 years? Is it very different? Yeah. Is it still keeping the core of what it is now? So I think there's a period of time that's more clear and there's a period of time where it gets a lot less clear. That's always true. The further on the future, the less granularity you have. But there's a little bit of like a threshold. So over the next couple of years, I think the biggest thing that's going to really change our business is going to be AI.

42:31I think you're going to see a lot of great things where you're going to see more creators can create more content. So you can create more content or better content if you're already a creator or people who didn't have the ability to make content can make compelling content who couldn't use it before. But there's also lots of concerns, right? There's also, you know, deep fakes. How do you know what to trust? How do you know that something was actually captured with a camera? You won't be able to. So there's opportunities and challenges that come along with more and more content that is created with AI.

43:00We too often talk about AI as binary. It's either synthetic or real content. And the truth is... AI-assisted in the middle. It's going to be mostly that, is my guess. So I think that's going to change what content you see on Instagram, who you follow on Instagram, who you even talk to on Instagram. these things are going to change and there's going to be a lot in the blurry middle. We focus mostly on the extremes, go back to the way of old or don't talk to like the unsupervised AI bot, but I think most of it's going to be in between those two. Where things get much more fuzzy is when the form factor changes.

43:36We obviously have been very public about the fact that we believe that eventually phones will still be part of our lives, but not nearly as dominant. one example of how it could turn out is how you know desktop and laptops have turned out which is you know you have more than one probably um uh you know it's still an important part of your life my computer's important part of my life but it's not the most important in a world where you know wearables but particularly glasses i think get better and better more in you know the five to ten years and obviously we we've talked about this publicly with uh um metarabon displays and with or um orion um i think that that makes it much less clear what instagram is yeah because there's certain things that naturally flow like most of what you do in terms of connecting with friends is message you can imagine that yeah um you can capture photos but then what does a consumption experience look like yeah in a glasses first world is i mean i've got a couple educated guesses but i think it's going to evolve a lot does any of it worry you because i made a reference at the end i got to see the meta ray band displays and i made a reference at the end of my video to like you know there is an instagram app on those glasses and there is a actual real possibility that i could be talking to someone wearing the glasses and they could just be scrolling through instagram yeah and not paying attention to me looking through glass at me yeah that's pretty close to that wally meme like that's extremely with the slurpees the people yeah so like yeah Is that, I mean, it's possible now that could actually happen.

45:11What do you think about that? I'm a worrier by nature. So I worry about all of the things. There's like, how can it get misused? How could it be bad for people? There's also how could it be bad for the business? How could it be bad for us? I mean, the thing that we've maybe talked about a little bit less publicly in the context of AI and new technology is like, yes, it's changing what our apps are and what people do on our apps. It's also massively changing how we build our apps. we're trying to wrestle with it even internally as well. So I think it's important for us to be honest about the risks and the downsides and then try to do what we can to maximize the upsides and minimize those downsides.

45:50So yeah, I worry about it. I've got kids. What is their life going to be? I mean, so when I was 13, I'm 42. I was born in 83. When I was 13, it's mid-90s. This is like AOL dial-up 2400 BPS. Early internet. Yeah, like... Can't be on the phone. Yeah. My parents had no idea what I was doing online. And I think one of the risks for me as a dad, my kids are too young to use social media, but they're 9, 7, and 5. They're going to come up as a lot of this tech comes up. And it's going to be hard for me to even understand possibly what the risks are if I'm not proactively leaning in. So, yeah, I think about I'm excited about all the positive opportunities and I am concerned about all of the risks.

46:39And I try to think about both. It's an interesting position because as a social network with now it's three billion monthly active users. Three billion. It's a hard number to wrap. It's my head around. You become kind of like fabric of society type big like decisions that you make to get people to use Instagram more, get humanity to be on their phones more. Like, that's the type of repercussions that come with what's happening at Instagram, you know, which is interesting. So, I actually wonder what you think of, you've seen these AI creators, like creators on Instagram that are entirely AI. Well, there's two kinds.

47:16Well, right. And I'm talking about the ones that are completely independently AI. But not just independently AI, it's a persona. It's a person who doesn't exist. Right, right, yeah. Because there's also like if I'm not AI who's fully synthetic content, but they're creating these dreams. Just random all types of stuff, yeah. I mean, there's like a creator with a name and a face that's AI and they make tons of stuff for no effort. I figure that's good for Instagram in theory because it's very efficient. It's a creator that doesn't demand a ton of revenue, but like creates tons of engaging content.

47:44Yeah. But on the other side, as a human creator, it's horrible. I hate seeing that. Yeah. What do you think when you see AI creator doing what human creators do?

47:58Both. So on one hand, I think that in a world where anybody can make any type of video with, I don't know,$150 worth of AI credits, whether it's personifying a person that doesn't exist or anything else, what do we have left as creatives? And I think it's really our taste and our understanding of culture and our own creativity. And so I'm in some ways bullish on those ideas, that creatives will always have taste, have creativity, and have a position on culture. And therefore, whether or not the content was created with AI, without AI, or entirely with AI, they will be telling stories, pushing boundaries, driving culture.

48:50And that'll be good. but I also worry about and it's also great if there's people who maybe you just were never comfortable in front of a camera and now you can do it but then I also worry about deep fakes I worry about just an explosion of competition if there's 10, 100 times as much content, there's no way there's going to be 10 or 100 times more engagement so the average reach is going to go down we'll probably get blamed for that what does that mean for people who yes it's great who people couldn't create content before cannot create content but for people who aren't don't have access to or aren't technical enough to leverage this technology how to make sure that they still have a voice yeah so uh my mind ping pongs between the exciting opportunities and the scary risks yeah does it make sense to create rules around it like you want to enable obviously you want to raise the floor and make it more accessible for people to create but i don't i don't think this is me being biased as a human creator i I don't think we want Instagram to be full of AI-only creators.

49:53And there are some that are getting tons of engagement, very successful profiles. But I don't love the world where Instagram is full of that. Is it up to the rules of Instagram to prevent that from happening? Or if they just make good enough stuff, is it that's just the way it's going to be? It could be. I mean, I have a really hard time imagining it getting to a place where that's all that there is. because I just don't see how that content is going to cover enough culturally relevant content. You believe in humanity a lot. I think people are interesting. And look, AI will be interesting over time.

50:28But right now, there's a reason. I mean, on one hand, it's unbelievable what some of this tech can do. For instance, I was living in the UK for a while. One common thing for banks to do is voice signatures to sign in. You should definitely not do that anymore. Way too easy to fake. Way too easy. As someone who has thousands of hours of my voice in high definition on the internet, don't do that. Don't do that. Yeah. On the other hand, I haven't found a funny AI yet. I haven't found an AI that has said something that I thought was on the bleeding edge of what's interesting in culture right now. And that will happen, but I think that's further away.

51:08I think right now people, particularly creatives, bring something to the table that AI does not, even though AI can completely, particularly with direction, fabricate something that didn't exist. Yeah. I think to an extent some of it is interesting now because it's AI, which may be why some of it is blowing up. But I think the other reason so many people call it slop is because it kind of just appeals to the lowest common denominator. We're sitting here thinking, okay, we've never seen anything really interesting or creative or funny. I've never really thought that hard about something AI. But at the very lowest level of just like basic humor, basic interesting imagery, they're making that stuff now.

51:52Yeah. So that's... But the thing about that from an Instagram business perspective is that it's not that valuable. So like for, it's too commoditized. You'll be able to find that anywhere. So for us, sure, it might be nice for some of the content on Instagram to be content that you could find elsewhere and drive some engagement. But it's fundamentally not differentiated. It's not defensible. It leaves us exposed. If we become all content that you can find anywhere else, then it's very easy for you to leave us. Whereas if there's content that is more unique or differentiated, then I think it's that it's much more valuable beyond the amount of engagement it might drive or amount of revenue it might drive.

52:38That's one of the reasons why we focus on creators. The creators do post across multiple platforms more and more so, but it is fundamentally more differentiated than like sports highlights or AI slot for instance. Yeah, so I mean yeah, it sounds like there's at least some incentive for Instagram to keep humans on the site happy and yes, yes, yes. I mean look, there's different, there are different forces in different directions at play. It's just like most big questions, not black and white, not simple. Yeah. Well, I guess then I have one more question for you. Yeah. Which is the same question from the beginning.

53:14You know, Instagram, 3 billion monthly active users, reels, upcoming AI, you know, maybe leaving some features behind, evolving forward. What is Instagram right now, 2025? Ooh, right now, it depends a lot on the country, but I'm not going to use that as a cop-out, but it is wildly different by country. I believe that. So maybe, you know, we're here in the U.S., so maybe we'll... In the U.S., I think that we are... There's some strengths and there's some weaknesses. I think on the strength side, you know, I think we are still the de facto home for most creators. They use multiple platforms. YouTube is better at long-form video, they're better at rev share.

54:00TikTok is better at breaking new talent and helping people get discovered. But we are a more complete suite of tools for you to not just tell your stories, but engage with your audience, et cetera. So that's why if you look at how many creators are on Instagram, it seems like they're more than any other platform. We are trying to continue to stay culturally relevant by investing in originality and timeliness. this, but there's real risk that the competition will execute better than us. And I don't want to be in charge of Instagram when we drop from being like a tier one app in terms of cultural relevance to a tier two.

54:41And to me, that feels kind of existential. I want us to be the best platform for creatives, the best platform for people to talk to their friends about their interests. in some ways i can point to numbers to suggest that we're the first in other ways i can point to numbers to suggest that with the second or the third um and so we're i think at this really intense possibly pivotal moment where the world is changing faster than ever the competition's fiercer than ever and we're trying to navigate that and somehow also stay simple and stay true to our identity. Yeah. Sounds like you're a busy man, so I'll let you go.

55:21Adam, thanks for the time. It's a pleasure. Appreciate it. Hopefully we'll get us again. Yeah, it'll be a blast.