By Carlo Versano
Facebook is about to create a brand new revenue stream out of thin air.
When Instagram starts allowing users to buy items directly from their favorite influencers, the company will take a cut of each sale ー likely generating millions in new revenue overnight. Taylor Lorenz, writer for The Atlantic and the internet's de facto Instagram expert, told Cheddar that starting next week a select group of influencers will be given the option of tagging specific items in their posts, which their followers will then be able to purchase with a tap ー without ever leaving the app.
"This is gonna make [Instagram] tons of money," Lorenz said.
Notably, though, it won't make any influencer a dime. At least not yet.
Instead of giving influencers a cut of the revenues generated at the point of sale, Instagram will instead provide them access to in-depth analytics that they can then use to negotiate their own deals directly with the brands they support, Lorenz said.
"Influencers can still negotiate directly with those brands for deals based on sales numbers and that's something that all of them plan on doing," she said. "It's just that Instagram won't be setting that fee."
Indeed, those fees could end up much higher than any cut Instagram would provide.
The first phase of the program will include just 55 influencers and 23 brands ー a tiny fraction of the overall Instagram ecosystem. But given the platform's investments in e-commerce, Lorenz said she believes it will expand fast.
"It's going to be a really effective way I think for Instagram to essentially turn their platform into an e-commerce [platform]."
For full interview click here.