Virtual tips are helping content creators actually make money
Updated: Oct 8, 2021
We’re not used to paying for social media posts or streams, but it’s now easier than ever to send someone a little cash.
By Terry Nguyen For VOX - Feb 26, 2021
Over the summer, Cherry Horne became hooked on watching Twitch streams of seasoned dancers playing Just Dance. She’d purchased the game herself on her PlayStation 4 as a quarantine workout, and the streamers became her source of motivation.
She started tipping the streamers, since it felt like “a natural extension of [her] gratitude,” in addition to paying a monthly subscription to access exclusive content. Horne tips about two or three times a month and approaches tipping not just as a financial gift, but as creative encouragement; some of her favorite dancers, she told me, are new to streaming, with fewer than a thousand subscribers.
“If I’m entertained or enjoying the content you’re providing, I want to tip you to help support your work,” Horne said. “I also think tipping is a great way to build community and practice mutual aid. This pandemic has been hard financially on a lot of us and many people have turned to various forms of online work to survive.” Horne worked as a stripper before the pandemic, and once lockdown orders came down, transitioned to online sex work on OnlyFans. Virtually tipping dancers on Twitch, she joked, felt like the pandemic version of tipping a stripper at a club.
Most people likely associate tipping with service work, seeing it as a cash bonus for polite or prompt customer service. It is common courtesy, especially in pandemic times, to tip restaurant workers, hairdressers, tattoo artists, hotel staff, drivers, and other workers in customer-facing roles, and in some states, millions of workers depend on tips to earn a decent wage. Under current federal law, employers are only required to pay $2.13 per hour in direct wages, if that amount combined with the tips an employee receives equals the federal minimum wage.
Virtual tip jars or donations, however, are usually one-way exchanges. Unlike service tips, these are based on an individual’s performance or entertainment value. It’s akin to putting money into a street-side musician’s hat or guitar case; tips are expressions of support from fans and viewers, who sometimes receive shoutouts or extra attention in return for their donations.
These microtransactions are not a new phenomenon for content creators and influencers with substantial followings. The Wall Street Journal reported in 2017 that musicians, comedians, and other independent creators have earned tens of thousands of dollars through frequent streams on apps like YouNow and Live.ly (which merged with Musical.ly, now TikTok, in 2018). The pandemic has only magnified people’s sense of economic precarity. However, this type of creative, content-driven labor has been bolstered by the generosity of online communities.
Self-monetization is easier, and arguably more acceptable, than ever, particularly in a time when fewer people are interested in pursuing aspirational, unpaid work. More seem comfortable with publicly sharing their Venmo and CashApp usernames to receive monetary aid from strangers in times of crisis. Mutual aid networks have flourished. The popularity of these peer-to-peer payment tools have facilitated a new form of social crowdfunding, wrote Jenna Drenten, a consumer sociologist, in the Conversation.
While virtual tipping is not the same as crisis crowdfunding, the idea is similar: People are relying on a network of supporters to partly or entirely bankroll their hobby or creative endeavor. “I think tipping is crucial for all creators, big or small,” said Horne, who tips streamers based on her own creative income. “Tips make more of a life-changing difference to small creators. $100 might not mean very much to someone with thousands of fans, but to someone smaller, that money could be used for a week of groceries.”
A person doesn’t need to be “internet famous” or have an established social media presence to rake in tips — although fame certainly helps. Asian Andy, a Twitch streamer and YouTuber with more than 1 million followers, recently earned $16,000 in tips during one of his “sleep streams.”
“We’re seeing an unbundling of the Kickstarter crowdfunding experience,” said Hugo Amsellem, writer and researcher of Arm the Creators, a blog on the creator economy. “The pandemic is accelerating everything. Creators are potentially struggling a bit more, and there is an incentive to do a live stream or put up a membership option. For fans, they are stuck at home and spending less on going out, getting drinks. Tipping the creators — their digital friends — is one way for fans to unleash their buying power.”
“TIPPING THE CREATORS — THEIR DIGITAL FRIENDS — IS ONE WAY FOR FANS TO UNLEASH THEIR BUYING POWER”
For years, Twitch streamers have set up donation links on their profiles through third-party tools, or solicited tips directly through Twitch’s currency system, Bits. Major platforms, like YouTube, Instagram, and TikTok, have since developed their own tipping systems for live broadcasts or exclusive content. The audio chat app Clubhouse is reportedly introducing a tipping feature, in addition to subscriptions and ticket sales, to future iterations.
Twitter rolled out its Tip Jar feature on May 6, which lets users send tips to anyone on the platform with an active jar, and Soundcloud is working on a payment system that allows fans to pay artists directly. Old and emerging platforms alike seem to be encouraging virtual tipping and alternative monetization methods. They have a financial incentive to do so, as virtually all companies take a percentage of money earned: YouTube pockets 30 percent of tips through its “applause” function, as does Twitch for its “cheer” function; TikTok takes a 50 percent commission when TikTokers convert digital gifts into cash.
Amsellem believes that it is in major platforms’ interests to lean into creator-friendly monetization features. At the start of the pandemic last spring, for example, Soundcloud and Spotify began allowing artists to add a direct support link on their profiles. Still, Amsellem thinks advertisers will remain a priority, since most social companies rely on ads as a key source of revenue. “Who is the customer for Twitch or YouTube?” he said. “Strategically, there is more to be done with the consumer in mind, rather than the creator.”
Some streamers are gravitating toward tools that streamline payments from fans, sometimes bypassing big platforms entirely. For example, StreamElements, a tool that streamers use to better manage live broadcasts, developed a tipping plug-in that alerts the streamer of a donation and its corresponding message. “The idea of delivering a tool that will help creators with everything the platform doesn’t provide them is very powerful because most people aren’t interested in limiting themselves to just Twitch or YouTube,” said Doron Nir, CEO of StreamElements.
More people are optimizing featured links in their social media bios, even if there is no direct tipping feature. Last May, a TikTok user added her Venmo handle to her bio for a week as a social experiment, and received more than $500 from strangers. It’s common practice for artists to plug their Venmo or Ko-fi handles through link optimizers, like LinkTree or Flooze, that allow users to promote multiple links at once. Sites like Ko-fi or Buy Me A Coffee encourage supporters to tip in small cash amounts, while currency systems on TikTok and YouTube — which are purchased with real money — offer a more gamified experience. On a TikTok livestream, for example, a fan can give “gifts” that can be converted into cash for the TikToker.
Most of these transactions for small streamers and artists generally range from $5 to $20, but they’re a crucial revenue source for those starting out. A Twitch user named Sarah, who streams full time under the username Sizzsarz, told me that tipping was her only source of income when she began in 2014. “Now that I have grown into a more successful streamer, I would say that tips make up around 30 percent of my overall income,” she said.
The rise of virtual tipping and other alternative forms of self-monetization is a means for content creators to “wrest back some of the power from the platforms,” said Brooke Erin Duffy, a professor in Cornell’s communications department. Duffy recently completed a study that surveyed creators and influencers on TikTok, Instagram, and YouTube; she found that income uncertainty was a major concern across all platforms. “Especially in cases when the algorithm changes, a person’s income stream can be severely severed,” she said. “This tipping system, regardless of whether the platform pays the influencer, allows them to directly connect with the audience and diversify their income stream.”
It’s not likely that streamers or creators can make a living entirely on tips. But these small amounts, as Sarah mentioned, can help them envision a full-time career. That’s a good thing, since people are no longer entirely creating content for free early on. “Young people have been encouraged to create content, to burnish their self-brand, and build themselves as entrepreneurs with the promise that their work will eventually be compensated,” Duffy told me. “They’re essentially tasked with doing free labor in the service of consumer culture.”
Optimists like Amsellem and Nir of StreamElements believe that over the past year, consumers have grown accustomed to, and are even demanding more, digital content. “They’re willing to pay for it, and democratic creator platforms have seen an explosion in growth,” Nir told me. “All these features, like tipping and subscribing, are going to become fully commoditized over the next few years … now that people’s digital consumption habits have changed.”
Still, Duffy thinks it’s important for content creators to hold a healthy degree of skepticism toward new products. “Even if a platform is not immediately requiring creators to give them a cut back, it falls along the Silicon Valley model of scale first and then revenue later,” Duffy said. “When the job economy looks so bleak, it makes sense people are seeking out more promising livelihoods that allow for autonomy and creative self-expression. It’s important to consider who benefits from all of this: What does the promise of success look like, and how does that map onto reality?”
This article originally appeared on VOX HERE