TikTok's rapid rise hasn't just hurt Instagram.
Instagram head Adam Mosseri said YouTube was hit harder than Instagram when TikTok entered the social media world.
“TikTok hurt us in 2020, 2021, but they hurt us more,” Mosseri said in an interview with YouTubers Collin Rosenblum and Samir Choudhury posted Monday.
Mosseri said he sees TikTok and YouTube as having more overlap in terms of being “laid-back, passive” viewing experiences, while Instagram is more of a “participatory, active experience” due to the popularity of its social sharing features that encourage users to send videos to their friends.
In a world where every media company is competing for attention time, the rise of TikTok and short-form video could be stealing viewers away from YouTube's longer-form videos.
Meta executives believed YouTube was losing money on Shorts, a short-form video feature it launched in response to TikTok's rapid growth.
YouTube pays creators and music rights holders a cut of revenue from Shorts videos as part of its Shorts monetization program, but because YouTube's longer videos are monetized through ad breaks inserted into the stream, while Shorts ads appear in the feed, it's hard to attribute revenue to a specific creator's video.
“It's not unreasonable to assume that as a company they will accept losses in order to increase market share and figure out a solution later. Which is what they might be doing,” Mosseri said.
“I don't know if they're subsidizing it or if they're just doing it better than we are,” he added.
YouTube did not respond to Business Insider's request for comment.
According to recent court filings, Instagram made more money from advertising than YouTube in 2021. That year, the company made $32.4 billion in advertising revenue, compared with YouTube's $28.8 billion. YouTube's ad revenue is expected to grow to $31.5 billion by 2023. Meta did not provide a breakdown of Instagram's ad revenue in its investor report.
Still, Mosseri said YouTube is “best in class” when it comes to sharing revenue with creators. YouTube CEO Neal Mohan said in February that the company has distributed $70 billion to creators, artists and media companies over the past three years.
“TikTok is best at discovering small creators and growing their popularity, but they're not best at revenue sharing,” Mosseri said.
How TikTok influenced Instagram's creator monetization strategy
Instagram may be a money maker for parent company Meta, but the company is still figuring out the best way to share some of that revenue with its users.
Mosseri said the company has struggled to find a sustainable way to pay creators for Reels posts “without burning through cash.”
Instagram compares what it pays creators for producing videos and photos to the revenue that content would have generated without the incentive pay.
But Mosseri said the math doesn't necessarily work in the company's favor.
Instagram has tested several programs to pay creators, including bonuses to encourage them to create certain types of content (such as Reels).
But the platform reversed course on many of these programs, halting bonuses altogether in 2023, only to bring them back in another test form a few months ago.
Mosseri acknowledges that this isn't ideal for creators on Meta's platform who rely on payments to make a living.
“You can't do a program this year, cancel it next year, and then bring it back the year after,” he told Rosenblum and Choudhury. “That would just leave you open to attack.”
Meanwhile, TikTok has also experimented with a variety of creator monetization programs in recent years as it seeks ways to incentivize users to stay on the platform. Some programs, such as TikTok Pulse, are tied to advertising revenue, while other payouts are determined more opaquely.
More recently, TikTok appears to be prioritizing its search business with its creator rewards program, which it announced in March. TikTok said it would assign a “search value” to videos based on how well they match popular search topics. It would use that search value, along with several other factors, like originality and video engagement, to determine how much rewards creators get.
The move suggests TikTok may be aiming to steal money from both YouTube's video advertising business and Google's search business.
A glimpse into the future of Instagram
During the roughly 90-minute interview, Mosseri also spoke about the future of the social media business.
Mosseri had three predictions for the future of social media:
- The feed as we know it is dead. “Sharing will increasingly move from a feed-based format to a message-based format,” Mosseri said. “One day, many more photos and messages will be shared on Instagram than will be posted to Stories, and many more photos and videos will be posted to Stories than will be posted to the feed, and people will still think of us as a feed app.”
- There are still many opportunities for video. “Mobile video will continue to grow, probably driven primarily by short-form video,” Mosseri said, “but I think what's really happening is that mobile video is eating into TV market share.”
- The way we communicate online will also undergo major changes. Mosseri said roughly every five years a new channel or format changes how we interact online, such as a shift away from SMS and Stories (which were on nearly every platform at one point, whether that made sense or not) and more recently vertical, short-form video. “You'll probably start seeing that in the next five years,” he said, adding that generative AI will likely play a big role.
As Instagram prepares for these changes, Mosseri knows the platform's continued relevance will be at stake.
“If Instagram is irrelevant in five years, what do you think went wrong?” Chaudhry asked Mosseri during the podcast.
Mosseri's answer was blunt: “Maybe we moved too slowly.”
“The most likely thing that will happen for a platform of our size is that we will eventually move slower than the world, the world will move away, and we will be left behind,” Mosseri said.
