Inside the Influence Economy

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S1: Earlier this year, Taylor larenz went to a beach party thrown by Instagram. It’s called Insta Beach.

S2: It’s up in Malibu, north of L.A. And they invite the top like 500 to 700 young influencers in L.A..

S3: larenz writes about Internet culture. She’s at The New York Times now, but she was working for The Atlantic when she went to Insta Beach.

S4: It was just this beautiful beach just north of L.A.. Everyone was really young and cool and I felt like an ancient pale corpse because most all of them live in L.A. So they’re really tan and they were just having a good time. There’s a lot of kids having a good time. The backpack kid did a dance. It skewed really young, you know, 10 year olds, middle schoolers and high school age kids. It sort of had the awkwardness of any high school social event, like it kind of felt like a homecoming party or something. There’s definitely a lot of CLECs, a lot of like kids daring, you know, other kids to talk to each other and psych regular teenage stuff, but regular teenage stuff that’s worth billions of dollars.

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S3: There was one young influencer at the party with 1.5 million followers on Instagram, another with six point eight million plus young comedians and actors and Web performers, all of whom intuitively get how to leverage being online to help their careers.

S5: If you want to be a young actress in Hollywood, you need to also understand how to navigate these digital platforms and engage with your fans at a very influence way, which was not the case until recently. And I think what struck me about that party was just how deeply all of that sort of young Hollywood talent there understood that we called up larenz because her beat Internet culture has really become the culture.

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S1: And the people at Insta Beach aren’t just funny online personalities to gawk at. And they aren’t just pretty girls with phones. They’re truly influencing our lives in ways we don’t always see.

S5: This is literally shaping every single area of our life. I can’t stress that enough. It’s a big shift in how we shop, how we learn, how we consume information. And you might think that it’s just something that teens are following. And oh, I don’t follow any YouTubers, but we very much live in an attention economy and the people that can exploit that are sort of able to do whatever they want.

S3: And as we move toward the end of the year, which is also the end of the decade, we wanted to talk about the rise of the influencer and the multi-billion dollar business that Taylor says most people don’t really understand today on the show. The influence economy. I’m Lizzie O’Leary and this is What Next TBD, a show about technology, power and how the future will be determined. Stay with us.

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S1: OK, so humor me here. I mean, I’m I’m 44 and I like to think of myself as fairly digitally savvy, but I think there are things here that I have a hard time understanding and I feel a little out of my depth. How would you define an influencer?

S2: That’s a good question. I would say an influencer is part micro celebrity and part entrepreneur. It’s somebody that makes money by swaying opinion around something. They’re kind of like opinion leaders in specific spaces or they’re just compelling personalities. So it’s very tied with commerce. Like it’s not just someone that’s famous on the Internet.

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S1: It’s more like the way that they also monetize to understand how we got to this point where influencers can command so much money and attention. We have to go back to the beginning of the decade. Instagram came out in 2010. Can you give me an example of what being an influencer in the beginning of the decade was like and felt like?

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S5: Yes, I can speak to this personally because I was a pretty well-known New York. Instagram were back in those days. And it’s funny because when Instagram started, people didn’t really know how to use it. And it was really crude. And the cameras back then were not very good. So the first sort of influencers on Instagram were photographers. Honestly, it wasn’t even professional photographers at that point. It was like people kind of like myself that had developed an edge and were just posting a lot of content related to a specific niche. And then you saw a lot of people who were sort of Old-School influencers hop on and use Instagram in in this sort of promotional way. There is a good tweet about Instagram and how it’s changed. And something like Instagram used to be about photos you took and now it’s about posting photos of you. And I think that’s very true. And I think influencer culture is kind of responsible for that shift.

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S1: You know, I have this, I think maybe outdated picture in my head that the early influencer who is making money off this stuff was already famous, whether they were an actor, a reality star, whatever. And I guess I wonder how. The WHO has changed over time.

S6: Yeah, I would say that’s not really who they are influencers. I mean, if you look at like the 2000s, like the aughts. Yeah.

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S5: You know, there were these MySpace people. There were reality stars. They were sort of influencers, but they didn’t have the platforms to have a following or to monetize in the way that influencers today were. So I think like you kind of have two things and it meets in the middle. So on one side, you have the barrier for fame and notoriety is lowering. Like you have the rise of reality TV or fiction.

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S2: Jay Well, Jay, well, you have more of these micro celebrity type figures. So that’s one sort of one side.

S5: And then you also have these platforms emerging where everyone my name is Tyler Oakley, entities that allow people to grow and engage with and monetize following their own sort of code. And I was like, you know what, I want to do it. Those two things, meeting of the middle led to this influencer boom. Without these platforms and without this these tech shifts, you would have just continued to have reality stars. But those reality stars weren’t really influencers the way that sort of the modern understanding of the word.

S1: It sounds like you’re talking about the technology sort of democratizing this.

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S5: Yeah, absolutely. I think that technology democratized fame, obviously, but it also just allowed for all of these new monetization models. I think there’s a misunderstanding that influencers are just people who post sponsored content, but that’s not true. I mean, most influencers now the trend is very heavily away from that. They’re monetizing through merch sales or through kind of creating their own products like the Kylie Jenner model, where you get really big, you get an audience and then you create something very specific to your personal brand that you can sell back to them. So these people are not people that are just getting paid to post things. They are kind of operating small businesses and they all have different business models.

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S1: Well, let’s talk about the business model. We know that global brands spending on influencers is somewhere between five and 10 billion dollars. I guess I’m wondering, can you walk me through the ways people make money?

S2: Yeah, I think it’s much more than that, actually. Really? Yeah. I think the latest figure I heard was closer to 20 billion in 20 now. And I would even say that that’s it’s that’s underestimating it because that’s just the brand spending money on influencers. Like I said, the whole trend is away from sponsor content. So those brands are paying for sponsor content. But that’s just the influencer marketing industry that doesn’t take into account the millions and millions and millions that these influencers are making by selling merch, by developing products, by having subscribers pay them directly through sites like Patra on.

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S7: This is a huge, huge, huge industry. It’s sort of equivalent to like Hollywood, where there’s lots of different ways to make money.

S8: I don’t know what kind of figure could really capture it because it’s kind of invaded a lot of areas.

S2: I mean, the amazing thing about sort of the rise of influence our world has been that it really did democratize fame, but it also allowed people to serve underserved communities in different ways. So you’ll see a lot of like niche influencers developing specific beauty lines aimed at different subgroups. Hi Hood. Hooda Cotard, who’s a huge influencer, developed basically a makeup line that wasn’t just for people with perfectly white skin tones. I mean, Rihanna, Fanti, beauty has done the same thing. I think that there is a recognition that people want to buy products from people that are like them. And not everyone is just a white, skinny girl that looks perfect in specific makeup and specific clothes. So I think, you know, the influencer world has allowed people to kind of get outside that mold a little bit.

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S9: We’ve talked a lot about the growth of the influence, our economy, what it looks like from the outside. But there’s this entire generation whose lives are intertwined with this world and to them it looks a little different.

S1: Authenticity seems so incredibly important here. And I’m curious whether, say, genze. Where their radar is for, hey, things are being sold to me, even though the person doing the selling is just like me.

S2: Yeah, well, their awareness about that is very high. A lot of genze teenagers themselves are posting sponsored content or aspiring to post sponsored content because they understand that it’s a way to make money. So I think they more than older people have an understanding of like what’s an ad, what’s not, what sponsored, what’s not. It’s not even just sponsored. I think that they understand that in order for these influencers to survive and make money, they that those influencers need to make money. So a lot of times, I mean, kids will just buy merch to support their favorite creator because they actually want to give that person money to continue to make the content that they like.

S1: For younger influencers in particular, it’s about more than just getting paid. Recently, Taylor Arends profiled a 15 year old named Rowan Winch. And he runs a series of meme accounts on Instagram. His biggest account had 1.2 million followers. You wrote about a teenager who is fifteen years old, ran a bunch of popular accounts from his house and was making about $10000 a month. And I guess I’m curious, what is the draw? Is it money? Is it. Influence. What is it?

S5: Yeah. It’s not just money, and I think that’s what I was trying to write about in that story. I think what young people understand and this comes back to that Instagram party that I was talking about earlier, the beach party, it’s something that every single person there talked about is this understanding that having an audience is powerful. We live in an attention economy. And the bigger audience you have, the better that’s gonna be for you in life. And that’s something that teenagers, because they’ve grown up so completely immersed in this influence, are worlds understand very, very deeply. So you’ll see a young girl that wants to be an actress, like she tries to get back on Instagram because she knows that when she goes to the casting call, you’re more likely to be cast in a movie if you have a big online following or this kid ruin. He basically just wanted to amass that audience that just because he could monetize it, but also because it’s just that’s a big network to have access to. So if he wants to apply to college or he wants an internship or he wants to get in touch with somebody in a certain way or just wants the answer to something on his math test, he can go to one point two million people and call on them. And that is very powerful. And and, you know, it’s not just about getting an audience because you can monetize it. It’s getting an audience because you can kind of do anything with it.

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S1: But sometimes the pursuit of that influence comes at a cost. In July, Instagram shut down Rohan’s biggest account, according to the Times. Instagram said it violated policies. His mother was worried about him. In your story? Yeah.

S5: I mean, Rowan is a 15 year old who got a huge audience young and then lost it. And I think he’s struggling to kind of figure out who he is without that audience building a business and building an audience on these platforms is very hard because the platform can also turn around and screw you or delete your account in any way and suddenly you’re cut off from, you know, your your whole friend and fan base. So I am sympathetic to his mom’s concerns because I think it’s something I hear a lot from parents, which is that they don’t really know if their kids are just spending an enormous amount of time on these platforms and getting very invested from a mental health standpoint and sort of their performance on these platforms. Is that a good thing? Is that them actually being very adept in operating in this new economy very well and setting themselves up very well for the future? Or is that sort of potentially going to have long term consequences to how they view themselves or their sort of their place in the world?

S1: What do you think the influencer of twenty, twenty or twenty, twenty five is going to look like or will even exist?

S6: Oh, my God. Yes, still exists. It’s not like this is like a fundamental shift in society.

S5: It’s not going away. Like if you have influence, you have power. If you’re able to mobilize people online, that is powerful. The world is only getting more connected. So people that are adept at that are well positioned for the future. And a lot of ways on which is terrifying, too, because you can be influenced too, you know, in a lot of ways. I mean, there’s definitely people that are more political influencers, especially extremists in certain ways that develop these very loyal fan bases by using influence or marketing tactics and strategies and monetization models like merch sales to sway public opinion and very terrible ways. So they influence our world is not going away. I think people hopefully are realizing that it is kind of this thing that’s invaded every single area of society. It’s not just like some beautiful woman with a phone. Taking selfies like that is not what it is. It is there are influencers in every single industry. There are people with health conditions that drug companies pay and they become influencers essentially for their own health conditions, marketing drugs to cure those ailments to other people that follow them. You know, there are influencers in the automobile industry and the hotel industry and the lifestyle industry. Obviously, everything. I mean, politics, like school education, everything has been sort of disrupted by this shift towards a more influence. Our economy. And I cannot stress like it’s not just some, like pretty girl with the phone. It’s really, really, really like shaping. I would say the way a whole generation approaches life and the Internet.

S10: Taylor larenz, thank you very much. Thank you. Taylor larenz is an Internet culture reporter for The New York Times. That’s the show.

S11: What next? TBD is produced by Ethan Brooks and hosted by me, Lizzie O’Leary. And it’s part of a larger what next, family? On Monday, you should listen to Mary Harris, dig into McKinsey and what exactly it does with reporter Ian McDougall. TBD is also part of Future Tense, a partnership of Slate, Arizona State University and New America. Thanks for listening. Talk to you next week.