The new monetization feature called Gifts was announced today by Instagram. The company is now extending the feature to more creators in the U.S. In November, the company first tested the feature, allowing fans to provide a favorite creator with direct monetary support in the form of themed virtual gifts. The gifts are bought using the virtual currency Stars and can cost anywhere from just 10 stars to several hundred stars.

Where live and on-demand videos, including Reels, could already be sent the Stars, Instagram adds gifts in a feature that is being able to keep up with competition like TikTok that is offering virtual gifts. And, also, for Instagram, the company gains yet another way of income, since its creators of the app need to split revenue from money they receive to Instagram.

Creators in the U.S. will be able to toggle on a setting to see if they are now eligible to receive Gifts from their Professional Dashboard.

On the web, Stars come in packs beginning with a price of $0.99 and escalate. Instagram clarifies that such Stars are only for use with Facebook. For the gifts on Instagram, Stars can only be acquired through the app to buy as in-app purchase products. Stars are bought as 45 Stars at the price of $0.99, 140 Stars at $2.99, or 300 for $5.99.

In this morning's announcement, Instagram said the Reels tipping feature was first publicly introduced in November. But it had been spotted long before that. Last fall, the company confirmed to TechCrunch that it had developed an internal prototype of Gifts, which was initially called "content appreciation." It came as a continuation of other in-app tipping features that followed, including the capability of sending Stars to creators and the release of Badges in 2020 that added a heart icon besides your name in comments. But Badges were only targeting live videos, while Gifts, since its launch, was Reels-only.

Instagram confirmed to TechCrunch that Gifts are still Reels-only for now.

When available, you'll see the option to "Send Gift" above the creator's username on a Reel, as can be seen with early tester Hamilton & Olivia.

The virtual tipping program may also encourage more creators to experiment with the format, which is still a priority for Instagram in its battle with TikTok. Though the company admitted recently that it may have pushed too many videos on its users last year, it continues to see Reels as a means to boost growth. According to Meta CEO Mark Zuckerberg in the company's Q1 2022 earnings out earlier this month, Reels videos played across Facebook and Instagram had more than doubled in 2022, and people sharing Reels with friends had more than doubled on both apps in just the last six months.
Even though Reels are gaining traction among the users, they've presented more of a challenge in terms of revenue generation. According to Zuckerberg, Reels' monetization efficiency is much lower than Feed, which means the bigger it gets, the longer it takes from a more profitable part of the application and the company loses. Meta said it wouldn't be until year-end or next year that it'll be able to grow Reels profitably while keeping with consumer demand for the format.

Thus, given this situation, the easy justification as to why Instagram wanted to add an extra monetization lever onto Reels comes by the launching of the Gift feature by the firm.

The corporation also anticipates making it easier to avail the features for its creators over time.