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Creator Economy: Why A Reels App Makes Sense

Creator Economy
Why a separate Reels app would make sense; MrBeast's funding talks.͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­͏ ‌     ­
Feb 27, 2025

Creator Economy


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Hello!

Instagram has been firing on all cylinders to take advantage of the uncertainty around TikTok in the U.S. The latest: the Meta Platforms-owned app is now considering whether to spin out Reels into a separate app, as we were first to report on Wednesday.  

A separate app for Reels could make a lot of sense. Instagram has had an identity crisis in recent years as it has tried to balance social connections with entertainment. People use Instagram for private messaging, seeing posts from friends and family as well as watching videos from creators and keeping up with news. That variety can be a detraction.

Social posts from friends and family, for instance, also can lead to drama (not the good kind!) and for young people, pressure to live up to the glamorized lifestyles and looks that have become a hallmark of the app. These types of problems led Instagram to experiment with hiding likes and rolling out anti-bullying features and ways to mute accounts. 

Meanwhile, users flock to TikTok and YouTube primarily for entertainment. A Reels app could serve a similar purpose, sidestepping some of the thorny issues of a thriving social network. What's more, it could look and feel a lot more like TikTok!

Instagram tried a similar video effort in 2018 with IGTV, a standalone app to watch longer videos, as it went after YouTube viewers. At the time, Instagram was essentially starting from scratch, tapping big name celebrities including Kim Kardashian and Selena Gomez to post. Many of them didn't post much—or at all—after launch and it shut down the IGTV app in 2022. In contrast, Instagram already has plenty of Reels content from creators. 

A Reels app may make it easier for Instagram to add even more features popular on TikTok, including shopping and livestreaming. The app could also potentially integrate more tools specifically for creators, such as editing features or even new money-making opportunities. 

Meta has launched separate apps before, most recently text-based Threads in July 2023 in the wake of backlash to Elon Musk's takeover of Twitter, now X. Separate apps are also a way to spur growth. Threads now has 300 million monthly users and recently started selling ads. 

When companies "build in features and functionality into an app, it becomes all bloated and is never quite as good as a dedicated app," said Matt Navarra, an independent social media consultant.

"If they tried to bake Threads into Instagram, it would be very confusing and people wouldn't use it," he added. "For Threads, they couldn't have done it any other way."

The same thinking seems to have applied to Instagram's new Edits app, which aims to take on CapCut, a popular video editing app for creators owned by TikTok parent ByteDance. While Instagram could have integrated more editing features within the app, if it really wants to compete with CapCut, it makes sense to launch as a separate souped up app with more features. There's only so much you can cram into one app.

Here's what else is going on…

See The Information's Creator Economy Database for an exclusive list of private companies and their investors.

TikTok announced new features for its desktop version in an apparent challenge to YouTube. TikTok's updates include a new layout, a "refreshed" For You feed, fullscreen and horizontal livestreams for gaming, and a floating window on Google Chrome that keeps TikTok visible above other windows, so users can multitask while watching content. 

LTK, the creator commerce startup, announced a new app that isn't just focused on shopping and recommendations from creators. Now, users can watch videos and discover creators based on their interests and location, as well as connect with friends. The changes position LTK to be more similar to TikTok. 

Twitch is working on new tools to make it easier for creators to stream with a friend or bring more people into the conversation, as well as expanding money-making opportunities for creators and making improvements to its mobile app, according to an open letter from CEO Dan Clancy about the company's 2025 priorities. 

Later, an influencer marketing and social media management company, announced a partnership with Snap so that marketers can better discover Snap creators and schedule posts on the disappearing photo app.

MrBeast is looking to raise a couple hundred million dollars in funding at a valuation of about $5 billion, Bloomberg reported. The top YouTuber, whose real name is Jimmy Donaldson, is raising money for his holding company that includes his chocolate brand Feastables and his video production business. 

Harmeet Dhillon, a Republican lawyer who is Trump's nominee to serve as the Assistant Attorney General for Civil Rights at the Department of Justice, disclosed that she made $43,531 from X's creator program that shares ad revenue, Business Insider reported.

Gemma Stafford, a YouTuber and professional chef, partnered with Future Today, a company that launches ad-supported channels on connected TVs, on a 24/7 baking FAST channel.

Andrew Tate and his brother Tristan, who have been charged with rape and human trafficking, have been allowed to leave Romania for the U.S. following pressure from the Trump administration, Bloomberg reported. Tate, a controversial influencer, frequently promotes misogynistic views online. He has denied the charges. 

Is this the next Hype House? A new Gen Z collab house launched last week called The Glow House focused on fashion and beauty. It's already generating lots of buzz.  

The Glow House's TikTok account racked up more than 500,000 followers within 24 hours of going live and searches for it started spiking on Famous Birthdays, a Wikipedia-like site for creators, according to Famous Birthdays founder Evan Britton. As of Thursday afternoon, The Glow House TikTok account had 1.1 million followers and 3.4 million likes. 

The first member, Embreigh Courtlyn, now has more than 2.1 million followers on her personal account. The collab house's account has been revealing new members in individual videos, such as when it hits milestones, such as surpassing 1 million followers. 

Thank you for reading the Creator Economy Newsletter! I'd love your feedback, ideas and tips: kaya@theinformation.com

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