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'Stories' are taking over social media, but monetization is elusive

The evolution of how people share their lives on social media changed with relatively little fanfare on Oct. 3, 2013.
Image: Woman Typing Phone Message On Social Network At Night
Snapchat introduces "Stories" in 2013 and is now one of the most-copied innovations in technology.diego_cervo / Getty Images

The evolution of how people share their lives on social media changed with relatively little fanfare on Oct. 3, 2013.

On that day, Snapchat introduced a new way for people to share their day with friends — “Stories,” in which users could stitch together a compilation of different snapshots from the past 24 hours that would then disappear. While the format received some coverage in the tech press, it was at the time just another feature on an app primarily used as a way for young people to send messages to each other.

More than five years later, the stories format has become one of the most-copied innovations in technology, showing up on almost every social media platform.

Facebook has embraced the format on all of its platforms, most notably WhatsApp and Instagram, which has enjoyed meteoric growth for its stories feature since it launched in Aug. 2016. The photo app has said that 400 million people use the stories feature every day, prompting the company to shift its focus away from its mainstay photo stream.

Instagram took its focus a step further on Friday by announcing a new feature that will allow users to create a list of “close friends” who they can privately share their more personal stories with, while still adding to the story they are comfortable sharing with their wider audience of followers.

Google-owned YouTube has also embraced the stories feature. On Thursday, the video site announced it was rolling out a stories feature to accounts with more than 10,000 subscribers.

But there’s one big catch — the format has proven difficult for companies to make money from. Facebook CEO Mark Zuckerberg said in an earnings call last month that he expects the stories medium will be even bigger than its News Feed, which catapulted the company to profitability, but that the company is still figuring out how to monetize stories.

“We're earlier in developing our ads products for stories. So, we don't make as much money from them yet as we do from feed ads,” Zuckerberg said. “We're following our normal playbook here of building out the best consumer products first and focusing on succeeding there before ramping up ads.”

The social media shift from posting on streams to posting on stories has been a rare bright spot for Facebook and Instagram in what has really been a particularly tough 2018. With Facebook users spending less time on the site following the spread of fake news and privacy scandals, Instagram stories will be “critically important” for kickstarting growth, said Gene Munster, managing partner of venture capital firm Loup Ventures.

“From the time a product starts to scale, which is what stories is doing right now, it usually takes one to two years to map the monetization to the use case,” Munster said.

A more privacy-conscious public will also mean that Facebook will have to be extra careful as it plots the best way to monetize the stories format.

“Privacy and consumer awareness about what data is being collected and better tools will impact the amount of money they make,” said Munster. “The reason why is it will be a small to medium percentage of users will opt out of sharing some data. The sharing of data is what makes ads the most effective, so there is a direct link between monetization and privacy.”

During a briefing to demonstrate the new “close friends” feature on Instagram stories, Robby Stein, director of product at Instagram, said his team noticed increased engagement when users were able to post stories for just their inner circle.

When asked about monetization plans for the “close friends” feature, Stein said it wouldn’t be treated any differently than the larger stories.

“We look at this from a ‘solving people problems’ perspective,” Stein said. “We believe if we solve problems that help people connect more deeply, then it’s best for business in the long term.”

Munster compared the scaling of stories to Facebook’s aggressive pivot to mobile a few years ago, which is now the most common way people access Facebook.

“It took about a year and a half to make that happen,” said Munster. “It was a step back to take two forward.”