Open Journal Systems

A man posts a TikTok video of himself longboarding while lip-syncing to “Dreams” by Fleetwood Mac. Between lyrics, he takes swigs of Ocean Spray’s Cran-Raspberry® juice. Seemingly overnight, there’s a spike in the brand’s popularity. Neither he nor Ocean Spray may be aware of it yet, but the man has just become a social media influencer. It ultimately lands him a partnership with the company in exchange for his continued publicity.[1] While his story is certainly incredible, it is not entirely unique. In fact, he is one of millions of influencers partnering with brands across all social media.[2]

Social media influencers have become a beacon of worthy brands in today’s society.[3] They signal the products consumers should buy and the trends they should follow. Their proliferation has also led to a flurry of academic research on peer-to-peer advertising in the new economy.[4] As the number of influencers has considerably grown, so too has the fascination with their business practices and profitability.[5] This is clear from the seemingly countless web articles dedicated to satiating the public’s curiosity.[6] Just this month, the New York Times published a piece on the methods that influencers use to secure jobs and partnerships.[7] The article begs the questions: what exactly do these arrangements involve and who oversees them?

To answer the foregoing questions, it is necessary to define what exactly qualifies one as an “influencer.” Per New York’s Supreme Court in its decision in Jianming Jyu v. Ruhn Holdings Ltd., influencers are “individuals who create content on social media platforms such as Facebook, YouTube, TikTok, and Instagram with the hope of gathering a large public following [and] who are paid to promote, market, and advertise products and services to their fans and followers.”[8] Social media influencers may take different approaches to marketing, including sponsored videos, product giveaways, brand reviews, and “shoutouts” or calls to action.[9] Moreover, the payment for these promotional services may vary. It can take into consideration the particular social media platform(s), the type of content, the effort required by the influencer, the number of their followers, and the influencer’s expertise, among other factors.[10] These can lead to widespread variations in influencer compensation. For example, an influencer on Instagram can receive anywhere from $10 to over $1 million per post depending on their follower reach and engagement.[11] That shakes out to around $30 to $60 thousand per year at the lowest end of earners.[12]

Given these relatively lucrative returns, it is no wonder that the number of influencers partnering with brands has seen an upswing.[13] Yet, influencer contracts are not without their share of disputes. Among those cited are unpaid fees and issues relating to rights to intellectual property.[14] Here, it would seem that influencers fall prey to an unbalanced power dynamic, where brands and influencer agencies ultimately command payment structures and rights of use.[15] The unfortunate outcome is that influencers complete performance only to have their invoices—comprising thousands of dollars of unpaid fees—remain outstanding.[16] More troubling still are the discriminatory payment practices that further disadvantage influencers who are persons of color. While not heavily studied, this phenomenon has been reported by PoC influencers who have testified to significant payment discrepancies between themselves and their white counterparts.[17] Short of costly avenues such as lawsuits, aggregated testimonies such as these are perhaps the only method that influencers have for voicing their concerns.

As for the regulation of these contracts, multiple government bodies may come into play. The first and most obvious of these is the Federal Trade Commission (“FTC”). The agency is critical to influencer arrangements with regard to advertising guidelines and disclosures. Specifically, it enforces and periodically updates rules that require influencers and their brands to disclose partnerships.[18] The agency therefore acts as an overseer of certain provisions within influencer arrangements.

What then, if anything, regulates the remaining relationship aspects between brand and influencer? The answer to this question is not quite as clear. On the one hand, social media influencers are often considered independent contractors.[19] This has the effect of relieving brands of costs associated with employee benefits and retention.[20] It also protects companies from potential disputes relating to discrimination, harassment, and retaliation.[21] For influencers, the benefits come in the form of work flexibility and tax breaks, including greater control over content and deductible expenses.[22]

Still, it is debatable whether influencers would benefit further from relationships that are regulated as if they were company employees. This classification is potentially feasible under state laws such as California’s AB-5, codifying the state Supreme Court’s decision in Dynamex v. Superior Court of Los Angeles.[23] There, the Court created the presumption that any person providing services to a company is an employee.[24] It is rebutted if the company has shown that the influencer is relatively free from the brand’s control and that they perform work outside of the company’s typical business.[25] The former factor may cause companies some problems. As the FTC has insisted that brands take responsibility for advertising practices, companies may be exerting more control over influencers than ever.[26] This comes in the form of formal programs intended to train and monitor influencers hired by the brand.[27] Crucially, should these prove to be sufficient control mechanisms, companies could face a reality wherein influencers have rights to protections afforded to their other employees.

Underlying the fascination with influencers is perhaps the notion that anyone—so long as they have access to the internet—can become one. Seeing as they earn fame and competitive compensation, it is easy to see why “influencer” has become a coveted profession. Yet, the issues facing social media influencers paint a less rosy view. Not only are these contracts prone to messy disputes, but also an overarching ambiguity in terms of their regulation. To combat some of these concerns, influencer trade groups and unions have emerged as collective voices of their members.[28] In the future, it is possible that influencers will see benefits akin to those afforded to their brands’ employees.

 

Footnotes

[1] https://www.accdocket.com/under-influence.

[2] https://mediakix.com/blog/how-many-influencers-are-there/.

[3] https://medium.com/crobox/under-the-influence-the-power-of-social-media-influencers-5192571083c3.

[4] See e.g., Charles R. Taylor, The Urgent Need for More Research on Influencer Marketing, 39 Rev. of Mark. Comm. 889 (Nov. 2020).

[5] https://onlinemasters.ohio.edu/instagram-influencers/.

[6] See e.g., https://medium.com/the-logician/how-to-become-an-influencer-84810180850f.

[7] https://www.nytimes.com/2021/03/01/style/influencer-jobs-fohr-ambassador-platform.html.

[8] https://law.justia.com/cases/new-york/other-courts/2020/2020-ny-slip-op-31541-u.html.

[9] https://influencermarketinghub.com/influencer-rates/.

[10] Id.

[11] Id.

[12] https://www.vox.com/the-goods/2018/11/28/18116875/influencer-marketing-social-media-engagement-instagram-youtube.

[13] https://influencermarketinghub.com/influencer-marketing-benchmark-report-2020/.

[14] https://www.theguardian.com/media/2020/oct/10/influencers-are-being-taken-advantage-of-the-social-media-stars-turning-to-unions.

[15] Id.

[16] https://www.theatlantic.com/technology/archive/2018/12/massive-influencer-management-platform-has-been-stiffing-people-payments/578767/.

[17] https://www.instagram.com/influencerpaygap/?utm_source=ig_embed.

[18] https://www.jdsupra.com/legalnews/ftc-issues-new-guidelines-for-social-40544/.

[19] https://www.lexology.com/library/detail.aspx?g=238ac2f1-b131-49ee-b15a-2bfed4c3619d. Note that the IRS tends to classify influencers as independent contractors. https://www.taxslayer.com/blog/filing-taxes-for-youtubers-bloggers-and-other-social-media-influencers/.

[20] https://www.lexology.com/library/detail.aspx?g=238ac2f1-b131-49ee-b15a-2bfed4c3619d.

[21] Id.

[22] Id.

[23] https://leginfo.legislature.ca.gov/faces/billTextClient.xhtml?bill_id=201920200AB5.

[24] https://www.lawyer-monthly.com/2018/11/are-you-influencing-your-influencers-too-much/.

[25] Id.

[26] https://www.allaboutadvertisinglaw.com/2018/05/walking-the-line-with-influencers-how-to-satisfy-the-ftc-without-your-influencers-becoming-employees-in-california.html.

[27] Id.

[28] See e.g., https://www.americaninfluencercouncil.com.