The market is certainly there. The legality is another story.
I hope you enjoyed last week’s issue on farmland and rural opportunities.
After publishing, reader Mike H. let me to explore Unyoked, a small business doing something really interesting with rural land. It’s a site where you can book unique, intimate, way-off-the-grid experiences throughout rural Australia.
What makes this business special is that the founder doesn’t own any of the land himself. Instead, he persuades landowners to get permission to build simple glamping-style cabins on their land, and rents them out to travelers. He handles bookings, ferries guests to & from the sites, and splits the revenue with the owners. It’s a perfect example of seizing an opportunity before it presents itself, and creating an entirely new market out of thin air. ?
This week’s issue explores the buying and selling of something that we all have — social media accounts.
Let’s dive in!
Why sell a social media account?
In the past couple of weeks, a new Netflix documentary called The Social Dilemma has created lots of chatter. Whether you like the movie or dislike it (I actually wasn’t a huge fan, tbh) nobody would argue with the film’s core premise. That is, when it comes to social media, if you aren’t paying for the product, you are the product.
Since they’ve become so commonplace, it’s easy to forget that social media accounts are absolutely digital assets in their own right! Social accounts have fans, followers, and eyeballs. Digital traffic. And as we all know, traffic = revenue. Or at least, potential revenue.
What is your social media data worth?
Over the years, a few startups have toyed with the idea of paying users for their social media posts. The thinking is that since social media companies are getting rich off your (collective) data, why not try and funnel some of that money back to the content creators who fuel it all?
One of the more hyped players in this space is OzoneAI, which is attempting to cut out the middleman and allow advertisers to pay you directly. It makes sense in theory: instead of giving away your personal data for free so social media companies can show you ads, you could grant companies access to your data, and advertisers could just pay you for it.
However, this idea has fallen apart time and time again, for three reasons:
- Ultimately, your data isn’t that valuable. It turns out that, despite lawmakers’ best efforts, it’s not that easy to calculate the value of your data. And even when you can measure, it simply isn’t very high. The WTA methodology is one way to look at it, and yields some paltry results. Axios has pegged the average Facebook account at $225 and Instagram account at $125, with each “like” worth just .20 to .40 cents. To the frustration of Twitter shareholders, the average revenue per Twitter user is just $7.50. Yippee. ?
- The new company hasn’t earned any trust. Since people have an issue with social media companies profiting off their data, any new company entering the space has to show why they’re any better than the alternative! After all, the user is simply handing that same data over to OzoneAI, it has to be trusted more than Facebook, etc. This sort of trust needs to be organic, and takes years to build up.
- The business model is unwanted by social networks. Finally, these startups are trying to insert themselves in to a recalcitrant ecosystem that simply doesn’t want them there. And why would they? It weakens their position in the data-grab game, and they gain nothing from it. These startups should expect zero support from the platforms themselves, and will face an enormous uphill battle getting people to sign up (and trust!) yet another 3rd party company, for what ultimately amounts to pennies anyways.
Okay, so getting paid directly from advertisers for your data is probably not going to amount to much. In the meantime, you are still the product.
So, what if you could sell that actual product itself?
Problems with selling social media accounts
Like with many other digital assets, it’s still the wild west out there. ? You can absolutely buy and sell social media accounts. But there are some issues.
It’s usually against the terms of service
This is, surprisingly, extremely common. Many of the most popular social networks explicitly forbid users to sell their accounts.
Twitter makes no bones about it, calling this out in their (rather friendly) terms of service. You’re not allowed to squat on usernames, either. In fact, if there’s a dormant account that doesn’t want to sell or is non-responsive, you can often work with Twitter to gain control over it anyways. (I can personally attest to this. Years ago I was squatting on a competitor’s Twitter handle. One day I woke up and Twitter had just yanked it out from under me without warning!) ?
Still, legalese is one thing, but enforcement is another. Twitter can issue legal threats until the cows come home. But the sheer number of Twitter value estimators & marketplaces indicate that sales are definitely occurring, and Twitter has a hard time enforcing this policy — if they even care at all.
Instagram is the same. Their terms strictly forbid users to “buy, sell, or transfer any aspect of your account (including your username).”
Not that it’s stopping users from spending thousands buying accounts for their follower counts. And let’s face it: Instagram can’t really know if an account has been sold or if it’s being managed by someone else.
I spent a good 20 minutes poring through TikTok’s Terms of Service and found that yeah, it’s probably against their rules as well. Which is pretty ironic, given that the question of who TikTok itself has been an absolute mess for months (I literally cannot keep up with this fiasco), and TikTok users are now planning their exits.
The one exception to the rule seems to be YouTube. This thread on Google’s support forums indicates that buying or selling a YouTube channel is completely legal, and has in fact been happening out in the open for several years now.
Niche accounts vs personal accounts
There is a big difference between selling a niche accounts and selling personal accounts.
A YouTuber has to shoot and edit videos for their channel, which typically lends itself to a very unique, recognizable personal brand. Production values (and expectations) are high, and the person behind the account matters. A lot.
An Instagram account, on the other hand, can just repost the same five stolen images of Bali, and gain tens of thousands of followers without ever uploading a picture they took themselves. Nobody knows who is behind the account, nobody cares. Just scroll and double-tap. “OOOH I LIKE THAT PLACE! I WANNA GO THERE. YAAY.”
This means that selling a YouTube, Twitter, or TikTok account takes key man risk to a whole new level. As I wrote about it my issue on newsletter acquisitions, with these types of social accounts, people are following not just the account, but the person behind the account. If that individual changes, will the audience care? Will they stick around?
No established escrow services
Unlike with more traditional digital assets, there is no Escrow.com equivalent to protect your digital asset purchase. So as you’d expect with any black market, people have built homegrown systems to try and protect themselves.
A new class of middlemen have popped up to act as sort of a low-tech “escrow service.” These neutral parties give the transaction an added level of security, and will typically charge a small fee to broker the sale. Gulam Mohiuddin Chandiwala has been a social account broker since 2016. He charges up to 12 percent of the sale price, and gets a steady stream of micro-influencers coming to him via word-of-mouth, all looking to sell.
But is a middle man really necessary? As far as digital assets go, selling a social account is about as low on the complexity/risk scale as you can get. One of the things I like about domain investing is that, at the end of the day, there is so little chance of anything going wrong. Either the domain was transferred to the new owner, or it wasn’t. There’s no ambiguity.
Social accounts are similar. Since follower counts are already public, there are really only a few steps here: a) Verify financials, and 2) Hand over the password. That’s it. There’s nothing else to do.
How to value a social media account
Just like with website investing, people are drawn to potential, but they ultimately pay for performance.
The two main factors when valuing a social media account are gross revenue and follower count. Factors such as account niche, recent activity, and most importantly, engagement rate will also have an impact on your final selling price. (In fact “engaged followers” is actually more important metric than raw followers, as followers themselves can be bought & sold — another thing which social networks forbid and increasingly punish you for.)
The more diversified your revenue streams, the better. Dropshipping, ebooks, sponsored posts, story shoutouts, etc. You don’t have to be an influencer or have a strong brand — though it certainly helps. But if you have a significant number of engaged followers, you have a good shot of finding a buyer for your account.
Inkify.com has an Instagram post value calculator which attempts to show you what one of your Instagram posts is worth. In case you’re feeling lazy, I’ll save you the click: All they do is take your followers and apply an RPM of $5.62 per thousand followers.
If you know me, you know I’m a big fan of buying un-monetized and under-monetized websites with high traffic. Social media accounts are no different. For revenue-generating accounts, based on some user tests I’ve done for Flippa, I think it’s safe to assume the standard 2.5x annual net profit multiple is a good starting point for negotiation. But frankly, with non-revenue generating accounts, the lack of transparency around pricing means anything is possible…
According to Instagram flipper Thor Aarsand, who has earned over $120,000 buying & selling Instagram accounts, he typically pays around just $10 per 1,000 followers. ?Personally, I think selling that low is insane. If you assume you can earn ~$5.62 for posting to 1,000 followers, why on earth would you sell your account for the equivalent of just 1.7 posts?!
But that’s why this space is still the wild west. when you have a murky, unregulated, highly illiquid market like this, some people are going to use information asymmetry to get the better end of the deal.
People don’t actually know how they should price their accounts. You can find crazy-good deals!
– Thor Aarsand, Instagram account flipping God
Places to sell a social media account
Despite the platforms’ insistence that it breaks their rules, a good amount of marketplaces dedicated to buying & selling social accounts have popped up:
- ViralAccounts.com. Stock photos and ugly design aside, these guys have a clear zeal for the space which shines through. Registered in Europe, they accept Bitcoin and deal in accounts from Facebook, Instagram, Pinterest, Tumblr, and YouTube.
- FameSwap.com. Growing steadily and boasting a higher SEMrush Authority Score, FameSwap is a serious, well-known player for buying Instagram accounts and to a lesser degree, YouTube channels. A quick look at the featured Instagram accounts shows the average selling price to be $33.12 per 1,000 followers. Based on the Inkify estimates above, this equates to roughly 6x a typical sponsored post’s earnings. (Wow!)
- SocialTradia.com. Based in Canada, SocialTradia focuses solely on Instagram accounts. They do verifications themselves to ensure quality, and offers a 24 hour “cooling off” period, which acts as a sort of escrow service.
- Trustiu.com. Based out of Barcelona, Trustiu is a marketplace to buy & sell digital properties, but it turns out it’s mostly YouTube accounts. I calculated the top listings on the site and after converting from Euros, came up with an average price of USD $28.80 per 1,000 followers. I still think this is very low.
- Facebook Groups and forums. In addition to forums such as PlayerUp and EpicNPC There are private groups with thousands of members trying to buy or sell social media accounts. These groups are full of screenshots of various accounts, with posters detailing the number of followers they have and the price they’re asking. Instagram accounts are by far the most common offering for sale.
- Flippa (coming soon!). If you’re looking for a large, trustworthy marketplace to put your social media account up for sale in front of half a million buyers, we’re about to begin accepting qualified social media accounts on the Flippa platform. Use PayPal or our Escrow service for full trust & transparency.
On the whole, it seems like social media accounts are definitely undervalued, and there are some big buying opportunities.
At worst, if the account is earning solid revenue, you’ll pay 2-4x annual net profit, which we all know is standard and can produce some great returns.
At best, if you’re buying the account mostly for its followers, then do the math. If the the average sponsored post yields ~$5.00 per 1,000 followers, and the average account sells for $30 per 1,000 followers, then there are clearly some enormous arbitrage opportunities here.
This market asymmetry won’t last forever. Do your research, find your niche, and buy eyeballs for cheap!
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That’s it for this week’s issue!
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