Tipping on social media is a troubling development for online workers

Tipping leaves workers in a perilous position. Photo / Getty Images

Tipping is a curious practice that feels generous without necessarily doing much good. Having your wages supplemented by random acts of noblesse oblige is a stressful way to make a living at the best of times. Over the past year it has become unfeasible for millions of people. But if the pandemic has strengthened arguments against tipping, social media seems intent on making the habit more ingrained.

Did you know that you can already tip journalists on Twitter? Probably not. The function was only added a couple of weeks ago and is still being tested. It ran into immediate trouble when users discovered that some payments seemed to make their personal details visible. That knocked the shine off what was supposed to be a triumphant launch.

Still, Twitter's Tip Jar is just the start. Clubhouse, San Francisco's favourite new social media network, introduced its own tip-like payments in April. Facebook wants to make it easier for fans to pay small sums of money to creators and YouTube is testing an "applause" feature that lets users send a few dollars at a time to their favourite YouTubers. Streaming service Twitch has facilitated small payments for years. One user makes money from streaming an image of a jar of peanut butter.

The model, of course, is from China, where payments in live-streams are already commonplace. Game streaming company DouYu, for example, makes over 90 per cent of its revenues from live-streaming.

For now, US social media platforms are not prioritising the cut they can take from tips. Both Clubhouse and Twitter have gone out of their way to say that they will not receive any of the money sent. Instead, it seems a way to prime users to spend money in the apps and to keep creators producing free content instead of moving elsewhere. Why take the time to make a video for Instagram when the same video on YouTube might earn more cash?

Companies are right to guess that fans are willing to put their hand into their pocket to show appreciation. The success of subscription platforms such as Substack and even racy site OnlyFans prove audiences will shell out for online writers, podcasters and other creators they admire. I pay for three newsletters and two podcasts every month. Together they cost me $40 — more than a newspaper subscription but less than the ever expanding number of TV and video services I sign up for.

It helps that online payment platforms make the transactions simple. Electronic payments have already systemised tips in the real world. Instead of putting down loose change you are now more likely to be presented with a suggested percentage or dollar amount. These seem designed to increase both the size and regularity with which tips are paid. Sometimes astoundingly so — in LA, I was once encouraged to pay a 45 per cent tip for a takeaway coffee.

This in turn makes it easier for employers to use tips as a replacement for wages. The US federal minimum wage for tipped workers is just over $2 per hour.

Online payments work in the same way. What's strange is that the internet almost managed to kill off tipping a few years ago. When Uber launched in 2011 the company promoted a flat fee and declared riders and drivers were better off knowing what they would pay or earn "without the uncertainty of tipping". The company noted studies that showed tipping was often influenced by personal bias, meaning payment was not a direct link to performance. Yet drivers rebelled, demanding a tipping function be added to the app. In 2017, Uber acquiesced.

The lack of tips was probably unpopular with Uber drivers because gig workers have come to rely on tips to make up for meagre payments, says Saru Jayaraman, president of campaign group One Fair Wage and author of Behind The Kitchen Door. "Many gig platforms like DoorDash, Instacart and I would argue Uber and Lyft have replicated [a restaurant tipping] model in the gig sector," she says. "DoorDash was exposed some years ago for deducting workers' payments by how much they got tipped, but the truth is that all the gig companies are in some way able to pay workers less because they are getting tipped."

Teenagers racking up likes by recording themselves dancing in their bedrooms are not minimum wage restaurant workers or Uber drivers working long shifts. But there is an analogy in the way in which restaurants and other industries use customer tips in lieu of wages. Platforms can funnel money to creators without diluting their own revenues. For social media companies, tipping is not just a way for users to show their appreciation, it is a way to outsource payment altogether.

- Financial Times