The 'Financial Wizards' Of Social Media

Parliament is not in session but there's so much to be said. So let's pull out the laptop and share a few thoughts on an issue that has always interested me: content creation. Content creation on social media has become a legitimate industry with a growth estimate of 25% per year and is slated to be worth ₹ 2,200 crore by 2025. As of January 2022, YouTube has more than 26 crore monthly active users in India; 1,200 of its creators have crossed the one million subscriber milestone. As an avid social media user myself, I was intrigued by the revenue model of this industry. I found that content creators get a share of the platform's revenue. But more than 70%-80% of a creator's revenue comes from branded content. This revenue is determined by the number of followers, type of content, genre, engagement rate and demographics.The area becomes murky when financial influencers, daily vloggers (people who record their daily chores) and people generally not qualified to tender financial advice promote financial products without full disclosure of a brand collaboration.Many first-time investors turn to the internet for financial advice to make easy money with a single swipe. Influencers have filled the void created by unemployment and lack of access to credit by promoting a variety of financial products on specific trading platforms, attracting very high returns. There exist significant concerns around influencer content: the fitness and qualification of the person providing advice, the veracity of the information provided, the risk of potential scams and the risk appetite of consumers of such content. In July 2022, a crypto-trading platform which was heavily promoted by influencers suspended all its operations including withdrawals and deposits, leaving 8 lakh patrons at a point of no return. In August 2022, India's top two crypto platforms had all their assets frozen by the ED due to non-compliance. These platforms had been talked up by various influencers in the garb of giving financial advice in good faith. While there is a need for more transparency in the influencer-verse, this is not a call for over-regulation but for better enforcement. This space requires a deeper understanding and not a myopic one-size-fits-all penal provision. The government should be proactive in at least releasing preliminary Do's and Don'ts for promoting financial products online in consultation with SEBI to protect naive investors. There should be gradation in penal provisions in accordance with the platform reach of the influencer and the monetary value of the brand collaboration. Penalties should be imposed on both the advertising company and the influencer in question, and the amount accumulated via such penalties should go towards the creation of a social media literacy fund.