TikTok divorce: In a sign-of-the-times moment, The Wall Street Journal tells the story of a couple of separating influencers dividing up their valuable social media accounts, the paper asking, “Who gets the TikTok in the divorce?” So when should you put your social media accounts in your prenup?
Since binding financial agreements (“prenups”, BFAs) are just that – financial agreements – it’s clear the answer will be, only if the social media accounts have any value. Theoretically, anything, even a social media account, can be added to a prenup provided it can be valued and then dealt with in the binding financial agreement.
When should you put your social media accounts in your prenup?
You’ll want to include your social media accounts if they have a value that needs to be taken into account, whether valued as ongoing income, or as a tangible asset. Maybe you share the account, the content, postings, and benefits, or maybe it belongs to just one of you. Either way, if it’s of value, you can talk about it in the prenup.
How many influencers are there in Australia, anyway?
Australia has a booming “social commerce” industry (that’s essentially where you click through from an influencer’s post straight to point-of-sale). The influencer marketing market value is worth $21.1 billion AUD, while elsewhere, somewhat hard-to-believe statistics suggest that there are 6 million Australian influencers, or 19% of the population. Well, whatever the exact numbers are, with the money clearly to be made in influencer marketing, the number of influencers is bound to be substantial.
Are you an influencer worthy of TikTok divorce?
At what point do you become an influencer worthy of a TikTok divorce? It’s generally when your branded content on social media is reliably earning money, rather than it just being a hobby. In the Australian marketing industry, influencers are classified according to how many followers they have: mega-influencers (one million-plus followers), macro-influencers (100,000 to a million followers), mid-tier influencers (20,000 to 100,000 followers), micro-influencers (5,000 to 20,000 followers) and nano-influencers (1,000 to 5,000 followers).
The WSJ mega-influencer couple were dealing with a TikTok account with four million followers. Numbers like that are mind-boggling to Australians, where our influencers tend more toward the nano category.
But although it seems obvious that more followers will bring more bucks, even nano-influencers (who might not even describe themselves as “influencers” by trade, but have niche, loyal, suggestible followers) can earn enough to need to pay tax and to include their income in their financial statement on divorce or to be able to include it in a prenup.
Including influencer income in your prenup
If you’re making a legitimate income from it, no doubt you’re on top of your need to pay tax, so the income generated by your social media business is easily trackable.
But valuation of social media accounts or influencing work is a little tricky, since income may be earnt in the form of pay-for-posting, or there might be other commercial partnerships or collabs/contra deals (receiving goods to recommend, paid holidays to create Instaworthy content, etc). So the account might also be ‘worth’ something in other ways, and if high value items or services are gifted in return for your branded content, they will still need to be regarded as income for tax and property settlement purposes.
TikTok divorce: Valuing a social media account
The WSJ article suggests that valuation of social media accounts as assets, though, is difficult, for instance because of the question of how to measure a future growth or decline trajectory of an account. Valuation of the WSJ couple’s accounts involved looking at who originally grew the audiences, who was more responsible for an account’s success, and whether an account was on the up or had a dwindling audience.
When it comes to a TikTok divorce then, in a best case scenario, you and your partner will agree on a value for a successful social media account for use in your prenup or property settlement. Alternatively, you’ll need to get it valued by someone with experience in this area.
Unsure where to turn for financial or valuation advice? Contact Alliance Family Law. We can link you weith the right people through our network of extnernal referral companies.
Or, if you’d like to discuss drafting a binding financial agreement, please contact Cristina Huesch or one of our other experienced solicitors here at Alliance Family Law on (02) 6223 2400.
Please note our blogs are not legal advice. For information on how to obtain the correct legal advice, please call Alliance Family Law.
(Source: The Wall Street Journal (subscription required, so we only read the intro, but there’s more info on the WJS story here.)
