Modeling on Instagram? Don't laugh. It can pay big

The Instagram economy

A new crop of entrepreneurs has popped up, using Instagram. They model clothes, ties, hats, shoes while sponsors who like what they see pay them. The sponsorships are either not disclosed or are only lightly disclosed, bringing up an ethical issue for some. But for many Instagram users, it doesn't seem to be a problem. A number of agents have even opened shop, helping to match models with big name corporate sponsors.

At age 25, he now makes enough money that it's become his full-time job. Brands like Ralph Lauren and Armani Exchange pay him to attend events and model their products.

As the Facebook-owned platform tries to make money, Instagram is in some ways competing with its own users for ad dollars.

Brian DiFeo started The Mobile Media Lab, an agency that matches Instagram influencers with brands looking to widen their reach. DiFeo said an Instagram user with about 200,000 followers can make anywhere between $5,000 and $7,500 per month.

Source: Justin Livingston | Instagram

Justin Livingston

There's enough money trading hands in this new economy that talent agencies like Next now have teams dedicated solely to representing Instagram influencers. Jennifer Powell, an L.A-based talent agent, represents some people who advertise products on Instagram.

"When you have a person with 2 million Instagram followers, that's direct consumer advertising. It's a no-brainer," she said.

The Federal Trade Commission requires disclosure in social media when a user is getting paid, but the requirements can be as simple as a person thanking a brand for a product in a caption. CNBC spoke with students at New York University who had mixed reactions, but most were OK with the person they're following getting paid by a brand.

Livingston said his posts have to feel authentic. "I don't ever want to feel like I'm chucking some product," he laughed. "My reader's going to be like, 'Wait a second.'"