The Internet is changing all the time. Today, the online world is crucial to the way people live their lives. The most prominent and eye-catching of these in recent years must be ‘TikTok‘. It is undeniable that ‘TikTok’ has somehow overtaken many of the traditional web giants to become the new global super web platform.
This essay will describe and analyse the business framework and reasons for the success of ‘TikTok’ and its parent company ByteDance, using ‘TikTok’ as a blueprint. In the first half of the essay, it will describe how they have developed their business model and what their ecology is. The essay will then analyse how ‘TikTok’ has used the development of the network to achieve commercial success and new obstacles.
What is ‘TikTok’? — A New Pop Culture
‘TikTok’ (Global Ver.) or ‘Douyin’ (CN Ver.) is a free mobile app available on both Android and iOS platforms.” The “creator” can create short videos of 3-60 seconds. These include creative audio clips, songs or pre-recorded video clips (Hayes, Stott, Lamb and Hurst, 2020). Compares to the traditional video-based platforms like ‘Youtube’, ‘TikTok’ features an emphasis on interactivity. It allows users to interact with other creators in one single video clip. For example, they can cooperate with someone else they do not know in the forms of “duets” or “stitching” and “reactions” videos.
ByteDance’s international presence has been growing since February and November 2017, when it acquired short video apps ‘Flipgram’ and ‘musical.ly’. By the end of 2018, ‘TikTok’ was available in over 150 countries and was on the most downloaded mobile app in many countries, including Japan, Thailand and China (Shi, 2019). While the vast majority of ‘TikTok’ users are young people, many brands are also using ‘TikTok’ as a promotional and advertising tool and marketing channel (Domingues, Nogueira, Francisco and Frade, 2020).
“Tiktok” by TheBetterDay is licensed with CC BY-ND 2.0.
How ByteDance Created ‘TikTok‘? — History of Entrepreneurship
In 2012, tech entrepreneur Yiming Zhang founded ByteDance in Beijing. In the same year, ByteDance began launching a series of Apps. The first App is ‘Neihanduanzi’, a platform for users to share jokes in the form of short videos, memes and written articles (Kharpal, 2019). Also, as one of the first products, ‘JinriToutiao’, powered by artificial intelligence, is one of the most popular news push apps in China. According to iResearch, it has been installed in over 240 million unique devices as of November 2018 (TING, 2019).
Then in 2016, ByteDance launched its hottest and most recognizable product, ‘Douyin’. Meanwhile, ByteDance already had plans to expand this App overseas. Finally, in 2017, the international version of ‘Douyin’, ‘TikTok’, was launched. Although they have different names, the cores of products and functions are the same. ByteDance also acquired ‘Musical.ly’, a popular lip-syncing app for teens in the same year, in a deal worth between $800 million and $1 billion. ByteDance consolidated their audience by merging ‘Musical.ly’ with ‘TikTok’ (Shu, 2020).
As with most Internet companies, the core technology of all Bytedance products is artificial intelligence. The underlying technology can learn to understand the interests and preferences of users by interacting with them. Therefore, direct user input or social graphs are not necessary for ByteDance’s content platform (ByteDance, 2018). In addition to ‘TikTok’, ByteDance also has several Apps that have done well in overseas markets. For example, ‘Vigo Video’ for the Indian market, ‘TopBuzz’ and ‘Buzz Video’, mainly for the US (ByteDance, 2018).
Today, ByteDance has gained 500 million monthly active users worldwide. In the first quarter, ‘TikTok’ was downloaded 45.8 million times from the App Store, making it one of the most popular apps on iOS, according to market research firm Sensor Tower (Bo, 2018).
The business model of ‘TikTok’. — Dual systems in one Single platform
‘TikTok’ utilises two different business models on one platform for two different customers.
One of how the Internet has become central to contemporary media is in symbiosis with media culture (Lister et al., 2010). A key feature of ‘TikTok’ is User-generated media platform, and it is not like a news distribution platform where an official is in charge of the entire platform, controlling contents as well as high-intensity management. User-generated media is an integrated form of communication that provides users with the opportunity to create content, share it and build their networks (Omar and Dequan, 2020). In ‘TikTok”s platform, users dominate the contents, and the platform only provides the appropriate tools and some degree of management. ‘Sharing’ as a metaphor is the most active way to build a sharing economy that is technical and has digital connotations (John, 2018). On the other hand, ‘TikTok’, as an Internet social platform, is inherently sharing ecology. As John believes, sharing is human nature (John, 2018), TikTok’s social and innovative ways of playing not only increase user stickiness but also attract more new users to use ‘TikTok’.
Another business model for ‘TikTok’ is advertising revenue. Many manufacturers will advertise on ‘TikTok’ directly or indirectly. Some brands choose to advertise directly on the platform, while others choose to open an official account, thus catering to both user habits and brand promotion. Besides, brands are also able to collaborate more deeply with ‘TikTok’. The “TikTok For Business” campaign is a personalized advertising service designed by ‘TikTok’ for businesses. Brands and marketers can engage with the ‘TikTok’ community using an ecosystem of trusted partners, including agencies and technology providers (TikTok, 2020). Brands like ‘Bidalgo’, ‘QuickFrame’, ‘Bare Tree Media’, ‘Kantar’, are already the partners on different dimensions of ‘TikTok’ (TikTok, 2020).
The Ecology of ‘TikTok’ — Cooperations and Challenges
‘TikTok”s core users are pretty evident and concentrated. According to the data, the primary target audience for the ‘TikTok’ platform is young people, 62% of users are between the ages of 10 and 29, and only 5.1% are over the age of 50 (Clement, 2020).
Distribution of TikTok users (Clement, 2020)
‘TikTok’ as a platform that focuses on short videos. The first challenge that needs to be faced is those traditional video platforms. For example, the largest comprehensive video category ‘Youtube‘, which contains both user-made and live-streaming. ‘Twitch‘, ‘Twitcasting‘, ‘SHOWROOM‘ and other platforms with live-streaming as their primary business, these platforms are not direct competitors of the same business, but they all have similar features and target audiences. Content delivery platforms such as ‘Netflix‘, ‘Amazon Prime Video‘, ‘HBO Go‘, ‘Hulu‘ and ‘Disney+‘ have little to do with ‘TikTok’ because the content and operations are so different from the user-driven concept.
Another core competency of ‘TikTok’ is platforming. As Anne states, the term ‘platforming’ relates to the extension of social media platforms to the rest of the internet (Helmond, 2015).’ TikTok’ is linked to social media platforms because of its platforming system. This is often a collaboration, a virtuous circle between platforms. However, at the same time, ‘TikTok’ is similar to social media platforms such as ‘Twitter‘ and ‘Facebook‘ with features such as powerful social networking and information sharing. This similar functionality is competitive. Both Facebook and Instagram have realised the competitiveness of short video platforms. In 2018, Facebook developed ‘Lasso’ with the same content as TikTok and Instagram launched ‘Reels’ in Brazil to share segments of music videos (Wrcbtv, 2020).
Because of its multinational internet platform identity, it has very different regulatory regimes in different countries. In Europe, it has regulated by the General Data Protection Regulation in the name of privacy (Wang,2020). Nevertheless, in the United States, it is regulated by the U.S. Department of Commerce and The Committee on Foreign Investment on national security grounds.
Below is the diagram of ‘TikTok’ ecology:
Internet transition after ‘TikTok’ — Success and New Dilemmas
The “audiences” has become the “users”, and the “consumers” has become the “producers” (Lister et al., 2010). In contrast to traditional user-generated media platforms like ‘Youtube’, ‘Twitch’, etc., traditional content platforms divide users into “content creators” and “viewers”. Whether it is leaving comments or live interactions, they split the user base. ‘TikTok’ considerably blurs the two, with a low barrier to entry that highly encourages user-to-user interaction and collaborative content creations that makes for a distinctive user experience. Another critical success factor of ‘TikTok’ is the use of users’ fragmented time, which is revolutionary. According to the table below we can see that the average duration for users of less than 0.5 hours accounts for 57% of the data and 0.5 to 1-hour accounts for 31.9% of the data. This shows that TikTok users mostly use fragmented time.
Statistics of Tiktok usage (Chen and Zhang, 2020)
Short, resonant information and content are more likely to attract people’s attention, and people are more willing to interact and share with this information or content (Boxin Mou, 2020). For users who are not allowed to watch more than 1 hour of content in its entirety at once, such as during commute times or intermittent breaks, ‘TikTok’ has more appeal than traditional media platforms. At the same time, it also has a live streaming service for users willing to spend much time. As evidenced by TikTok’s transformation into pop culture, the use of fragmented time is now accepted and embraced by the majority of users and it is also a new area of the market that never had a player before the arrival of ‘TikTok’.
Although ‘TikTok’ has been a commercial success, its regulatory issues have not stopped since he was the first software to come out of China. In 2020, the US attempted to launch an investigation into ‘TikTok’ and tried to ban it on privacy and national security grounds. The lead participant in this investigation was CFIUS (The Committee on Foreign Investment), an interagency group that examines proposed foreign investments in the US to determine whether they threaten US national security (Alan Reinsch and Caporal, 2020). That investigation is still ongoing. In this case, it was not the internet regulator who oversaw and investigated ‘TikTok’. The Secretary of State even claimed that ‘TikTok’ would upload US user data to the Chinese government, while a spokesperson for ‘TikTok’ said that this was not the case (Bonner, 2020). This, of course, set off major Internet volatility. Many ‘TikTok’ users expressed their unacceptability. In light of this incident, digital platforms are no longer only characteristic of the internet, politics and national policy have begun to get into regulations.
In addition to data security, another national security concern Western democracies have with ‘TikTok’ is that the platform could be used to spread disinformation and censor content that upsets the Chinese government (Wang, 2020). According to leaked documents, ‘TikTok’ had instructed its moderators to censor videos that mentioned Tiananmen Square, Tibetan independence or the banned religious group Falun Gong (Hern, 2020). The platform’s self-censorship has been controversial, while ‘TikTok”s has raised questions about its freedom of speech and political manipulation. As Kari mentioned, digital tools can be seen as tools for freedom of expression to promote broader human rights-related objectives, such as economic, social and cultural rights (Karppinen, 2017). From this point of view, ‘TikTok”s self-regulatory paradox lies in its transnational nature, where ‘TikTok’ needs to weigh and adapt itself to the regulations and policies of different countries, especially since its company, ByteDance, the ideology of the parent company’s management differs from that of most Western countries as never before.
Overall, though the arguments about ‘TikTok’ has never stopped and there are many who see it as a ‘toxic app’. However, its success cannot be ignored. This essay argues that ‘TikTok’ is the best electronic platform for its time. Once again, The success of ‘TikTok’ has created a generation of user habits and made the industry aware of the validity of the concept of fragmented time. By all results, ‘Tik-Tok’ is one of the most successful and influential platforms of the moment but also the most controversial and political one.
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“Tiktok” by TheBetterDay is licensed with CC BY-ND 2.0. To view a copy of this license, visit https://creativecommons.org/licenses/by-nd/2.0/
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