Since the beginning of the 21st century, with the rapid development of new media technology, the way people use media has been constantly changing. Nowadays, people pursue not only the speed and scope of information dissemination but also efficiency, which has led to the emergence and quick development of short video applications. In recent year, the short video is gradually dominant the new media environment all over the world.
TikTok, as one of the most popular short video application in recent year, has a transformative impact on the internet ecosystem. This new industry model attracted a large number of audience, forming a new social media craze. In this blog, I will explain the history and business model of TikTok in detail and analyse its transformative impacts from the perspective of the economy.
What is TikTok? What’s the difference between Douyin and TikTok?
TikTok is a social media platforms owned by ByteDance, designed for the smart phone to share and create the short video. Its mission is to inspire creativity and originality and encourage people, especially the younger generation, to bring positive energy and joy (Our Mission, 2020). This short video application was first launched in the mainland China in September 2016 under the name Douyin. Users can upload or shot short videos, usually 15 seconds, via Douyin, but the video can also be up to 60 seconds through editing and merging (TikTok, 2020). The video content in Douyin is very diversified, including personal experiences, pets, lip-sync, imitation, comedy, dance, etc.,(TikTok, 2020), but the main purpose of all these videos is to bring joy to the public. Therefore, Douyin quickly became popular in China after its release in 2016, with more than 100 million users within 12 months, and at least 1 billion videos are watched daily (Singh, 2020).
Due to the rapid rise of Douyin in the Chinese market, the company soon had plans to introduce Douyin to overseas markets and quickly began to prepare for its overseas expansion. In 2017, Douyin created an overseas version called TikTok, but it did not start to be vigorously promoted until the merger with musical.ly (a Chinese social media service) in August of the same year (Lingqing, 2018). The brand new TikTok immediately gained about 30 million new users in just three months after the two apps merged (Fannin, 2019). Although Douyin (Chinese version) and TikTok (overseas version) have exactly the same interface and functions, they are completely different software with separate servers, so there is no direct connection between the two software.
Here’s a click-worthy video from ABC News (2018) that goes into more detail about TikTok:
TikTok’s Business Model and its Ecosystem
Since TikTok provides people with an online, peer-to-peer (P2P) video sharing services in order to bring joy and fun to people, but nothing to do with money or interest, it can be said as operating in a sharing economy model (John, 2016). In this platform, users are not only the recipients of content, but can also become creators and even trend leaders. TikTok users turn their ideas and enthusiasm into interesting videos with simple operations, attracting a number of users around the world.
As of September 2020, TikTok is available in more than 150 countries/regions in 39 languages and has nearly 800 million active users every month worldwide (Figliola, 2020). In addition, compared with other well-known Chinese apps (such as WeChat and QQ), the dual version of TikTok can be regarded as a new business model that has brought a transformative impact on traditional businesses model. This model is not only a strategy for the Internet censorship market in China, but also for the rest of the world (Fannin, 2019).
Ecosystem of TikTok:
The ecosystem is a term from biology which can be defined as the interaction between the living organisms and their physical environment (Freedman, 2014), but in the social media environment, it refers to the interconnection between the spread of technology and digital media and the different spheres of society (Ruotsalainen, 2015). TikTok is a collaborative production social media platform provides users with a platform to post creative short videos about their lives. By publishing and browsing, contents posted by users on TikTok are shared (Belk, Eckhardt, & Bardhi, 2019). While there are some social media apps that have similar functionality, TikTok’s simplicity and user-friendliness design has made it stand out from its competitors and become the hottest short video media app of the moment.
As a short video media platform, TikTok has three prominent competitors, which are Likee, Byte and Triller. Among them, Likee ( a social video platform from Singapore) has more than 80 million monthly active users in 2019, became the biggest rival of TikTok (Mansoor, 2020). Although they have similar designs in interface and layout, the functions they provide have their own characteristics. The Likee focuses on visual effects like 4D magic and dynamic stickers, such as using technology to change hair and makeup (Likee, 2020), while TikTok is mainly about lip-syncing and mimicking videos. In addition, short video function introduced by Instagram and Facebook recently could also pose a threat to TikTok, although they are not software that focuses on short videos.
The core suppliers of TikTok are their users. Users post tens of thousands of short videos on the platform every day, and these short videos are then reproduced, watched and collected by users. By publishing content on the platform, users in the platform actually become free workers of TikTok. At the same time, TikTok also becomes a media platform for collaborative production, forming an economic model of sharing economy (Belk, Eckhardt, & Bardhi, 2019). Besides, since TikTok has an enormous amount of audience, companies which in need of advertising or awareness also become the main users of TikTok.
As TikTok is a social media platform that runs around the world, the content on the platform is regulated by local governments and should comply with local laws (Tobin, 2020).
Below is a flow chat which describing the ecosystem of TikTok:
The Transformative Impact of TitTok on Economic
In recent years, TikTok has grown rapidly around the world and quickly become one of the most popular social media applications. Along with its development, TikTok has brought a transformative impact on economic marketing. First, It has driven the development of the sharing economy. The sharing economy, as explained by Eckhardt et al. (2019), is a social and economic system in which individuals use third-party technology platforms to conduct transactions and exchange goods, services, or ideas without transferring ownership.
Unlike the sharing economy in Uber and Airbnb, TikTok turns users into free labour by providing them with a platform to create and share. As shown in the blow image, users post short videos of themselves skiing, dancing or singing on TikTok, which are then passed around among users. In the process, they unintentionally become propagandists or advertisers, which raising awareness and even bring profits to these places or songs.
Image: Influencers on TikTok by Business of App available at https://www.businessofapps.com/news/influencers-on-tiktok-could-earn-up-to-1-million-per-post/ All Rights Reserved.
Second, TikTok has changed the model of online economical, especially with the rise of key opinion leader (KOL) and influencer marketing. These kinds of marketing bring a new business model which attempts to promote products or raise awareness of a business or even a place through content disseminated by influential social media users (Gretzel, 2018).
As I mentioned before, TikTok has over 800 million active users. The huge media audience brings a broad and targeted consumer group, which means that more people will be driven to consume by key opinion leaders. According to the Statista (2020), the total transaction volume facilitated by top KOLs on TikTok in 2019 exceeded RMB 100 million. This has dramatically changed the economic system in China.
Moreover, KOL and influencer marketing on TikTok has driven the development of tourism. Since TikTok is a short video application, the content on this platform can be more attractive than the picture or text. The real dynamic video and accurate positioning system combine together to provide the public with details of tourist attractions, making the publicity become more accessible and efficient. Just as Gretzel (2018) noted that the magnification and targeting of content provided by travel social media influencers have great potential to promote tourism.
Furthermore, the role of TikTok in reducing poverty by promoting tourism has attracted the attention of Chinese scholars since 2017 (Zhan et al., 2020). For example, in just five months of cooperation with TikTok, the videos about Libo were viewed more than 240 million times on TikTok, which led to a surge in the number of visitors during the holidays (more than 520,000 visitors, a 65.98% increase from usual). The total income of the tourism industry also exceeded 500 million yuan, successfully lifting Libo out of poverty (Zhan et al., 2020). Therefore, KOL and Influencer marketing is becoming the dominant marketing form on TikTok and impact the economy dramatically.
Further consideration of TikTok
Although TikTok has benefited a lot in driving the economy, it has had very serious impacts on society. In the era of fragmented information, dynamic short video combine visual and auditory together, making the process of information transmission easier and faster. This method replaces the emotionless text of traditional media and makes the message interesting and joyful, thus attracting more users and let them become addicted.The endless content on TikTok make users spend a lot of time on social media every day and ignore the offline community. According to the Statistics, younger users who aged from 10 to 19 spend an average of 80 minutes per day on TikTok (Mansoor, 2020). Exposure to social media too early and too long may affect their mental and mental health. Moreover, the influencer culture brought about by TikTok has also led to perverse thoughts and behaviours among users in order to become famous.
In short, TikTok, as one of the most popular short video social media platform in recent years, has had a transformative impact on the economy. It introduced a new model of online communication and took advantages from people’s fragmented time, allowing short video content to be reproduced, shared, and distributed more efficiently. Although it has few negative impacts in society, its benefits in the economy are unimaginable. I believe, no matter now or in the future, the short video will become the most accurate and explosive marketing tool.
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