Group 1 A case study of Tiktok’s platform business

Do a case study of a platform business. When did the business commence, what are its primary fields of operation, and has it been successful? How does it make money from its activities, and have any concerns been raised about the company?

The multimedia essay would concentrate on a case study of Tiktok’s business. First, it would examine the business commence of Tiktok. In addition, it would also examine its primary fields of self- advertising business and entertainment purposes for public’s interest. Second, it would use worldwide download times on Tiktok to analyze whether it is a successful platform or not. Moreover, it would demonstrate how Tiktok makes money from its activities. Third, it would have a further discussion on security issues that have been raised on Tiktok. In conclusion, it would reinforce the thriving business of Tiktok and its impact to the world.

The business commences of Tiktok and Tiktok’s primary fields of operation

Since the spread of Covid-19 started from the end of 2020, many countries set restrictions of lockdown rules to stop the spread of Covid-19. Therefore, within a short time, there were over 2.6 billion worldwide downloads among Generation Z on Tiktok in December 2020 (Iqbal, 2021). It is because most people are bored when they get stuck at home, so they download Tiktok to watch entertaining videos (Iqbal, 2021). In addition, Musical.ly was the former app of Tiktok, and a colossal Chinese technology company called ByteDance spent one billion dollars to purchase Musical.ly and rename its name to Tiktok (Tidy & Galer, 2020). Hence, the commence of Tiktok was launched in September 2017 (Tidy & Galer, 2020). Furthermore, Tiktok has two primary fields, which are for advertisement purposes and people to use in-app features to entertainment themselves. The first one is advertisement’s space in top view, it refers to Tiktok provide marketers to promote their advertisement videos to the front page so that everyone would see them when they first open the app (Hsu, 2021). For example, Nathan Apodaca (Photo 1) posted a viral advertisement clip of him riding a skateboard showing Ocean Spray Cran-Raspberry juice (Haasch, 2020). The video became trending and led to over 80 million views; hence many people followed the viral trend to skate on the board while drinking juice in order to get viral (Photo 2). As a result, they helped boosting the company’s juice (Hsu, 2021). Moreover, internet advertising took up 49 percentage among all advertising on all media in the United States in 2018 (Mansell & Steinmueller, 2020). It shows that internet advertising is an essential strategy to target mass consumers and it can also bring about high exposure to the public. In 2020 Tiktok generated over 1.3 billion annual internet advertisements sale in the United States. The second main field operation allow users to do live streaming and create short videos from 15 seconds to 3 minutes videos to showcase their daily lives to the world (Tillman, 2021). Additionally, people can also use in-app custom stickers and sound effects on Tiktok to participate in lip-sync, duet videos, trend challenges. Moreover, many people love to show their unique talents and show off comedy skits on Tiktok during their free time (Tillman, 2021). For example, me as a Tiktoker, I duet under my username as @willychen (Photo 3) with a video of chipmunk singing, and that video went viral with over 1.5 million likes and 18.1 million views (Chen, 2020). This video is one of the most viral videos I posted, and it helped me gain lots of exposure to audiences and allowed me to reach over 630k followers. Tiktok also helps me to gain work opportunities with companies to advertise their products.

Photo 1:

The viral cranberry juice skateboarder says the video is helping him make a down payment on a home

Credit by : Palmer HaaschThe viral cranberry juice skateboarder says the video is helping him make a down payment on a home by Palmer Haasch is licensed under a Creative Commons Attribution 4.0 International License.
Based on a work at https://www.insider.com/cranberry-juice-longboarding-fleetwood-mac-dreams-420doggface208-nathan-apod

aca-interview-2020-10.

Photo:2

Since we are all out buying cranberry juice by Steph GrassoCredit by : Steph Grasso
Since we are all out buying cranberry juice by Steph Grasso is licensed under a Creative Commons Attribution 4.0 International License.
Based on a work at https://www.tiktok.com/@stephgrassodietitian/video/6889868747935337734?is_from_webapp=v1&q=cranberryjuice&t=1633821139534.

Photo 3:

The most viral Tiktok video of Wei-Che, ChenCredit by: Willy Chen
This ruin our childhood by Willy Chen is licensed under a Creative Commons Attribution 4.0 International License.
Based on a work at https://www.tiktok.com/@willychen/video/6863931024397602054?is_from_w

ebapp=v1&q=willychen&t=1633823122981.

Is Tiktok a successful platform?

Tiktok is one of the most uprising social media platforms in contemporary society, and its primary target audience is teenagers. The secret of Tiktok’s successful business lies in its choices of music and algorithm (Tiday & Galer, 2020). The music part refers to users following the trend and choosing a wide range of popular songs to create videos. For example, Lil Nas X’s song “Old Town Road”, has been widely used and featured by users over 810,000 times (Tidy & Galer, 2020). Moreover, the algorithm refers to Tiktok as the fastest learning app for knowing what contents people may like more than any other video shooting apps (Tidy & Galer, 2020). For example, many people are addicted to Tiktok’s For You Page, it is because the algorithm can predict people’s choices of content based on users’ previous content they have already engaged. Therefore, it is easy to capture their attention. In addition, there is no stopping cue when people watch videos on Tiktok, and people can keep swiping up and down to see similar content in their feeds (Tidy & Galer, 2020). Furthermore, in 2019 July, there are top 10 countries have at least 50 million downloads, and especially India reached the high peak of 650 million-time downloads (Photo 4) (Tidy & Galer, 2020). The overall downloads in 2019 had one billionaire downloads worldwide.

Photo 4:

Top 10 countries for Tiktok downloads

Credit by : Joe Tidy & Sophia Smith Galer
TikTok: The story of a social media giant by Joe Tidy & Sophia Smith Galer is licensed under a Creative Commons Attribution 4.0 International License.
Based on a work at https://www.bbc.com/news/technology-53640724.

In consequently, during the spread of the Covid crisis, many countries started socially distancing rules (Johnson, 2020). As a result, people had to be isolated at home and without physical contact with other people. Therefore, over 2 billion people downloaded Tiktok to entertain themselves and connect with people over the platform in 2020 (Johnson, 2020). The result showed it grew twice download times than 2019 (Johnson, 2020). Ultimately, it depicts that diverse database choices of trending music and robust algorithm determine the thriving business of Tiktok.

How Tiktok makes money from its activities?

Tiktok can charge entrepreneurs over two million dollars a day for top advertising spots in the United States (Shaw, 2021). It is because Tiktok trends can be viral overnight with the zooming numbers of view counts; therefore, it draws many marketers and entrepreneurs’ attention to the platform to build up their brand awareness and promote their products by making Tiktok advertisement videos (Shaw, 2021). Moreover, Tiktok has two primary fields to make money from its activities, which are in-app purchase virtual coins and Tiktok advertisements (Conkle, 2021). The first one is in-app purchases. It refers to users on Tiktok can spend their money to purchase virtual coins and people use those coins to their favourite content creators’ videos or on their live streams (Conkle, 2021). In addition, when the receiver receives the coins that audiences gifted them, they can convert coins to real currency. However, Tiktok charges half of the commission fee that content creators earn; hence when someone convert the coins of 100 dollars, Tiktok takes 50 dollars away (Conkle, 2021). The second way is Tiktok ads. It mainly refers to brand take over ads and hashtag challenges to make money (Conkle, 2021). Besides, Tiktok set the rule that companies need to spend at least 500 dollars for advertisement promotion on their campaign, and when companies run sponsor hashtag challenges on Tiktok for three days can cost them up to 500,000 dollars (Conkle, 2021). It is due to consider the cost of music licensing and paying creator fees. One of the best examples to examine this is a company named Menulog, which is a food delivery app in Australia (Wilson, 2020). Menulog launched the hashtag #DeliveryDressUp for people to participate in winning one year of free supply on Menulog (Wilson, 2020). Moreover, it also featured Snoop Dogg’ song to create a bespoke version of Australia Tiktok. Therefore, it drives many users to participate in the campaign to win the prize. The result generates over 22.6 million views on the advertisement and Tiktok provides companies and entrepreneurs for 10 dollars cost per 1000 views on the advertisement videos (Influencer marketing hub, 2020). It shows Tiktok generate an enormous amount of money in Tiktok advertisement and in-app purchase.

 

The United States concerns about data collection issue on Tiktok

Social media platforms collect both content data and user’s data (Driscoll 2012; Mayer-Schonberger and Cukier 2013; Turow 2012; Van Dijck2014). Moreover, data collection is shaped and empowered by hardware and software. Besides with in-app algorithm and system’s logistics, social media platforms shape the way people’s live and how society is structured (Van Dijck & Poell, 2013). Tiktok has complete data to access people’s private messages through the app and contents they watch on Tiktok (Fowler, 2020). Moreover, the US’s privacy policy shows that when people use Tiktok, the app can detect user’s country location, Internet address and what kind of devices people use (Fowler, 2020). Furthermore, when people sign up for Tiktok and accept user’s agreement, Tiktok may collect their personal information, the app can grab their users’ exact location, phone numbers, phone contacts and other social media connections (Fowler, 2020). It is hazardous because even though China stated to the US that people’s data is only stored in the United States and Singapore; yet, this statement is not verified. Therefore, the US is afraid that China may sell users’ personal information to unscrupulous. In addition, in 2019 December, researchers found that hackers found a way to manipulate users’ data and reveal their personal information (Bergman, Frenkel & Zhong, 2020). For example, hackers may send Tiktok users a message containing malicious link, and when users click on the link, they are entirely able to access their full information (Bergman, Frenkel & Zhong, 2020). It shows that Tiktok’s secure work is not safe enough; hence, it leads to many controversial issues about security problems.

In conclusion, Tiktok is a successful, rapidly growing video shooting platform that provides in-app features to attract most teenagers and adults to participate challenges during the Covid-19 pandemic. Moreover, Tiktok also attracts companies and entrepreneurs to build up their brand awareness and promote their products to a broader range of consumers. However, Tiktok has a flaw in security issues about the use of personal data collection. Hence, it leads to many countries concern about the significance of personal security data issues about Tiktok.

Reference list:

Bergman, R., Frenkel, S., & Zhong, R. (2020, January 8). Major TikTok security flaws found. The New York Times. https://www.nytimes.com/2020/01/08/technology/tiktok-security-flaws.html

Chen, W. (2020, August 23). This ruin our childhood [Review of This ruin our childhood]. https://www.tiktok.com/@willychen/video/6863931024397602054?lang=en&is_copy_url=1&is_from_webapp=v1

Conkle, S. (2021, January 26). How does TikTok make money? Brooksconkle.Com. https://www.brooksconkle.com/how-does-tiktok-make-money

Fowler, G. A. (2020, July 13). Perspective | Is it time to delete TikTok? A guide to the rumors and the real privacy risks. Washington Post. https://www.washingtonpost.com/technology/2020/07/13/tiktok-privacy/

Haasch, P. (2020, October 13). The viral cranberry juice skateboarder says the video is helping him make a down payment on a home. Insider. https://www.insider.com/cranberry-juice-longboarding-fleetwood-mac-dreams-420doggface208-nathan-apodaca-interview-2020-10

Hsu, T. (2021, September 28). TikTok Wants More Ad Dollars, and It Has a New Plan to Get Them. The New York Times. https://www.nytimes.com/2021/09/28/business/media/tiktok-advertising.html

Influencer marketing hub. (2020, January 2). How Much do TikTok Ads Cost? Influencer Marketing Hub. https://influencermarketinghub.com/how-much-do-tiktok-ads-cost/

Iqbal, M. (2021, May 24). TikTok Revenue and Usage Statistics (2021). Business of Apps. https://www.businessofapps.com/data/tik-tok-statistics/

Johnson, T. (2020, April 21). The Rise of TikTok During COVID-19. Tinuiti. https://tinuiti.com/blog/marketing-news-covid-19/tiktok-covid-19/

Mansell, R., & Steinmueller, W. Edward. (2020). Economic Analysis of Platforms (pp. P.43-44) [Review of Economic Analysis of Platforms].

Mayer-Schönberger, V., and K. Cukier. Big Data: A Revolution That Will Transform How We Live, Work, and Think. Boston: Houghton Mifflin Harcourt, 2013

Shaw, L. (2021, June 11). Bloomberg News. Retrieved October 7, 2021, from https://www.bloomberg.com/news/articles/2021-06-10/tiktok-is-jacking-up-prices-as-it-builds-its-ad-business

Tidy, J., & Galer, S. S. (2020, August 5). TikTok: The story of a social media giant. BBC News. https://www.bbc.com/news/technology-53640724

Tillman, M. (2021, August 9). What is TikTok and how does it work? Everything you need to know [Review of What is TikTok and how does it work? Everything you need to know]. https://www.pocket-lint.com/apps/news/146960-what-is-tiktok-the-musical-ly-successor-explained

Van Dijck, J., and T. Poell. “Understanding Social Media Logic.” Media and Communication 1, no. 1 (2013): 2–14.

Wilson, Z. (2020, December 9). Menulog promotes “dress down” in new TikTok campaign via Connecting Plots. Com.Au. https://mumbrella.com.au/menulog-promotes-dress-down-in-new-tiktok-campaign-via-connecting-plots-661293