“In the future, everyone will be world-famous for 15 minutes.”—— Andy Warhol.
TikTok has unquestionably emerged as one of the biggest social media platforms around the world. Within the whole year of 2020, TikTok was download over 315 million times as internet social platform, also monetization capacity has exceeded 10 billion U.S. dollars (Keselj,2020). This essay will illustrat how TikTok as one of the representative social media platform transforming internet interaction. In addition, TikTok’s business model, internet ecology and influence in social media sphere will be discussed.
What is TikTok?
TikTok was launched in September 2016 in China known as Douyin (抖音). Is a video-sharing focused social network service owned by Chinese company ByteDance, it allows users to create short-form video ranging from 60 to 150 seconds on any topic.
The history of TikTok.
In 2016 to 2017, short video was in a high-hot stage because the mobile and fragmented consumption were increasingly popular (). At this time, TikTok focusses on product polishing, experience optimisation, performance improvement and market integration. While continuously improving video clarity and texture, optimising video loading and playback fluency, it also adds simple and interesting special effects such as filters and stickers. Explore the characteristics of communicators and transmitters, constantly adjust the core functions of products, and lay a solid foundation for later explosive development.
After completed its seed capital accumulation in mainland of China the ByteDance began to shift its goals to the world since 2017. Musical.ly was a popular short-form (15 seconds) video streaming and sharing app, with more than 100 million users as of August 2018. The app provides users with a plethora of music and dialogue options, with which they could lip sync and make funny or entertaining videos (Geyser,2021). in August 2018, the app was taken over by ByteDance and its users were moved to Tik Tok. All the content and accounts that were present on Musical.ly were automatically transferred to the new Tik Tok app (Geyser,2021).
Is TikTok successful? And how?
Since its launch, the popularity of the TikTok application has been growing significantly. In October 2018, it became the most downloaded video app in the global Apple store. It is reported that the application has more than 500 million active users every month. The United States was the most popular country, with more than 80 million downloads (Geyser,2021). until 2019, it has become one of the most installed mobile apps. It has more than 1.9 billion app downloads and hundreds of millions of monthly users.
Canadian researchers studied the attention span of 2,000 people and the rise in the availability and cost of affordable home broadband Internet – our ability to focus on one thing fell by one-third before the brain shut down, from 12 Seconds to 8 seconds. We can’t focus on it in the short term, not just about the immediate problem. Long-term analysis by independent researchers shows that a lot of information is related to depleting our attention. A researcher at the Max Planck Institute for Human Development said: “Our desire for new things makes us change topics faster collectively (Stokel-Walker,2021). Part of the reason is that the same social platforms that shorten our attention span can also help meet the new grasshopper-like attention we can provide. And TikTok has been fine-tuned to attract our attention for as long as possible, and then it knows that it will let us continue scrolling before providing us with the next video block. According to the director of content cooperation of the app, most videos are short film joy bursts of 15 to 30 seconds, forcing content creators to be as creative as possible in a short time. Internal guidelines for new creators recommend that they publish videos between 11 and 17 seconds and at least 10 seconds. In the new world of TikTok, Andy Warhol’s infamous 15-minute fame has actually turned in 15 seconds (Stokel-Walker,2021).
How does TikTok make money from its activities?
TikTok profit making way is mainly in three ways: firstly, the E-commerce supplier on TikTok shopping window is a actually shopping platform. Second, advertising revenue (ads) means make money from advertising. Thirdly, live streaming, TikTok is one of the largest live streaming platforms in mainland of China.
TikTok ads, specifically is a current business model charges sponsors and advertisers depending on the CPM (Cost Per Thousand Impressions). On TikTok, influencers’ video challenges can be sponsored by companies to promote their message and products to the TikTok community. In addition, TikTok also own its virtual coins, users can receive virtual gifts from followers through hosting live streaming, they give them as a token of appreciation or tip. These virtual gifts and coins are the in-app currency of TikTok, also gifts received from followers will be converted into monetary value. The value of money is 50 cents. TikTok charges half of the total commission. If TikToker converts a value of 100 USD, 50 USD will be transferred to TikTok and 50 USD will be credited to TikToker’s account (Brroks,2020).
In the past few years, their revenue from in-app purchases has skyrocketed. According to Sensor Tower and Bloomberg, the number of in-app purchases increased from US$1.5 million in May 2018 to US$7.4 million in April 2019, and then increased tenfold to US$78 million in May 2020 (Tristan.2021).
As of January 2021, the cost of coins in US$ are: (coins are sold in bundles)
• 65 coins: $0.99
• 330 coins: $4.99
• 1321 coins: $19.99
• 3303 coins: $49.99
• 6607 coins: $99.99
TikTok’s 2019 revenue was US$176.9 million, and its revenue in the previous quarter was close to US$90 million. This is mainly due to the combined use of in-app purchases and advertising. Prior to this, TikTok’s revenue was only generated through in-app purchases. According to data from Sensor Tower, the source of the application analysis, by 2018, approximately $3.5 million in payment revenue-compared to the record in 2017, their revenue increased significantly by 275%(Brroks,2020).
TikTok within political sphere
TikTok has achieved great global success in such a short period of time. Of course, there will be a lot of pressure from public, political opinion and opposition. In addition, the company ByteDance originated in mainland of China. Whether the relationship with the Chinese government and the user’s data problem of the application itself will be related to the Chinese government have caused a lot of discussion. Reddit CEO Steve Huffman even labelled TikTok as “Chinese spyware”. Also, Donald Trump had sought to ban TikTok, claiming they were a national security threat and the spread in the US of mobile apps developed and owned by Chinese firms threatened “the national security, foreign policy, and economy of the United States” (BBC,2021).
“There are concerns that Chinese companies will obtain data on U.S. citizens, and these companies may pressure by the Chinese government to hand them over to espionage or other purposes.” Said Adam Segal, director of the Commission’s digital and cyberspace projects (Scoot,2021).
The emergence of TikTok has driven the rapid development of the new media industry, which not only greatly reduces costs for enterprises, but also obtains huge exposure and influence. It can also communicate directly with users to better realise traffic conversion. This is undoubtedly a very good opportunity for small and medium-sized enterprises and brands! TikTok has also become a very important frontier for future enterprises to carry out product marketing.
BBC news. ( February 12th 2021) US President Joe Biden ‘pauses’ TikTok and WeChat bans. Retrieved from: https://www.bbc.com/news/technology-56041209
Brroks, C. (2020). How does TikTok make money? Retrieved from: https://www.brooksconkle.com/how-does-tiktok-make-money
Geyser, W. (2021). What is TikTok? – The Fastest Growing Social Media App Uncovered. Influencer Marketing Hub. Retrieved from: https://influencermarketinghub.com/what-is-tiktok/.
Keselj, M. (2020). The future is TikTok. Retrieved from: https://harvardpolitics.com/the-future-is-tiktok/
Stokel-Walker, C. (2021). TikTok Boom: China’s Dynamite App and the Superpower Race for social media. Retrieved from: https://web-p-ebscohost-com.ezproxy.library.sydney.edu.au/ehost/ebookviewer/ebook/bmxlYmtfXzI5MzI1MjFfX0FO0?sid=e0c5a849-ede1-4478-8edf-2b879ef96043@redis&vid=0&format=EB&rid=1
Scoot, N. (2021). Biden is taking Trump’s argument against TikTok seriously. Retrieved from: https://qz.com/2023128/after-trumps-ban-failed-biden-gives-tiktok-a-second-look/
Tristan, R. (2021). How does TikTok make money? (Business and Revenue model). Retrieved from: https://entrepreneur-360.com/how-does-tiktok-make-money-12356