TikTok is the latest sensation within the social media space and has been growing exponentially over the past few years. The concept can be described as similar to that of Vine that was popular a few years before, with short but creative videos. However, the platform does not feature the very short time constraint (7 seconds) that Vine did. Instead, videos can be up to 15 seconds long. Today, We’re going to take a look at the question “How does TikTok make money” and also explore the possibility of making money yourself on the platform.
The platform and its content has been spreading like wildfire on the internet and is now one of the biggest platforms amongst teenagers.
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TikTok was originally launched in China under the name “Douyin” in September 2016. It was not until the following year that it was launched globally under the name TikTok. The global launch was made possible after a merge with the app musical.ly.
Douyin and TikTok are essentially the same app, but they run on separate servers since Douyin needs to comply with China’s heavy content censorship restrictions.
How does TikTok work?
All of the content that can be found on TikTok is user-generated. Users upload videos of themselves dancing, talking, lip-syncing to songs, or performing comedy skits. As a user on TikTok, you can browse, comment, like, and follow other user’s TikToks. Users with a big following are usually referred to as TikTok influencers or TikTokers, similar to other platforms. We’ll be talking about this later on as well when discussing how TikTok makes money.
How does TikTok make money?
TikTok has a couple of different revenue streams, spreading the risk while also providing something for any type of online spender.
TikTok offers users In-app purchases in the form of coins, with the value of a coin being just under a cent. The minimum amount you can buy is 100 coins for $0.99, and the maximum is 10000 coins for $99.99.
TikTok has several different forms of ads available to ensure that their advertisers can effectively reach their target audience.
- In-feed video ads: Appears in the form of TikToks when you scroll your “For You” page.
- Brand Takeovers: Completely fills up the screen when a user starts up the app, and then eventually turns into an In-feed video
- Hashtag challenges: Ads on the discovery page, which encourage you to participate in TikTok challenges, usually involving a retail product
- Branded AR content: Ads in the forms of lenses and filters (like the ones on Snapchat) that TikTokers can use in their videos
- Sponsored Influencer ads: These are ads made by TikTokers themselves. Though these sorts of deals are made between the influencers and the companies, while TikTok isn’t personally involved.
This one’s still in the planning stage. TikTok has over the past year or so been in the talk with major record companies like Universal Music, Sony Music, and Warner music to start up their own music streaming service. With this, they’ll be going head-to-head with similar services like Spotify and Apple Music.
Like any other company, TikTok has investors behind it. According to research, TikTok has received more than $3 billion in funding from high-class investors.
How much money does TikTok make?
As mentioned above, TikTok received $3 billion in funding from investors. This can be added to their income, so let’s say the starting amount is $3 billion. According to several online reports, users are spending $3.5 million a month on In-app purchases. It’s unclear how much of this becomes profit for TikTok. However, Musical.ly whom they merged with had a similar system in place, receiving a 20% cut or “tip”.
Then there’s the advertising. It’s hard to put a number on this. But with the platform’s enormous user base, it’s not hard to imagine upwards of a few million being spent a month by advertisers.
While we cannot put a specific number on it, it’s safe to say TikTok makes a lot of money!
Who owns TikTok?
The company behind TikTok is ByteDance, a massive Chinese company valued at $75 billion. The brains of the operations are its founder, lifelong entrepreneur Yiming Zhang. Yiming Zhang himself is estimated to have a net worth of $6.8 billion.
Can I make money on TikTok?
Yes and no. TikTok themselves does not act as an intermediary for creators to sell ad space as Youtube does, but creators with large followings can strike sponsorship deals with companies directly.
On other platforms with user-generated content like Youtube and Twitch, these kinds of deals can net creators anywhere between a few hundred dollars, to hundreds of thousands. All depending on the product, the company behind it, and the size of the influencers following.
Another way to make money with TikTok would be to use it as a way to grow your following on other platforms like Youtube, where you can earn money from your content.
How much does TikTokers make?
Without a statement from the content creators themselves, there is currently no way of knowing how much money they actually make, but there are speculations. Loren Gray who’s only 17 years old is the biggest TikToker on the platform. She’s estimated to be able to make upwards of $200,000 per post.
Some very optimistic experts are speculating that the top TikTokers could be making as much as $1 million per post by 2021. This all requires a big following, so remember this: The best time to start was yesterday, but the second-best time is right now.