TikTok has now become one of the popular app in the social entertainment industry. It has over 1 billion users all around the world.
You must be thinking “how does TikTok make money” to manage such a big number of users and TikTokers.
TikTok was previously known as Musical.ly. ByteDance Ltd a Chinese company acquired Musical.ly in the year 2017 and gave a new name “TikTok”.
Though TikTok is now focusing on acquiring new users so that they can make big money in the future.
Yes, they are still making money from various streams but they aren’t monetizing it fully at the moment.
I am going to share the Business model of TikTok and the sources of earning to get you a clear picture of how much does TikTok earns money.
How Does TikTok Make Money?
TikTok basically makes money from Ads and virtual coins through the TikTok app. They are planning to come up with a new business model to generate the maximum revenue like what Facebook and Instagram are earning.
Right now they are focusing on user experience by providing the best entertainment service to the users.
You must have seen the ad while you start the app and in between when you swipe the video.
These all are advertisements that generate revenue for TikTok. Many companies are now taking interest in showing advertisements on TikTok.
TikTok is doing experiments in showing advertisements as they do not want to affect the user experience. The more users will join the app, the more money they make in the future.
TikTok charges advertisers on the basis of impressions and clicks. They can only welcome advertisers in bulk when they actually get over a billion users. This is the reason TikTok is now focusing on evolving the app to the next level.
People can upload even 15 seconds of video. It can be anything funny or educational. It’s not like YouTube where you have to do hard research and make longer videos.
This allows users to participate in making TikTok videos and eventually help TikTok getting video content. The more video content TikTokers will upload, the more chances for TikTok to grow and bring new users.
TikTok charges a commission to TikTokers while receiving virtual coins as a gift. Many TikTokers go live and communicate with the viewers.
Users gift a coin/s to the TikToker who is performing live for them. The coins have been categorized into Panda, Diamond, or Drama Queen.
So, one drama queen equals 5000 coins which bring $52. TikTok takes 20 percent from the gift and the rest adds it to the TikToker account.
This way both TikTokers and TikTok earn money from virtual coins.
- TikTok Revenue and Usage Statistics.
- How To Make Money On TikTok? (Detailed Step-By-Step Guide)
- What Is TikTok?
TikTok Business Model
TikTok has focused more on music and act performance by TikTokers. They help users or TikTokers to find various types of music for creating or editing TikTok videos.
You will find all the latest and viral music, dialogues, songs, etc. on TikTok. This strategy attracts users and keeps them entertained.
TikTok is now focusing on educational videos so that people who love inspiration and education videos can enjoy it through the app.
This has also given a boost in the number of users on TikTok. Moreover, they are getting a huge number of active users who are spending time on the app daily like what Facebook used to be.
These users help TikTok to gain impressions and clicks on Advertisement which brings ad revenue to their pocket.
TikTok is not sharing ad revenue with the TikTokers like how Adsense does but they are planning to share it in the future.
They do send t-shirts and gifts to popular TikToker to motivate them. This strategy is followed by YouTube. YouTube sends a silver, gold and diamond play button to popular YouTubers by reaching a certain number of subscribers.
4 Pillars of TikTok Business Model
- Get trending, viral Music, dialogue and songs for TikTokers
- Acts & stories
- Promote likable videos through its algorithm
How Much Do TikTokers Make Money?
Though TikTok never shares ads revenue, still TikTokers are making money from other sources.
Being a TikToker you just need to bring creative video content and once TikTok finds your video has the potential to grab user attention, they will start promoting it to the followers and under the “For You” section.
This eventually helps to gain new followers and likes. Once you get over a half million followers, you may get opportunities to earn money from various sources. See the list of options that you will find being a popular TikToker.
- Brand Promotion
- Gifting from users during TikTok live
- Drive traffic from TikTok To their own YouTube and Instagram accounts.
Who Owns TikTok?
TikTok is owned by ByteDance, a Chinese company. The company was founded in the year 2012 by Zhang Yiming and Headquarter is in Beijing, China.
ByteDance deals in technology that creates content in entertainment, education, and inspiration. They have their offices in 150 countries and has over 50,000 employees all over the world.
TikTok was actually called Musical.ly when it was introduced. ByteDance acquired the Musical.ly app and named TikTok in the year 2017.
The app got viral and is still trending in the current market. People use it for entertainment, education, and influence. More into entertainment.
The app basically allows users to upload short videos and has many features that enable TikTokers to make an entertaining video.
TikTok has now become a popular entertainment app and is growing rapidly day by day but it still facing competition with the Likee app.
Likee app is giving a good competition but I still believe that it’s very tough to give competition to TikTok.
Facebook is also trying its hand to compete with TikTok by introducing the Lasso app. The TikTok app has already won the heart of people and it’s very difficult to give competition to this app.
However, the only place TikTok is lacking is by not sharing ads revenue with the TikTokers. If Facebook comes up with the ad sharing strategy then TikTok may face competition.
On the other hand, Likee started gaining popularity but it’s not growing the way TikTok is. Likee may see a stable growth but may not surpass TikTok anyways.
TikTok has gained popularity all over the world and this is creating a huge opportunity for them to become one of the leader in the social media industry.
Anyhow TikTok popularity may impact the revenue of two market leaders; Facebook and YouTube.
TikTok is spending more time on getting users to register the app. They are earning money on the side but their main focus is on gaining popularity and bringing more users.
Though they are generating income from ads, still this app has more potential to make huge profits in the future if it continues to grow at the same pace.