Unveiled: TikTok's Monetization Strategy
In the ever-evolving world of social media, TikTok is making waves with its innovative approach to monetization. As the platform attempts to capitalize on a Western ecommerce opportunity, it faces challenges due to its association with China. However, TikTok's unique payout system for creators offers several advantages.
TikTok's current Creator Rewards Program, a reformation of its earlier Creator Fund, pays creators based on engagement and video quality. The reported earnings range from about $0.20 to $0.40 per 1,000 views, significantly higher than the old Creator Fund's payout of $0.02–$0.04 per 1,000 views but still generally lower compared to YouTube's ad revenue sharing.
Creators are paid monthly, usually through PayPal once they hit the program’s cashout minimum ($10). Eligibility requires a minimum of 10,000 followers and 100,000 valid video views within 30 days, with some restrictions by country.
In addition to the Creator Rewards Program, creators can monetize through gifting during livestreams, where viewers purchase virtual gifts redeemable by creators for cash. This interactive element is absent from many other platforms.
If TikTok develops its own payments technology, it could offer several advantages over relying on third-party services like PayPal. Direct control over the payment process could reduce delays, potentially increasing net creator earnings. TikTok could also reduce transaction fees, enhance convenience, and customize payout schedules, offering instant withdrawals or integrating new payout options.
TikTok's ecommerce arm aims to quadruple its global merchandising sales to reach $20bn this year, primarily driven by growth in Southeast Asia. However, TikTok faces stiff competition in Southeast Asia as it seeks to expand its ecommerce reach, with leaders in Indonesia's ecommerce market, Shopee and Tokopedia, holding significantly larger market shares compared to TikTok Shop.
In summary, TikTok's current payout process pays less per view than YouTube but uses accessible monthly payments and additional monetization like gifting. Developing its own payments tech could significantly improve speed, cost, and convenience for creators, potentially making TikTok payouts more competitive and creator-friendly.
[1] Joe Baker, Senior Copywriter, authored the deep dive report on TikTok and its payments system. [3] Billions of dollars pass through TikTok year-on-year via various revenue streams. [4] Several countries, including the US, Australia, Canada, and India, have taken steps to limit or ban the use of TikTok, citing concerns about data and privacy.
Sources: [1] TikTok Payments Deep Dive Report [2] TikTok's Ecommerce Expansion Plans [3] Data on TikTok's Impact on Purchases [4] Growth of #TikTokmademebuyit Hashtag
- The unique payout system of TikTok, including the Creator Rewards Program and gifting during livestreams, leverages technology to offer a less competitive yet creator-friendly approach in the finance realm of the business world.
- To further enhance its finances, TikTok is considering developing its own payments technology to streamline transactions, potentially increasing net earnings for creators and challenging the dominant positions of competitors in the ecommerce market.
