Making TikTok a Better Product for the Creator Economy
A couple of weeks ago, social media star Hank Green created a viral YouTube video called “So…TikTok Sucks.” His point was that creators aren’t making enough money from the platform. Considering that TikTok plays a major role in the creator economy, Green’s charge is worth a closer look. Green mainly compared TikTok’s Creator Fund to Youtube’s Partner Program. According to Green, Youtube’s Partner Program shared more than 50% of its revenue with creators. In 2020, Youtube’s revenue was $20B and $10B went to creators. TikTok pays a much smaller percentage of its revenue to creators. Its Creator Fund is a static pool of funds, $1B in 2020. Therefore, the more successful TikTok becomes, the less creators get paid per view – $0.025 per thousand views according to Green.
The Creator Fund is not the only way for creators to generate income on TikTok, but should TikTok follow Youtube and share more revenue with creators? Are there other monetization methods available so creators can be successful on TikTok? To answer that last question, let’s take a look at the Chinese version of TikTok, Douyin, considering the latter’s success in the creator economy, and what could be a path forward for TikTok.
eCommerce on Douyin
New Yorker journalist Jia Tolentino wrote in 2019, “Though it remains broadly similar to TikTok, Douyin has become more advanced than its global counterpart, particularly with respect to eCommerce.” With 600 million daily active users, Douyin is one of the biggest social commerce platforms that allows brands not only to advertise their products, but also create detailed brand pages with built-in eCommerce and livestreaming features (aka the Douyin Store).
Creators on Douyin can promote products from the Douyin Store via the affiliate program and get a commission for every sale they facilitate. For example, a creator named “Italian Bonnie” promotes skin care and makeup products in her videos and on her store page. When someone buys a product from Bonnie’s page, Bonnie gets a commission from the brand.
Source: Nanjing marketing group
It is important to point out that 2 years ago, Douyin was in a similar situation as TikTok today – significant user traffic on the platform, but no clear direction to turn this into cash flow. Douyin definitely has come a long way to enable eCommerce as a revenue stream for both brands and creators.
Building a business: more than sheer impressions
Both TikTok and Douyin are great lead generation platforms given their high traffic and various promotion features driven by either AI or user defined targeting mechanisms. In addition to targeting the right audience, Douyin went above and beyond to help creators build a business on its platform.
For example, the knowledge sharing platform Xuelang provides an end-to-end service for creators to build an online education business within Douyin.
- Creators upload their classes on the Douyin Store and Douyin helps creators find and match suitable students.
- Xuelang provides class and class management tools including pre-recorded content, live streaming, and hybrid course distribution.
- It also provides creators operational support for student enrollment, management, and communication, all in one place.
TikTok doesn’t yet have any similar business-building features. In terms of generating income within the platform, even those creators getting millions of views (like Hank Green) won’t see much cash, limiting their ability to further promote and grow their presence on TikTok. On the other hand, if you already have a business, a website, or a YouTube channel, TikTok can be a powerful tool to drive high quality leads to your site and help you earn a stable income within the creator economy.
Benefits of value-add services
Businesses, regardless of size, should always think about value-add services that are beyond transactional goods exchange. Creators on any platform can consider providing value-add services e.g. offline channels to their followers.
For example, a vocal teacher on Douyin, after teaching a few vocal lessons online, invited students to his vibrato live room for vocal correction. When students gained a certain degree of confidence there, the teacher then organized recitals for his students.
Many friends and families of each student came to support them during recitals. Both students’ social needs and their singing skills were elevated. In this situation, the recital is considered as a value-add service that helps the vocal teacher generate more qualified leads to his online classes. This is one method creators can begin using today, with leads generated, from TikTok to start building a community.
Though TikTok has several ways in addition to the Creator Fund to help creators generate income, its monetization methods are lagging Douyin perhaps by 2 years. TikTok could learn from Douyin by making eCommerce a top priority. Furthermore, TikTok can look into helping creators build a business or provide value-add services.
TikTok claims it is revolutionizing the creator economy, because creators are able to build a massive audience on the platform. But considering the points made by critics like Hank Green, TikTok has more to do in order to fully support its huge base of creators. Following US competitors like YouTube may work, as suggested by Green, but a better model might exist closer to home. Douyin is doing extremely well for creators in China. TikTok could learn from Douyin and truly empower the creator economy by turning its mass audience into stable income for creators.