If you’re reading this, I assume you’re either already aware of TikTok or at least curious about it.
The video platform has exploded in popularity in the past few years and even the most stalwart traditionalists are grudgingly coming around. In 2019 alone, TikTok was the fourth-most downloaded app globally and the most downloaded app in the US. It’s been a wild ride and one that’s still escalating.
The Money Behind the Favorite App
When it comes to the most downloaded app on the Apple store, you’d assume that TikTok is making a mint on the back of that popularity. But you’d be wrong. According to a report by TikTok, the app generates a relatively small portion of its revenue from advertising. The overwhelming majority of its money comes from microtransactions.
Specifically, 94% of its revenue comes from six- to 12-year-olds using the app, with the remaining 6% coming from teenagers and young adults. The average user spends $4.41 per day on the app, which, according to TikTok, is 300% more than the average daily spending of a traditional social media user. And the number of daily active users is only going up.
A Business Model That Works
On the surface, TikTok seems like a typical social media app — it focuses heavily on user-generated content and advertises frequently — but with a few key differences. First, most of its revenue comes from microtransactions, not advertising. Second, it gives users a reason to spend money — its main attraction is the entertainment value of watching fun, short-form videos. Third, the app requires a lot more work to generate income than a typical social media app. Finally, unlike most social media apps, which are centered around celebrities and influencers, TikTok encourages, even demands, that users find the fun in themselves.
A Business Model That Can Scale
When it comes to generating revenue, none of the above matter if you don’t know how to scale the model. And that’s where TikTok’s brilliance lies. Thanks to its efficient business model and emphasis on automation, the platform can easily accommodate more users and generate more revenue than almost any other app on the market.
The Rise of TikTok
TikTok is now the third most downloaded app on the Apple store, behind only Google Maps and WhatsApp. The video platform celebrated this milestone by sharing a laughably self-congratulatory video featuring all of its chief executives, boasting that it had grown 500% year over year.
While still a relative newcomer on the app store, TikTok already has billions of downloads and is still growing. In fact, the most recent data from TikTok shows that the number of monthly active users is now over 200 million, up from just 50 million at the start of the year.
The Future Of Work
TikTok is a glimpse of the future of work. Not only are its stars frequently self-employed, but the video platform itself is emblematic of the changing nature of the working world. Now, more than ever, people are looking for flexible work arrangements and digital nomads are the perfect example of that trend. It’s no longer uncommon to see people working remotely for much of the year and freelancing on the side for the rest. This is a trend that will only continue to grow as the economy shifts to a more digitally driven future.
What do you think? Is this just another fad or is TikTok going to redefine our perception of work? And how much does this app’s rapid growth influence how you make money? Let us know in the comments below!