In India, it is almost impossible to find a person who does not have any idea about video creating app TikTok. On its website, TikTok describes itself as “a destination for short-form mobile videos.” TikTok is owned by ByteDance, a Chinese company which has been around since 2012 and has a $75 billion valuation. TikTok currently has more than 500 million users worldwide. In fact, it’s generating so much attention that ByteDance was recently crowned the world’s most valuable startup.
TikTok (formerly known as musical.ly) is a free social media platform that lets you watch, create, and share, discover short music videos -- often to a soundtrack of the top hits in music usually of 15 seconds. The app musical.ly was used by young people as a platform to express themselves and showcase their talents through singing, dancing, comedy, and lip-syncing.
Though TikTok was originally available as musical.ly in the U.S. but was rebranded when Musical.ly merged with TikTok on 2 August 2018, to create a 'bigger and better short-video community’ when the two apps merged in August 2018. The app is now called TikTok with complete with a new logo. The app has all of the same features as musical.ly and allows users to create videos recorded in 15 seconds or less and share them across a community.
TikTok incorporates the most popular elements of both apps with a feed that highlights the users’ community. In addition to this, a “For You” feed uniquely recommends the relevant videos based on user’s interest and viewing preferences. The video clips on the platform may only be 15 seconds long but they are having a big impact on audience.
With more than 1 billion users, TikTok is incredibly popular, owing in part to its slick mash-up of features from other kid favorites. As with the lip-synching app Dubsmash, users can watch and record videos of themselves lip-synching to popular music and sound tracks. And just like YouTube, TikTok is an interactive world of videos that lets you connect with friends and admirers through likes, comments, and even duets.
About CEO of TikTok
ByteDance’s CEO and founder is Zhang Yiming, a 35-year-old entrepreneur. Information about Zhang is scarce as he doesn’t give many interviews but he has even created a real estate search engine. He has studied from Nankai University.
In a 2015 speech at his alma mater, Zhang revealed a few other details about himself. He is a big fan of biographies and spent a lot of time in college reading. He said he is socially awkward, precisely a “science man” who introduces himself at school reunions with “Hi, I installed your computer.” During college, he used to build websites and did tech troubleshooting for extra money. As an added bonus, it helped him meet his wife.
ByteDance is the Chinese version of Facebook. It was launched in 2012 in Beijing. It has chat apps and news apps. After acquiring an AI company, it jumped onto the video sharing bandwagon. In 2015, it launched a Chinese video app called ‘Douyin’ that was a great hit.
In 2017, the concept of Douyin was taken further in the form of TikTok. But there was already a lot of competition. Musical.ly, a video sharing app, was already in the market. ByteDance soon acquired it and merged Musical,ly’s user base with TikTok. In December 2017, the deal was closed with at $1 billion dollars.
In 2018, Softbank had invested $3 billion dollars which raised TikTok’s worth to $ 75 billion dollars. There’s something about TikTok if firms are placing such trust in it! TikTok has offices in many countries, including India. Surprisingly (or not), TikTok has several million users in India.
How TikTok works?
TikTok uses AI at its core. The algorithm it adopts is rumoured to be more powerful than the ones used in other social media platforms. It uses your video viewing history to populate relevant videos feed in “For You”. In this app, personalization is at its peak. If you watch these 15-sec videos completely, then this AI feature serves with you more associated content.
The more you converse with it, the more it gets trained to provide your personalized feed. It is different from other platforms because they just show you recommended videos or posts based on your recent activity. What’s interesting is that ByteDance has a different version of TikTok for the Chinese users whereas a different version for rest of the world, Douyin. It generates revenue in a pattern similar to that of other social media apps.
According to some reports, an average user spends nearly 52 minutes on TikTok. With over a billion users and reportedly available in 150 countries and counting, the platform for short-form mobile videos has left other social media platforms way behind. It has 1.5 billion registered users with the maximum users lying in the 15-25 age group.
The gigantic user base has almost equal sex ratio. 54 % of TikTok users are males and 46% are female. Currently, TikTok is the most valuable start-up in the world with a valuation of $75 billion dollars. The visionary Softbank fund has always invested in startups that have worn the crown of most valuable entrepreneurial ventures.
TikTok is used by many Asian countries like Cambodia, Japan, Indonesia, Malaysia, Thailand, and Vietnam, etc. TikTok strongly influences the lower and middle classes of China and India. TikTok has 27% of its user base from India with whopping 190 million users. Indian users spent over 5.5 billion hours on TikTok in 2019. Major credit goes to Jio internet services which gave Indians instant access to these 15-sec videos with the ability to upload similar videos. The growing segment of influencers grew has a lot to do with TikTok.
How does TikTok Make Money?
ByteDance does a lot more than just run TikTok. It also owns Toutiao, a massively popular news platform with 240 million downloads, as well as products like Xigua Video, TopBuzz and BuzzVideo.
TikTok is available in 155 countries. It’s also available in 75 languages that helps to attract these many users. TikTok is the most downloaded app on the Apple App Store, with 33 million downloads in a single quarter of 2019. The app strongly beats out all other social media giants like YouTube, Instagram, WhatsApp, and Facebook Messenger, which round out the top five. These number of downloads help earn the revenue.
TikTok offers in-app purchases of coins, starting from 100 for $0.99 and leveling up to 10,000 for $99.99. Users can give coins to their favorite creators, who can in turn exchange them for digital gifts. Mobile intelligence firm Sensor Tower reported that TikTok users worldwide spent $3.5 million on in-app purchases during the month of October 2018, which is nearly four times what they did in October 2017.
Digiday reported that agencies also may start advertising on TikTok going forward given its explosive popularity. According to the Nanjing Marketing Group, the Chinese version of TikTok, Douyin, offers splash ads that can cost about $150,000 for one day and newsfeed ads for about $4 per click. Thus, many celebrities, brands like Pizza Hut pay to run such campaigns or the promotion and endorsements.
TikTok now enjoys a monopoly in the micro video sharing market. It’s also expanding to news industry. It recently bought a French news company and has stake in US based news agencies. The use of AI is extremely high in TikTok’s initiatives. It uses an AI tool which collects various news clips and prepares articles in few seconds.
Challenges Faced by TikTok
Though TikTok has monopoly, the journey till date hasn’t been smooth for TikTok. It had to pay $5.7 billion dollars for violating children privacy in US. India also banned this app for a few days. Mark Zuckerberg spoke about TikTok and its dominancy in US and other countries. He expressed concerns about the privacy of users of TikTok.
Yet many reports credit Zuckerberg’s reaction to fears of Facebook, Instagram and WhatsApp losing their grip over social media to TikTok. Recent reports suggest TikTok has already positioned itself as the topmost social media app in the market. The US government has been critical of TikTok over concerns on the national security.
When it comes to value addition, the 15-sec videos on TikTok don’t do anything big. However, they provide entertainment and comical content, a stress buster for billions across the globe. Underneath all of this, ByteDance is building an empire using millennials and having greater influence over them.
Many feel that millennials are now morally and ethically vulnerable than ever, with attraction towards silly content in the name of entertainment is one such reason. In February, the FTC in the U.S. fined TikTok $5.7 million for violating children’s privacy law (COPPA) and required the app to implement an age gate.
Moreover, some Indian politicians and parents believe the app’s content is inappropriate, particularly with regard to its use by minors. Thus, Tamil Nadu court had ruled against TikTok and banned it, saying the app could expose children to sexual predators as well.
But after all these hurdles, TikTok managed to persuade the governments by implementing some policies by restricting the app for users above 13 years. Now, parents can help children manage their screen time by selecting how much time they would like their child spend on TikTok like 40, 60, 90, 120 minutes per day. This feature is password-protected; when users reach their limit they have to enter a password to continue. Parents can set the password to be in total control of screentime.
After all these hurdles, TikTok has become World’s Most Valuable Startup beating all other social media giants. It has set example of how by using the youth power which is considered to be the greatest power, a startup can excel in the market by using appropriate strategies.