Have you ever wondered why TikTok is free , but even more so, how does this platform make money ? Although most of these companies do not leave these answers at a glance, it is possible to know what their business model is like and you will want to know how much money they keep in their pockets for the hours you spend watching or creating content within their platform.
There is a very popular phrase that says “when the product is free, the product really ends up being you” and it turns out that on TikTok it is totally true. The first thing you should know is that this platform makes huge amounts of money from advertising, that advertising that appears between one video and another, but that you don’t really pay attention to and that is ultimately its method of making a lot of profit.
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The trick of virtual currencies
While not really TikTok’s earnings forte, the platform offers users a method to purchase valid virtual currency within the social network. This currency is used to offer tips to creators, as a way of valuing their work, and they can then exchange it back for money.
But… what happens to that fiduciary money while it is converted into a virtual currency. It can take days and months before that virtual currency converts back to dollars, euros, or whatever currency you use, but in that period of time, it’s in TikTok accounts . Possibly, it has been invested in traditional transactions and is earning interest that is not returned to you.
TikTok coins or “Coins” have a value that is not directly linked to the fiduciary value of money , that is, a group of coins can cost a specific value.
These coins are priced from €1.09 per 100 coins to €104.99 per 10,000 coins.
But, in addition to having that money managed at your discretion, TikTok makes a percentage profit from those tips given out. The company charges 30% as a contribution towards the cost of the servers where the application is stored, a 20% own profit for TikTok and only 50% is given to the content creator.
Tiktok Creator Marketplace
One of the most attractive ways that tiktokers have to earn money on the platform is with the Tiktok Creator Marketplace , because they are agreements for much more money in exchange for direct advertising with a brand, as long as your profile meets the demands of the market. sponsor.
On this platform, a large number of advertising campaigns are achieved , in which the creator is asked to produce a certain type of content and for this they will receive a payment established in the agreement, but here the platform’s own earnings system enters again.
TikTok acts in this process as a kind of intermediary and representative , for that reason, with each of the videos that you manage to agree on within the platform, finally your earnings will not be exactly what was agreed, since a percentage of that money stays in the platform. In addition, TikTok will also charge the advertiser a percentage for advertising.
information is money
Are you really not paying to be on TikTok? At least that’s what you think. There are things that have more value than money, at least in the long term and if you think about it big, for example, information and that is precisely the cornerstone of the business of TikTok and any other social network.
Knowing how old you are, where you are, what kind of content you like, what your sexual preferences are, even knowing your culture, your language and even the color of your skin… all of this information has allowed TikTok to build a huge base of users. data to sell advertising to anyone.
We could not tell you exact prices of what advertising costs on TikTok, because it will always depend on the specific filter you want to apply to display an ad.
For example, a brand could request TikTok to show an ad in Spain, for people between 20 and 30 years old, female and Spanish speaking. This very specific selection has a price and for each reproduction that is made, even more, for each ad that you see, free and voluntarily, TikTok is adding cents to your account … Now imagine that those cents that you produce become millions and million views in one day.
Not surprisingly, TikTok closed 2021 with profits of 58 billion dollars. The Chinese company behind TikTok, ByteDance announced the closing of its profits last year with a year-on-year growth of 70% and, of course, the world in a pandemic, confined and completely dedicated to virtuality helped a lot in that growth.
The marked and sustained growth of TikTok’s income, then, confirms what we have been saying in this article, its great strength is not the content itself, but its ability to extract information, but also make you spend a lot of time connected.
The more hours you have in front of the screen of your application, the more advertising you are going to consume and that means more zeros adding to TikTok accounts every day, so in short, you are the real product of this social network.
