TikTok Business Model - What Makes It So Popular

tick tock is all the rage right now and it's pretty equally divided between those who swear by it and say that it's the next big thing and those who dismiss it has been just another cyclical new social media platform fad oh and there's also a third group those that deeply hate tick tock like the US government and Reddit CEO Steve Huffman who called it a truly terrifying fundamentally parasitic spyware boy that escalated quickly but tick tocks popularity can't be denied at the time of this recording tick tock has been downloaded almost 2 billion times on App Store and Google Play and keeps climbing ranks on all the other metrics such as monthly and daily active users for example tick tock already surpassed Instagram users in India and India is also where most of its new downloads are coming from but make no mistake even though tick tock hasn't yet reached the same proportions in USA and Europe it's just a matter of time because it's experiencing the nominal growth Facebook last saw Instagram reels and YouTube shorts are all attempts to compete frontally with stick talk but they will have a lot of trouble because of a specific business model innovation that gives tick-tock a competitive edge that other platforms aren't able to reproduce in this video I'll explain what tick tock is how it works how it makes money whether you can make money from it and of course what is that secret business model ingredient that makes it so popular let's go if you never heard about tick tock it's time to come out of your cave you for sure have seen videos from tick tock even if you never use the app every time you watch a compilation of viral videos on YouTube or your favorite TV channel pay attention to the corners of the videos that are played chances are you'll notice tick tock logo meaning that the video comes from tick tock and you can also see the account ID of the creator next to it tick tock is owned by Chinese artificial intelligence company called buy it dance and of course this is a huge problem but back to that topic later in 2016 by to dance launched due in a Chinese version of tick tock and in 2017 it launched the current tick tock for international audiences that same year by the dance just an app called musically for just under a billion dollars this app was popular in the United States and it was mostly about lip syncing meaning that users would record videos of themselves singing to a superposed original music track a year later in 2018 bite dance merged tick-tock with musically and by doing so introduced Tik Tok to an even bigger worldwide audience and it's true that a lot of tik toks original growth was fueled still by those lip-synching videos but in the meantime things changed these days Tik Tok is pretty much anything that an app where you post short videos can be there's no limitation to the kind of creative content that you can find there and it's pretty addictive and entertaining as any multi-sided platform Tik Tok offers value propositions to all its customer segments which are the viewers the creators and the advertisers and even though Tik Tok was made popular by teens there are now all age groups on it as usual teens want to hide from their parents by going to new platforms but by doing so they make it the new cool thing and so everyone older eventually flux there as well you can run but you can't hide so tic toc is a video based feed that you scroll and entertaining content is a value proposition for the viewers but it's not that simple here we're talking about tailored entertaining content and I'm not saying this lightly remember bite dance is an artificial intelligence company at its core and they create powerful algorithms you will be shown content that you like and the more you watch the more you'll see content that you like chances are you'll never see same videos as your friend for example so you kind of flaw it in your own content universe and it's not like Netflix where you are presented with a choice of shows that you'll probably like but you still have to make that choice no on take top you don't need to do that you just scroll and watch hours and hours of videos that are shown to you another value proposition for the viewers is that tick-tock is friendly or should I say innocent unlike on Instagram where you usually follow people who polish every single post hide their flaws or even leave fake on tick-tock you like and celebrate people for being themselves with their flaws and their cringe Ness a lot of tick-tock creators don't take themselves seriously and it turns out that viewers like it because they can relate tick tock celebrities are often just being themselves all of this makes the app addictive but it's design pushes the addiction even more so when you want to finally stop scrolling and exit you need to press the exit button twice to confirm because after you press it once tick-tock will squeeze in one more video for you to see like I'm so sorry you didn't like the previous video and it means you want to quit but please just give me another chance to make you stay here maybe you'll like this one now tick tock wouldn't be so popular if it wasn't for all the content that creators are publishing on it so wait why are they actually doing it why did it suddenly so many content creators pop up on a completely new platform instead of keeping it up on the usual youtubes and instagrams here's the thing by its nature tick tock offers virtually anyone a shot at being discovered and even becoming famous it's called organic discovery and it's very real on YouTube you need to build an audience for months or years before your new videos start to be picked up by the recommendation algorithm on Instagram and Facebook it's the worst I sometimes wonder why instagramers bother pushing on it while the platform does everything to actually down rank them and make it harder to get noticed but on tick tock you're virtually guaranteed that your video will be seen remember that almighty video feed algorithm well as a viewer you'll be watching popular videos that you might like and then out of nowhere you'll see a weird video that has no views no likes and no comments and you'll be like why am I getting this you might like it or you might pass it because it's totally not your thing and by showing it to smaller samples of viewers this way tick tock will determine if that new video is worth throwing to yet more people or not until eventually it reaches the level of popularity that it deserves so it means that if that video is really good it can go viral and the Creator doesn't need to have any followers in the place sometimes you'll see super popular videos with thousands of likes and you'll click on the creator profile just to realize that it's the first video they ever posted so the barrier to entry for creators is extremely low just like YouTube lowered this barrier from TV levels tik-tok is lowering it down even from YouTube not only are there now creators becoming famous through tik-tok but also musicians some of them have managed to make a hit on tik-tok first which segwayed them into traditional media second but everyone getting a shot at going viral is not the only advantage for tik-tok creators there's also the low barrier for creativity there are of course creative and complex videos on tic toc as well but if you are not very talented you can just repeat trendy challenges basically do the funny stuff that other people are doing and maybe viewers will find something to it and you'll start getting followers also tic toc has an intuitive and powerful video editor which allows easy creative versatility for everyone unlike vine which tik-tok is often compared to and this is where we're getting to the juicy part what is that secret ingredient that I mentioned in the beginning that makes tic toc so popular before we talk about it please hit that like button if you're enjoying this video because you know we're talking about tic toc but I need to claim YouTube's algorithm here and if you want to learn more about business topics like this you can take my online course called business model innovation differentiate and grow your company by following the link in the description it's a very popular course and at the time of this recording it has 15,000 students and an average rating of 4.5 out of 4,000 reviews you learn business strategy and especially how to innovate your business model in order to outgrow your competitors also there's the 30-day money-back guarantee if you feel like this course is not for you so there's no risk hope to see you inside now back to tick tock so the secret ingredient that makes this whole machine work is the content network effect in addition to repeating trendy viral challenges creators can repurpose other creators audios let's say that there's a video that became popular you can take it original sound and record your own video on top of it there are many videos like this on tick-tock and eventually this remixes end up snowballing into an infinite amount of content on the platform let's call it audio memes it gives creators a lot of food for creativity and increases the overall value of the content on tick-tock faster than on any other platform just like Eric ban the former product manager at Instagram puts it when it was a product manager at Facebook and Instagram building a true content first social network was the holy grail we never figured it out yet somehow tick-tock has cracked the nut and leapfrogged everyone else so yep tick tock is 100% about content even though you can search for videos add friends and chat through it its main goal is to be an endless entertainment platform where you can casually watch fun and short enough videos that stimulate our ever shorter attention span many of which have a challenge element to them which pulls viewers into participating themselves and keeps increasing that content snowball in terms of their revenue model here is pretty traditional tick-tock mainly earns money by showing video ads to its viewers in their feed and when businesses do them correctly you might not even realize that you're looking at an ad at some point a download or a shop now button will appear and you can click on it if it caught your interest businesses should take advantage of these ads as soon as possible because they seem very native and they can reach younger audiences which becomes harder and harder to do on other platforms also on tik-tok you can buy virtual currency and tip creators when they do live streams or buy their branded products like whant which most likely tik-tok takes a cut on these transactions as well and this is of course a value proposition for creators who have some ways to earn money from tick-tock in addition to getting paid influencer deals for those who become popular to do that they can use tick tocks creator marketplace to connect with brands however tick tock does not register with its own ad revenues at the time of this recording and therefore makes money off its creators back now with all this being said tik-tok has a dark side which is wait for it China United States and some other governments claim that the personal data that tik-tok collects from its users can later be used by the Chinese government to spy on their citizens already now tick tock is forbidden from being installed on government-issued devices and some lawmakers are calling for investigations into it from a national security perspective to make things worse tick tock is accused of censorship when it comes to sensitive content that Chinese authorities don't like which puts China in the bad light therefore advancing Chinese foreign policy and yes we're talking only about the international version of ticked up here by tea dance on the other hand is perfectly aware that the Chinese roots of its app are an existential threat to it and tries everything to clean their name from these allegations for example they opened a transparency centre where outside experts can examine their moderation policies speaking about censorship that they conveniently claim that they are censoring everything considered sensitive by any nation not only China to steer the platform away from negative content also they keep repeating that their servers are located in the United States with a backup in Singapore and that they don't transmit any of this data to China at least not anymore either way a stick top popularity grows in the Western world so will US government's frustration about it and it's hard to speculate about what will happen will the u.s. be able to forbid the app on national security grounds or will it force by to dance to spin it off out of China what do you think about tick-tock are you like this parent saying that it is a worthless nonsense for kids to be wasting their brains away what a shame I destroyed my 14 year old smartphone if he sneaks a new one I will destroy that one also or this parent saying my kids are ticked off famous with over 4 million views of their video it was great to spend quality time having them explain the dank video to me which took longer than the video itself let me know what you think in the comments and don't forget to like this video and subscribe my channel see you soon [Music] [Applause] [Music] you

Channel: Business Disruptors

Views: 90,423

Rating: 4.957232 out of 5

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Id: pJtJJa7vgm4

Length: 13min 44sec (824 seconds)

Published: Sat Apr 25 2020