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TikTok Faces Creator Backlash Over Flawed Payment Models



TikTok Faces Creator Backlash Over Flawed Payment Models

TikTok could be forced to update its creator funding model due to several high profile users raising questions about their monetization options, and highlighting some key flaws in the platform’s current process.

As outlined by YouTube and now TikTok star Hank Green, TikTok’s current Creator Fund, through which it’s allocated $200 million to pay creators of the top-performing clips (available to those with over 100k total views per month on their videos), is inherently unfair to top creators who regularly get payouts because the payout amount is static, while the amount of users and creators continues to rise.

As explained by Green:

“If the fund were a percentage of revenue, rather than a static pool, that would be very bad for TikTok’s bottom line. Compared to what it is right now, they would have less profit, [but] it would be very good for creators […] as more creators join the fund, as the app continues to succeed, creators make less money per view.”  

In essence, Green says that with more creators signing up to the Creator Fund, that means TikTok needs to pay out a larger number of users. And because the Creator Fund doesn’t rise relative to the amount of creators or users in the app, the payout amounts inevitably decline, as the app succeeds.

Which is in stark contrast to YouTube, where creators are paid relative to the ad views that their actual content generates. TikTok can’t do that, because it can’t insert mid or pre-roll ads into short video clips, so it has to find alternate means of monetization in order to provide equitable and attractive revenue share for creators.

Which has always been the challenge with short-form video content. Vine, the precursor to TikTok, eventually collapsed for the exact same reason.

Back in 2015, when Vine was on the rise, a group of the app’s top stars, including Logan Paul and King Bach, met with executives from parent company Twitter to call for greater revenue share for their efforts.

As per Business Insider:

The stars had a proposal: If Vine would pay all 18 of them $1.2 million each, roll out several product changes and open up a more direct line of communication, everyone in the room would agree to produce 12 pieces of monthly original content for the app, or three vines per week. If Vine agreed, they could theoretically generate billions of views and boost engagement on a starving app. If they said no, all the top stars on the platform would walk.”

Twitter didn’t have an effective monetization model for Vine’s short clips, and while it did try to add longer videos with a view to inserting ads, and it did try to push in promos to advance the app’s model, it all ended up being too little, too late. The top creators did, in fact, end up leaving as a result of their failed negotiations, and their audiences followed them to wherever they went next. When Vine was eventually shuttered in late 2016, its usage was way down on peak levels.

TikTok knows this, and it’s been trying to add in more monetization options to counter the eventual push from creators for a bigger cut of the revenue pie.

As noted by Green, TikTok’s parent company ByteDance brought in $34.3 billion in revenue in 2020, and while not all of that came from TikTok, an increasingly larger share is being driven by TikTok’s growth.

In order to provide more monetization pathways for its top stars, TikTok’s added creator tipping, along with its Creator Fund, while it’s also working on creator subscriptions and facilitating brand partnerships via its Creator Marketplace.

But the big-ticket item for TikTok is integrated commerce, enabling creators to directly monetize their presence through revenue share partnerships with brands.

This is already a key element on the Chinese version of the app ‘Douyin’, which now makes the majority of its revenue from commerce activity. TikTok’s working on several ways to integrate the same, and that, eventually, could provide a more lucrative pathway for TikTok and creators alike.

But it’s more work on the part of creators, it’s more effort than on YouTube, where they can earn money simply by signing up to the YouTube Partner Program and taking payouts from ads – which YouTube’s going to insert into their clips anyway.

Which makes this latest concern all the more pressing, and if the top TikTok stars do indeed end up banding together to seek a better deal, as proposed by Green, it could put TikTok and ByteDance in a difficult situation.

And it seems that, already, some of the app’s most popular creators are considering their next move:

Would TikTok consider increasing creator payouts in line with its rising revenue? And if it did, would that be sustainable, and acceptable by the company’s shareholders?

As a quick comparison, ByteDance’s revenue increased from $17 billion in 2019 to $34 billion in 2020. If the Creator Fund rose in line with this increase, it would have been doubled straight away, though as Green also notes, relative to the amount that TikTok generates from ads, it should actually have increased 6x over the current amount.

That would be a significant chunk out of ByteDance’s profits, and if it remained that way ongoing, with the fund rising relative to usage and ad performance, that would be a big dent for the company to have to eat.

But creators are the ones who bring the audience, and if TikTok won’t pay them, much like Vine before it, somebody else will.

If the issue escalates, that could become an existential concern. It’s nowhere near a critical stage as yet, but it’ll be interesting to see if and how TikTok responds to the new push, and what that means for the platform’s ongoing growth trajectory.

For its part, TikTok has issued a press statement on the push:

“We continue to listen to and seek feedback from our creator community and evolve our features to improve the experience for those in the program.”

Given ByteDance was very keen to highlight the $19 billion in profit it made in 2020, it’ll be interesting to see just how flexible it might be in catering to these new concerns, and likely demands from the app’s top stars.

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Twitter Applies for US Licenses to Facilitate In-App Payments



Twitter Applies for US Licenses to Facilitate In-App Payments

Twitter has taken its next steps towards facilitating payments in the app, with The Financial Times reporting that the company has begun applying for regulatory licenses in US states, the next legal requirement for providing payment services in the app.

Payments, which Elon Musk has a long history in, could be another way for Twitter to generate revenue, by enabling transactions between users, from which it would then take a small percentage. Musk has repeatedly flagged his vision for payments as part of his broader push to make Twitter into an ‘everything app’, which would provide more functionality and usage benefits.  

As reported by FT:

In November, Twitter registered with the US Treasury as a payments processor, according to a regulatory filing. It has now also begun to apply for some of the state licenses it would need in order to launch, these people said. The remainder would be filed shortly, in the hope that US licensing was completed within a year, one of the people said.”

From there, Twitter would also look to establish agreements with international regulators to enable payments in all regions.

As noted, payments are a part of Elon’s broader plans for a more functional app, which would replicate the utility of China’s WeChat, which is used by Chinese citizens for everything from ordering groceries, to buying public transport tickets, to paying bills, etc. WeChat has become such a crucial connective element, that it formed a key part of China’s COVID response, with authorities using the app as a means to manage COVID positive citizens and restrict their movement.

Musk isn’t ideally looking to use Twitter as a control device (I don’t think), but the broader concept is to add in more and more functionality, in order to both generate more income for the company, and make the app a more critical element in the interactive landscape.

Twitter’s already exploring several options on this front.

Several app researchers have uncovered mock-ups for Twitter Coins in the back-end of the app.

Via Twitter coins, users would be able to make donations to creators in the app, through on-profile tipping, but beyond that, Twitter’s also exploring options like unlockable tweets, paywalled video, and more, as it seeks to embed broader usage and adoption of in-app payments.

A big opportunity also exists to facilitate remittance, or sending money to family and friends, which is a key use case in many regions. Remittance payment services often charge processing fees, and various social apps have been trying to find new ways to facilitate such without the same costs, with the idea being that once people are moving their money in-app, they’ll then be more likely to spend it in the same place.

Thus far, social platforms that do offer payments haven’t been able to embed this as a use case – but maybe, with Musk’s experience, knowledge and connections, he might be able to make this work in tweets.

Elon, of course, got his start in payments, with his first company, an online bank called, being bought out by PayPal in 1999, his first big business win. And while his focus has since shifted to electric cars and rockets, Musk has keen understanding of the digital payments space, and how it can be adapted for varied usage.

According to reports, Musk told Twitter investors in May last year, that his aim was to see Twitter bring in about $1.3 billion in payment revenues by 2028.

That would give the company a sorely needed boost. After Musk’s cost-cutting efforts, which have resulted in the reduction of around 70% of Twitter staff, the company could be on track to potentially break even this year, or close, but a lot has to go right to get the platform back on track. And with advertisers continuing to back away from Twitter spend, it’s not looking good, while subscriptions to Twitter Blue are unlikely to provide much relief, at least at this stage.

As such, the shift into payments can’t come fast enough, though it’ll still be some time before we see the possibility of in-app payments.

Also, while Musk has made it clear fiat currency will be the main focus of this push in its initial phase, cryptocurrencies could also, eventually, be included. The price of Dogecoin, Musk’s favorite crypto offering, rose to a 24-hour high after news broke of Elon’s expanded payments plan.

Will payments be the answer to Twitter’s revenue woes? Maybe, if Elon’s vision for billions in payments revenue comes to fruition – and with his previous track record, you can’t dismiss the notion entirely.

But it’ll take time, many approvals, and many more steps before we reach the next stage.

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Social Responsibility And Ethics In Influencer Marketing



Social Responsibility And Ethics In Influencer Marketing

Chief Growth Officer (CGO) at HypeFactory, a global influencer marketing agency.

It’s no secret that influencer marketing popularity has skyrocketed over the past couple of years, and partnering with influencers isn’t a new concept. Just over the past year, the industry was valued at $16.4 billion and still keeps growing, with a whopping revenue forecast of $143.10 billion in 2030.

Since the beginning of influencer marketing, people have talked about how influencers and social responsibility fit together. It stands to reason that influential people would use their large fan bases to help others. However, when influencers and businesses collaborate, they each have specific responsibilities to the communities in which they operate.

Sponsorship Transparency And Gender Stereotypes

One of the most critical skills for an influencer is honesty. Influencers base their marketing strategy on being genuine and sharing personal tales and thoughts with their target audience. They are not celebrities living in a bubble of fame that very few of their followers will ever reach; instead, they live lifestyles that are reachable and use items that their viewers would find helpful. This approach has significantly contributed to their immense level of success.

However, many influencers don’t play by the rules, especially when it comes to impressing brands they’ve made deals with, even though transparency is essential to the sustainability of an influencer’s career. Because of this, many people would think that the most important ethical issue in influencer marketing is sponsorship disclosure.

The United States Federal Trade Commission (FTC) and the Advertising Standards Authority (ASA) and the Competition and Markets Authority (CMA) in the United Kingdom have all put out rules about how influencers should be honest in their posts and about their relationships with brands. If you disobey the regulations, you risk facing penalties, fines and legal bills. You also risk losing the trust of your customers for good.

Moreover, when doing influencer marketing, it’s essential to consider gender stereotypes and how people usually think men and women will act in different situations. The Committee on Advertising Practice (CAP) has said that since June 2019, marketing materials could no longer show men and women in ways that are based on stereotypes. These rules state that ads “must not use gender stereotypes that are likely to hurt or offend a large number of people.” Great campaigns, like Nike’s “Dream Crazier,” have challenged gender preconceptions.

Improving Influencer Marketing’s Reliability And Authenticity

Authenticity is essential in influencer marketing. People listen to influencers who are honest and relatable. In addition to the moral problems I mentioned above, brands and influencers must also follow FTC rules, community guidelines and terms of service on social media platforms.

Based on my experience as a chief growth officer at a global influencer marketing agency, here are some things brands must consider for influencer partnerships that are authentic and reliable.

Outline—and stick to—the ethical principles that your brand stands for.

Before you can begin your search for the ideal influencers, you must first understand the core principles of representing your business. Most businesses start by determining their values and ethics early on. They then use these to build their brand identity. It’s up to each company’s brand to decide where they will draw the line and how they will show their core values on social media.

However, consumers place a high value on consistent honesty. Customers are likely to call out your company for being hypocritical if it says it wants to fight racism but then partners with an influencer who has a history of making small slights against people of color. Or if your company promotes equal pay yet pays female influencers less than it does male influencers, contributing to the continuation of the pay gap between male and female influencers.

As a result, you will likely lose the trust of these customers.

Collaborate with real influencers.

One of the most effective ways to stick to influencer marketing principles is by collaborating with real-life influencers. Choosing the right influencers is crucial for building consumer confidence in your product.

Determine which influencers are authentic and have credibility with your intended audience. Specifically, it would be best to look at how many people engage with their content and how good it is. Even though engagement numbers are essential, they only tell part of the story about an influencer’s reliability. Please pay close attention to their writing style, the brands they’ve worked with, the accuracy of their reviews, etc.

Develop a long-term partnership.

When you’ve found a group of genuine, influential people with whom you can collaborate successfully, it’s crucial to keep in touch with them over time. Even if they are paid to review a product, genuine influencers always give honest opinions. Because they follow all the rules, the spectator can have more faith in them.

Consequently, after a shortlist of influencers has been compiled, you should perform authenticity checks. Check their content feed for branded articles. Make sure that any disclaimers you find adhere to the first point’s disclosure guidelines. Consistently partnering with the same influencers demonstrates to customers that you value their brand’s success just as much as they do, which can increase consumer confidence in your business.


Authenticity serves as the cornerstone of the influencer marketing strategy. Influencers earn the trust of their followers and become successful when they always provide high-quality, authentic, relatable content.

In addition to the concerns over the morality of influencer marketing, brands and influencers must follow the criteria established by the FTC and the community guidelines and terms of service based on social media platforms. You can shield your brand from potential ethical and legal difficulties and still enjoy success with influencer marketing if you are aware of the expectations and follow certain best practices.

Forbes Agency Council is an invitation-only community for executives in successful public relations, media strategy, creative and advertising agencies. Do I qualify?

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Key Notes on Building Your Brand via Your Social Profile Visuals [Infographic]



Key Notes on Building Your Brand via Your Social Profile Visuals [Infographic]

Looking to give your social profiles a visual refresh for the new year?

This could help – the team from Giraffe Social Media recently put together an overview of the whys and hows of building your brand via your social profile visuals.

There are some good notes here – a key consideration is consistency, which ensures that you’re building your brand with every post and update.

Check out the full infographic below.

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