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TikTok Faces Creator Backlash Over Flawed Payment Models

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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.”  

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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.”

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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.

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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.

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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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Snapchat Explores New Messaging Retention Feature: A Game-Changer or Risky Move?

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Snapchat Explores New Messaging Retention Feature: A Game-Changer or Risky Move?

In a recent announcement, Snapchat revealed a groundbreaking update that challenges its traditional design ethos. The platform is experimenting with an option that allows users to defy the 24-hour auto-delete rule, a feature synonymous with Snapchat’s ephemeral messaging model.

The proposed change aims to introduce a “Never delete” option in messaging retention settings, aligning Snapchat more closely with conventional messaging apps. While this move may blur Snapchat’s distinctive selling point, Snap appears convinced of its necessity.

According to Snap, the decision stems from user feedback and a commitment to innovation based on user needs. The company aims to provide greater flexibility and control over conversations, catering to the preferences of its community.

Currently undergoing trials in select markets, the new feature empowers users to adjust retention settings on a conversation-by-conversation basis. Flexibility remains paramount, with participants able to modify settings within chats and receive in-chat notifications to ensure transparency.

Snapchat underscores that the default auto-delete feature will persist, reinforcing its design philosophy centered on ephemerality. However, with the app gaining traction as a primary messaging platform, the option offers users a means to preserve longer chat histories.

The update marks a pivotal moment for Snapchat, renowned for its disappearing message premise, especially popular among younger demographics. Retaining this focus has been pivotal to Snapchat’s identity, but the shift suggests a broader strategy aimed at diversifying its user base.

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This strategy may appeal particularly to older demographics, potentially extending Snapchat’s relevance as users age. By emulating features of conventional messaging platforms, Snapchat seeks to enhance its appeal and broaden its reach.

Yet, the introduction of message retention poses questions about Snapchat’s uniqueness. While addressing user demands, the risk of diluting Snapchat’s distinctiveness looms large.

As Snapchat ventures into uncharted territory, the outcome of this experiment remains uncertain. Will message retention propel Snapchat to new heights, or will it compromise the platform’s uniqueness?

Only time will tell.

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Catering to specific audience boosts your business, says accountant turned coach

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Catering to specific audience boosts your business, says accountant turned coach

While it is tempting to try to appeal to a broad audience, the founder of alcohol-free coaching service Just the Tonic, Sandra Parker, believes the best thing you can do for your business is focus on your niche. Here’s how she did just that.

When running a business, reaching out to as many clients as possible can be tempting. But it also risks making your marketing “too generic,” warns Sandra Parker, the founder of Just The Tonic Coaching.

“From the very start of my business, I knew exactly who I could help and who I couldn’t,” Parker told My Biggest Lessons.

Parker struggled with alcohol dependence as a young professional. Today, her business targets high-achieving individuals who face challenges similar to those she had early in her career.

“I understand their frustrations, I understand their fears, and I understand their coping mechanisms and the stories they’re telling themselves,” Parker said. “Because of that, I’m able to market very effectively, to speak in a language that they understand, and am able to reach them.” 

“I believe that it’s really important that you know exactly who your customer or your client is, and you target them, and you resist the temptation to make your marketing too generic to try and reach everyone,” she explained.

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“If you speak specifically to your target clients, you will reach them, and I believe that’s the way that you’re going to be more successful.

Watch the video for more of Sandra Parker’s biggest lessons.

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Instagram Tests Live-Stream Games to Enhance Engagement

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Instagram Tests Live-Stream Games to Enhance Engagement

Instagram’s testing out some new options to help spice up your live-streams in the app, with some live broadcasters now able to select a game that they can play with viewers in-stream.

As you can see in these example screens, posted by Ahmed Ghanem, some creators now have the option to play either “This or That”, a question and answer prompt that you can share with your viewers, or “Trivia”, to generate more engagement within your IG live-streams.

That could be a simple way to spark more conversation and interaction, which could then lead into further engagement opportunities from your live audience.

Meta’s been exploring more ways to make live-streaming a bigger consideration for IG creators, with a view to live-streams potentially catching on with more users.

That includes the gradual expansion of its “Stars” live-stream donation program, giving more creators in more regions a means to accept donations from live-stream viewers, while back in December, Instagram also added some new options to make it easier to go live using third-party tools via desktop PCs.

Live streaming has been a major shift in China, where shopping live-streams, in particular, have led to massive opportunities for streaming platforms. They haven’t caught on in the same way in Western regions, but as TikTok and YouTube look to push live-stream adoption, there is still a chance that they will become a much bigger element in future.

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Which is why IG is also trying to stay in touch, and add more ways for its creators to engage via streams. Live-stream games is another element within this, which could make this a better community-building, and potentially sales-driving option.

We’ve asked Instagram for more information on this test, and we’ll update this post if/when we hear back.

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