With over 170 million active users in the U.S. and an expected $12.3 billion in U.S. ad revenue this year, it would appear TikTok has every reason to celebrate. TikTok Shop and live-stream commerce are reshaping the app’s business model, transforming it into something very different from what it once was.
TikTok: The ‘cultural epicenter’ of a booming creator economy
Marking its eighth year on U.S. cellphones, TikTok now describes itself as the “cultural epicenter of the internet” where users come together to connect, create and shop. Operating far beyond its roots in short-form entertainment, TikTok serves as a powerful hub where users are compelled to consume, and in turn, creators can earn big on ad revenue and sales.
The platform’s 60% Gen Z user base is tapping into a competitive $250 billion creator economy, which could reach half a trillion by 2027. Young aspiring talents from acting, fashion, music and beyond have flocked to TikTok, leveraging its reach to launch their careers and gain visibility. According to reports, 54% of TikTok users are part-time creators, most of whom can access certain monetization perks.
TikTok Shop is proving to be the ultimate addition to TikTok’s future beyond short video content in the United States, tapping into a phenomenon many thought had died long ago—teleshopping. Douyin, the Chinese version of TikTok, has been pushing the boundaries of social media shopping for years, transforming the app into an endless showcase of products and sales content. Estimates indicate that in 2023, Douyin generated about $21 billion in advertising revenue. Douyin joins nearly every other social platform in China, which has a prominent e-commerce component.
TikTok pushes ahead with TikTok Shop ambitions
TikTok is now focused on replicating a similar initiative in the U.S., according to Business Insider, with its entire team dedicated to driving its e-commerce efforts. In September, Douyin and ByteDance reportedly flew U.S. TikTok Shop partners to Shanghai and Hangzhou to meet with regional teams and tour the studios where shopping content is filmed, as part of a Christmas campaign to boost sales. The app also gathered shop partners from 200 different agencies at its offices in Culver City, California, for a day of feedback sessions and discussions on affiliate marketing and live selling strategies. Questions remain about whether a similar model can be successfully replicated in the U.S. and if users would accept such changes.
Despite projections of $50 billion in gross merchandise volume from its commerce push this year, a significant and unresolved challenge remains for the app: its survival. A federal appeals court has recently upheld a ruling allowing a law that could ban TikTok from U.S. app stores. The ban, approved by Congress and President Biden earlier this year, gives ByteDance, the Chinese owner of TikTok, until January 19 of next year to sell the app or have it shut down in the United States.
In March, the House of Representatives voted in favor of the Protecting Americans from Foreign Adversary Controlled Applications Act to curb U.S. national security risks from apps like TikTok, highlighting concerns over data privacy and foreign influence.
On Monday, TikTok appealed for an emergency injunction, with its lawyers urging the U.S. Court of Appeals for the District of Columbia to consider the impact of such a ban the day before a presidential inauguration. Meanwhile, the Department of Justice (DOJ) has called for the legal request to be dismissed.
TikTok’s uncertain future should prompt creators to explore new possibilities
TikTok may not be breaking records anymore, with user growth down from 2023 and 2022, but it remains one of the globe’s most popular social platforms with almost unmatched influence. The ban threat could be avoided if bought out, but now more than ever, creators and marketers should look beyond TikTok.
Alternative platforms like Instagram Reels, YouTube Shorts and Snapchat’s Spotlight bring new algorithms, audiences and opportunities to the table. As TikTok continues to evolve, creators and brands must stay agile. The social media landscape is constantly shifting, with new platforms pulling in audiences and launching new voices. Staying ahead means mastering the rhythm.
TikTok no longer rewards creators as generously as it once did, making monetization ambitions increasingly exclusive to the ultra-followed or those making a significant investment in commerce. “Contrary to popular belief, TikTok creators do not earn substantial income from views alone. The creator program pays out mere pennies compared to what other platforms offer for the same number of views,” said Christopher Claflin, a viral social media consultant, in an interview with EuroNewsWeek.
Diversifying is key to maintaining your position
Claflin emphasizes that diversifying is crucial for any creator looking to maintain their position. The changes at TikTok are a reminder of the valuable lessons for its creators. “That is the name of the game as a content creator. You always have to be pivoting and adjusting to the environment,” he added.
TikTok’s survival is far from guaranteed, yet internally, the app is pushing forward with a hunger for innovation. Despite the hundreds of millions in the U.S. who continue to use, consume and create, the prospect of a future where that space no longer exists is one to consider. Keeping a finger on the pulse of what’s hot and adapting your voice is essential—sometimes, the breakthrough you need is just around the corner.
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