After first announcing its $200 million Creator Fund last month, which would see the platform’s top creators get paid for their work – which was then boosted to $1 billion following reports that Facebook was looking to poach top TikTok stars for its new ‘Reels’ product – TikTok has today announced the first recipients of its grant funding, while once again upping the potential scope of the program to ensure more TikTok stars are remunerated for their efforts.
As per TikTok:
“We recently announced our TikTok Creator Fund to further support creators of all sizes and backgrounds through earnings that reward the passion and dedication they put into inspiring, uplifting, and entertaining the TikTok community. This Fund will reach hundreds of thousands of creators, starting with $200 million and growing to $1 billion in the US over the next three years, and more than double that globally.”
So it’s gone from $200 million, to 4x that, and double that again, as TikTok looks to reassure creators that they will get paid. Which is important – but we’ll get to that in a minute.
Among the initial recipients of TikTok funding are a chef, a photographer, a beauty influencer, a cosplayer and a healthcare professional – all up, 19 TikTok stars will get a new injection of funding to keep them creating – and most importantly, keep them aligned to the platform.
As noted, Facebook has reportedly been offering lucrative deals to top TikTok stars in order to get them to post to Instagram Reels instead. Those deals are not necessarily exclusive, but would involve, at the least, original content being uploaded to Reels first, which Facebook would then be hoping to use as a measure to highlight how creators can earn more money on Instagram than they can on TikTok.
Which, again, is why the Creator Fund is so important.
Amid all the discussion around the potential takeover of TikTok, and its massive $30 billion valuation, one question that’s been largely overlooked by most is whether the platform is actually worth that – and if not, what is TikTok’s actual value?
The broad perception is that TikTok is the next big thing in social media, and a potential challenger for Snapchat, Twitter, etc. As such, it’d be crazy for someone like Microsoft not to buy it, right?
But that doesn’t take into account the fact that TikTok’s success is absolutely not a given – and we know this because we’ve already seen the rise and fall of TikTok before, though last time it was called Vine instead.
To recap, Vine was a hugely influential platform at peak, kick-starting the careers of many internet stars including King Bach, Logan Paul and Amanda Cerny, while establishing itself as a culturally influential tool in its own right. Vine, at one stage, was serving 200 million active users (TikTok, for reference, has 100m users in the US), and Vines were everywhere, sparking a raft of trends and flow-on behaviors on other platforms – just like TikTok does today.
But Vine still failed. Why? Here’s the truth: It’s not because Twitter messed it up.
Back in 2016, before the app’s demise, Vine’s top stars had called on parent company Twitter to pay them more in order to keep them around. These creators had already seen many of their contemporaries switching to YouTube and Instagram, and getting paid big time as a result. They could do the same, but they preferred to stick with Vine, the platform that had made them, and which they were most familiar with.
A group of Vine creators met with Twitter to deliver an ultimatum of sorts.
As reported by Mic:
“If Vine would pay all 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.”
Twitter declined, and the creators subsequently adandoned the app, taking their millions of followers with them. Vine usage went into freefall, and while Twitter did try to introduce ad breaks and other options as a last-ditch bid to save it, eventually, Vine lost relevance.
In hindsight, many view the demise of Vine as Twitter’s failure, but the fact is that monetizing short-form video is hard. Inserting mid-roll ad breaks into seconds-long clips won’t work, and interruptive, skippable promotions between clips is also not hugely viable.
It’s difficult to build an equitable structure that will ensure your top creators get paid enough to keep posting – which is why Instagram has a significant advantage in Reels, in that it already has a business model that can be adapted to keep the top creators paid.
TikTok doesn’t have that, and while it’s ad business is arguably more advanced than Vine’s was at the same stage, and it has other options like its Creator Marketplace and its evolving eCommerce tools, right now, TikTok’s business success is not guaranteed.
Which is why its Creator Fund is so critical to its future strategy.
Will that work? Can TikTok continue to separately fund its top stars while Facebook and YouTube provide better revenue options for, essentially, the same content? As you can see, while TikTok is currently being valued at around $30 billion, it’s not as safe a business bet as the headline reports might have you think.
TikTok has potential, definitely, and its cultural footprint is significant – and the fact that it’s remained the most downloaded app over the last year is clearly an indicator of its major opportunity. But it still has some work to do to avoid losing out in the long run.
Which is something that Microsoft, and any other potential partner, will need to weigh up. Because its competitors are not going anywhere – and TikTok’s top creators are also acutely aware of this fact.