Like a bartender with a generous pour, TikTok creators have been reeling in the tips.
What happened: TikTok has become the first non-gaming app to see users spend US$10 billion on the app. Per TechCrunch, the surge in spending has come from TikTok’s in-app purchases of “coins” — a virtual currency that users can spend to tip the app’s creators.
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TikTok users spend over US$11 million a day tipping their favourite creators, but the number is likely higher since it excludes sales from third-party app stores in China.
- Every time a virtual coin changes hands — the most popular purchase is 1,321 coins for $19.99 — TikTok makes bank: The platform takes a 50% cut from every tip.
Why it matters: TikTok and other social media platforms are increasingly pushing users to both tip creators and sign up for paid subscriptions to access exclusive content. This also creates a new lucrative revenue stream that incentivizes the creation of more content.
- Instagram created a currency, called Stars, also used to tip creators, and YouTube has a similar feature called Super Stickers that can be gifted during live streams.
What’s next: Between its virtual coin currency, thriving ad business, and a new TikTok shop, the platform is on track to become the highest-earning mobile app in the world by 2024.—LA