TikTok, the popular video-sharing app, has created a new way for its users to make money online: by receiving virtual gifts from their fans during live-streaming sessions. But what are these gifts, how much are they worth, and what are the implications for the TikTok community and the wider society?
The rise of the TikTok superstar economy
TikTok is one of the most downloaded apps in the world, with over 2 billion users and 1 billion active monthly users. It allows people to create and share short videos, often with music, filters, and effects. Some of these videos go viral, attracting millions of views, likes, and comments.
Some of the most popular TikTok creators, or influencers, have amassed huge followings, ranging from tens of thousands to tens of millions of fans. These fans can interact with their favorite influencers by sending them messages, joining their fan clubs, and watching their live-streams.
Live-streaming is a feature that lets TikTok users broadcast themselves in real time to their followers. During these live-streams, fans can show their appreciation and support by sending their idols virtual gifts, which are animated icons or emojis that appear on the screen. These gifts are not free, however. They have to be purchased with real money, using TikTok’s in-app currency, called coins.
Coins can be bought with different amounts of money, depending on the region and the platform. For example, in Australia, 100 coins cost $1.49 on the App Store and $1.69 on Google Play. These coins can then be used to buy different types of gifts, ranging from 1 coin to 5,000 coins. The cheapest gift is a panda, which costs 5 coins, while the most expensive one is a drama queen, which costs 5,000 coins.
The hidden costs of TikTok gifts
While these gifts may seem like a fun and harmless way to express one’s admiration and gratitude, they are actually part of a complex and lucrative system that benefits TikTok and its top influencers, but also poses some risks and challenges for the fans and the society.
First of all, TikTok does not disclose how much money it makes from these gifts, nor how much it pays to its influencers. According to a joint investigation by ABC News and the ARC Centre of Excellence for Automated Decision-Making and Society (ADM+S), TikTok takes a significant cut from the initial value of the gifts, ranging from 20% to 60%. This means that for every $100 spent on gifts, TikTok could pocket up to $60, while the influencer could receive as little as $40.
Secondly, the gifts are not directly converted into cash for the influencers. Instead, they are accumulated as diamonds, which are another form of in-app currency. Diamonds can be redeemed for money, but only after reaching a certain threshold, which varies depending on the region and the platform. For example, in Australia, an influencer needs to have at least 10,000 diamonds, which is equivalent to $100, to withdraw their earnings. Moreover, the exchange rate between diamonds and cash is not fixed, but fluctuates according to TikTok’s discretion.
Thirdly, the gifts are not evenly distributed among the influencers. The investigation found that the top 10 influencers in Australia and New Zealand received 80% of the total gifts in a month, while the rest of the 74 influencers in the sample received only 20%. This means that the TikTok economy is highly skewed and unequal, creating a winner-takes-all scenario for the most popular and successful influencers.
Fourthly, the gifts are not only influenced by the quality and popularity of the content, but also by the gamification and manipulation of the platform. TikTok encourages its users to compete with each other in live battles, which are timed contests where two influencers vie for the most gifts from their fans in five minutes. The winner of the battle gets a bonus of 10% to 30% of the gifts, depending on their ranking, while the loser gets nothing. These battles create a sense of urgency and excitement among the fans, who are urged to spend more coins to support their idols.
Fifthly, the gifts are not without consequences for the fans and the society. Some fans may spend more than they can afford, or even go into debt, to buy gifts for their favorite influencers. The investigation revealed that one fan spent over $300,000 in a month, including $30,000 in a single night, on gifts for various influencers. This fan admitted that he was addicted to TikTok and that he felt lonely and depressed. Other fans may feel pressured or obligated to give gifts, especially if they receive personalized messages or shout-outs from the influencers. Some fans may also develop unrealistic expectations or unhealthy attachments to the influencers, who may not reciprocate their feelings or attention.
The future of TikTok and social media
TikTok is not the only social media platform that offers live-streaming and virtual gifts. Other platforms, such as YouTube, Facebook, Instagram, and Twitch, also have similar features, although with different rules and regulations. However, TikTok stands out for its massive scale, rapid growth, and young demographic, which make it a powerful and influential force in the digital landscape.
TikTok has also been subject to various controversies and criticisms, such as censorship, data privacy, national security, and online safety. Some countries, such as India and Pakistan, have banned TikTok, while others, such as the US and Australia, have considered doing so. TikTok has denied any wrongdoing and has tried to address some of the concerns by implementing new policies and initiatives, such as age verification, parental controls, and educational content.
The phenomenon of TikTok and its gift economy raises some important questions and challenges for the future of social media and society. How can we ensure that social media platforms are transparent, accountable, and ethical in their operations and practices? How can we protect the rights and interests of the users, especially the vulnerable and marginalized groups, from exploitation and harm? How can we foster a healthy and balanced relationship between the creators and the fans, and between the online and offline worlds? How can we harness the potential and creativity of social media for positive and meaningful purposes?
These are some of the questions that we need to ask and answer, as we navigate the complex and dynamic world of TikTok and social media.
