How does the social media giant TikTok make money? It's no secret that the short-video app has exploded on the scene capturing the eye-balls and screens of billions worldwide. But how can they possibly afford all the development, support, and marketing? Advertising right? You might be surprised to find out that all their revenue is not just from brands spending millions on advertising.

Let's dive in.

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Advertising

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For starters, yes TikTok generates most of its revenue through advertising. Brands can produce sponsored content that appears in users' feeds, much like Instagram and Facebook. These ads come in various forms such as sponsored videos, branded filters, and even in-app shopping options that allow users to buy products directly from the app.

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Live Gifts

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However, there is more to TikTok's monetization strategy. The app also features "Live Gifts" which permits users to send virtual gifts to creators during live streams. These gifts can be purchased with real money, and the creators receive a cut of the revenue. This not only generates revenue for TikTok but also encourages creators to produce more live content, keeping users hooked and coming back for more.

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Creator Funds

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Another source of income for TikTok is its Creator Fund. This feature enables creators to earn money through the app by monetizing their content. TikTok takes a cut of the revenue from the ads displayed on their videos and shares it with the creators. This is a win-win situation for both TikTok and the creators, as it allows creators to earn money and TikTok to keep its creators happy and engaged. YouTube recently rolled out a similar program for its creators.

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Partnerships, Collaborations, and Licensing

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TikTok also makes money through partnerships, collaborations, and licensing deals with media companies and music labels. They have also been experimenting with a feature where TikTok users can pay a subscription fee to access exclusive content and features.

In conclusion, TikTok's monetization strategy is multi-faceted, like a diamond, with advertising, live gifts, the Creator Fund, partnerships, and subscriptions all playing a part. But at the core of it all is the app's ability to tap into our emotions and keep us hooked for hours. So, the next time you find yourself aimlessly scrolling through TikTok, remember that the app is cashing in on those feelings of joy, laughter, and FOMO.

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