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Capital Structure Ratios – Meaning and Importance
Capital structure ratios are very important to analyze the financial statements of any company for the following reasons: Same Business Can Yield Different Returns Investors understand that the way a business is funded can have a lot of impact on the returns it provides. Although the total return provided will always be the same, the […]
How Reserve Requirements Work ?
Reserve requirements are one of the most important features of modern central banking. We hear about reserve requirements almost every day in the media. When central banks like the Fed change these requirements, it is said to have a huge impact on the markets. Liquidity worth billions of dollars is said to be either released […]
What are Soft Forks?
In the previous article, we have already read about cryptocurrency forks. We now know that a cryptocurrency system is basically software. Just like the software on our phones and laptops cannot stay static, the software responsible for cryptocurrencies cannot stay static either. It needs to be changed from time to time. The changes are done […]
When we talk about social media, we often refer to companies like Facebook, Instagram, Twitter, and LinkedIn. However, in the past few years, another company has emerged as a huge player in the social media space. This company has created an application that is known for having high levels of user engagement. The application being talked about is TikTok.
TikTok has taken the world of social media by storm. This is because millions of people are using this application to create content. This application is very successful amongst the younger target audiences. As a result, Bytedance, the Chinese company which has created TikTok has become the most valuable start-up in the world. The company is valued at close to $280 billion.
However, despite its high levels of user engagement, TikTok seems like an application that is not meant for entertainment only. Most people around the world are not clear as to how TikTok generates revenue and how it has become one of the most valuable applications across the world.
In this article, we will explain the business model of TikTok which enables it to generate significant amounts of profitability.
The business model of TitTok is that it allows users to create, watch and share 15-second videos. These videos can be made catchy since TikTok allows the users to choose from various background filters and various sounds. The application has been downloaded and installed more than 315 million times across the globe!
Even though TikTok is a free app from the consumer's point of view, it still has various revenue streams which it can draw upon. TikTok has developed various forms of advertisements that it uses to make money on its application. Some of the most prominent revenue streams have been listed in the article below:
TikTok has been tight-lipped about the profit that it generates. The company does not share too much information. Also, since it is based in China, there is even more opacity as information shared for regulatory purposes is also not known. However, some estimates show that TikTok derives most of its revenue from China.
Estimates suggest that the company generates 80% of its revenue from China. However, the company is now trying to diversify into the global marketplace. The company faces a significant challenge as it has been banned in several countries because of the fear that it may be sharing user-generated data with the Chinese government.
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