When TikTok makes more, its creators make less: the bitter truth behind TikTok’s Creator Fund

By Malavika Pradeep

Published Jan 26, 2022 at 10:42 AM

Reading time: 3 minutes


On 23 July 2020, TikTok announced the launch of a monetary programme “to help support ambitious creators who are seeking opportunities to foster a livelihood through their innovative content.” Dubbed TikTok Creator Fund, the platform dedicated $200 million to revolutionise its creator economy in the US while encouraging them to do what they love. Six days later, TikTok witnessed an incredible response to the initiative. “We are excited to share that we expect this Fund will grow to over $1 billion in the US in the next three years, and more than double that globally,” the platform wrote in a press release at the time.

Close to the end of 2021, TikTok hit a major milestone of one billion monthly users and these numbers have only skyrocketed since. In fact, the platform’s parent company ByteDance made a whopping $58 billion just last year—a 70 per cent year-on-year increase, to be exact.

‘Wow, with these statistics TikTok’s creator economy must be booming,’ I hear you say. On the surface, yes, the gen Z-first platform may scream “Hey! We’re paying independent artists!” out loud with its Creator Fund, but a recent wave of revelations, first highlighted in a video by Hank Green—an OG YouTuber, TikTok star and founder of VidCon—suggest a concerning and rather incognito gap in how TikTok pays its creators.

Before we get into the thick of it, let’s analyse how social media companies typically go about their creator programmes. In 2007, YouTube established the YouTube Partner Program (YPP) which essentially enables revenue sharing on the advertisements that play before a creator’s video. Here, 45 per cent of the money earned goes to YouTube while the creator gets the rest 55 per cent. In his video, Green explained how the Partner Program has redefined the entire “history of online media.” Rightly so.

Given how the program’s revenue ratio has not changed ever since its introduction, it’s safe to say that as YouTube grows, so will the amount creators make from their videos. On the other hand, TikTok’s monetisation structure is entirely different. Unlike YouTube, ads on TikTok are run between videos rather than on them. So in this case, it’s practically impossible for creators to earn ad revenue with their content on the platform.

This is where TikTok’s Creator Fund came in: pitched as the coveted solution to monetisation which definitely caused a collective sigh of relief.  Although the platform hasn’t exclusively stated the metric it uses for Creator Fund payouts, Green believes it’s estimated by watch time. According to his calculations, he theorised that TikTok looks at the watch time generated by all the creators who have enrolled in the Fund. The platform then splits the $200 million between all of them proportionally—with more money going to creators whose content bought in more watch time, of course.

Now, $200 million is no joke. But the problem arises because this number is static. That is, no matter how many users sign up for the app, how much money TikTok makes and how many creators are enrolled into the programme, the platform will always pay $200 million to its US-based creators. Remember that this is a static pool of funds that we’re talking about at the end of the day. In short, as TikTok grows, the size of its Creator Fund does not. And as Green puts it: “When TikTok becomes more successful, TikTokers become less successful.”

Imagine baking a cake and inviting everyone in the neighbourhood to come over and have a piece. But in this case, the biggest chunks go to the ones you deem are more deserving with a secret metric of judgement. Not the most fitting example but you get the point. The more creators who join the Fund and make good content that gathers views, the less money there is to go around.

After tracking his TikTok earnings for over a year, Green explained how he used to make five cents per thousand views. In the recent months, however, his earnings have reduced to two cents per thousand views. Side note: the creator has over six million followers on his TikTok account.

Following Green’s revelations, other stars like Safwan AhmedMia and MrBeast posted screenshots of their own Creator Fund earnings. While the former had earned £112 (around $150) from gathering over 25 million views on TikTok since April 2021, the latter made close to £11,044 ($14,910) with one billion views.

“The Creator Fund is one of many ways that creators can make money on TikTok,” a TikTok spokesperson told TechCrunch, when the outlet reached out with insights from Green’s video. They then outlined new initiatives like the TikTok Creator Marketplace—which helps brands connect and collaborate with creators—along with the recent launch of a feature that lets creators receive tips at any point rather than just on livestreams.

“We continue to listen to and seek feedback from our creator community and evolve our features to improve the experience for those in the program,” the spokesperson concluded. It’s worth noting that both the new features mentioned by TikTok are already natives of YouTube.

That being said, it can’t be denied that every other social media company has tried to rip the mantras behind TikTok’s booming success over the past few years. While YouTube established a $100 million creator fund for Shorts, Snapchat is currently offering cash prizes for Spotlight challenges. Instagram is also in the mix by empowering creators to make more Reels with gamified cash bonuses.

“When we say TikTok is revolutionising the creator economy, what we actually mean is that creators are building and leveraging the audience they amass on the platform,” TechCrunch noted. “But by the numbers, TikTok isn’t putting its money where its mouth is to actually support creators.” Meanwhile, Green is encouraging other creators to organise and speak up about their earnings themselves—given the fact that TikTok is “not sharing anywhere near enough” on the matter.

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