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Chad Spangler films the video.
Courtesy of: Chad Spangler
As TikTok CEO Shou Zi Chew faced hours of grueling questioning from members of Congress in late March, small business owner Chad Spangler watched in frustration.
The bipartisan congressional committee was exploring how TikTok, the massively popular short video app owned by Chinese company ByteDance, could pose a potential privacy and security threat to American consumers.
Representatives questioned Chew about the app’s addictive features, potentially dangerous posts and whether US user data could end up in the hands of the Chinese government. Politicians are threatening a nationwide ban on TikTok unless ByteDance sells its stake in the app, a move China said it “strongly” opposes.
But this is not the only source of opposition. Creators like Spangler, who sells his artwork online, worry about their livelihoods.
TikTok has emerged as a major part of the so-called creative economy, which has swelled by more than $100 billion annually, according to Influencer Marketing Hub. Creators have built lucrative partnerships with brands, and small business owners like Spangler are using the large audiences they’ve built on TikTok to promote their work and drive traffic to their websites.
“This is the power of TikTok,” said Spangler, adding that the app drives the majority of sales for his company, The Good Chad. “They’ve captured lightning in the bottle that other platforms haven’t been able to do yet.”
Spangler has more than 200,000 followers on TikTok, and his business brought in more than $100,000 last year, largely because of his reach there. Influencer Marketing Hub data shows that the average annual income of an influencer in the US was more than $108,000, as of 2021.
TikTok has seen a huge rise in the US, capturing an increasing amount of consumer interest from people who are used to spending more time on Facebook, Instagram, Snapchat, and Twitter. In 2021, TikTok has surpassed 1 billion monthly users. August Found a Pew Research Center survey 67% of teens in the US use TikTok and 16% said they use it almost constantly.
Advertisers are watching with eyeballs. According to Insider Intelligence, TikTok now controls 2.3% of the digital ad market worldwide, putting it behind only Google, including YouTube; Facebook, including Instagram; Amazon and Ali Baba.
But with Congress weighing in on TikTok, the app’s role in the future of social media in the US is shaky, as is the sustainability of the companies that have come to depend on it.
TikTok CEO Shou Zi Chew testifies before the House Energy and Commerce Committee hearing on “TikTok: How Congress Can Protect American Data Privacy and Protect Children from the Harms of the Internet,” on Capitol Hill, March 23, 2023, in Washington, DC.
Olivier Dollery | Afp | Getty Images
In April, Montana lawmakers approved a bill that will ban TikTok from being offered in the state starting next year. TikTok said it opposes the bill, and claims there is no clear way for the state to enforce it.
Congress has already banned the app on government devices, and some US officials are trying to ban its use entirely unless ByteDance is pulled.
ByteDance did not respond to CNBC’s request for comment.
The White House also threw its support behind a bipartisan Senate bill in March called the Restriction Act, which would give the Biden administration the power to ban platforms like TikTok. But after a major setback, the momentum behind the bill has slowed dramatically.
While the debate is gaining momentum, the creators are in a state of uncertainty.
Creators are turning to other platforms
Vivian Tu, who lives in Miami, is preparing for a potential TikTok ban by working to build her audience and diversify her content across multiple platforms.
I started posting on TikTok in 2021 as a fun way to help answer co-workers’ questions about finance and investing. By the end of her first week on the platform, she had more than 100,000 followers. Last year, she quit her job on Wall Street and in tech media to pursue content creation full time.
Tu shares the videos in an effort to act as a friendly face of financial expertise. Apart from posting on TikTok, she uses Instagram, YouTube, and Twitter, and also runs a podcast and weekly newsletter.
Tu said she started building her presence on multiple platforms before a possible TikTok ban entered the equation, and hopes she spreads her sources of income enough to be okay if anything happens. But she described her work on TikTok, where she has more than 2.4 million followers, as her “pride and joy”.
“It would be a huge disappointment if the app was banned,” she told CNBC in an interview.
The largest social media companies in the United States are preparing to try to fill the void.
meta, which owns Instagram and Facebook, is pouring money into the TikTok replica, called Reels. Users reshare videos more than 2 billion times a day, CEO Mark Zuckerberg said on the company’s earnings call last month, a number that has doubled in the past six months, adding, “We think we’re getting share in short video.”
pop And YouTube is pouring billions of dollars into their short video features to compete with TikTok.
Tu said it expects an “exodus” of creators streaming on other platforms if TikTok is banned, but the app is hard to beat when it comes to discovering new and relevant content.
“That’s why someone like me, who doesn’t have a single follower, who doesn’t have a single video, can make a video and have the first video get 3 million views,” she said. “This really doesn’t happen anywhere else.”
Emily Foster with her stuffed animal.
Source: Emily Foster
Small business owner Emily Foster agrees. She said other media platforms can’t come close to offering the kind of exposure they get from TikTok.
Foster designs stuffed animals that she sells through etsy shop and its website is called Alpacasews. She said she started hand-sewn plushies as gifts for her friends and at a cost. But when a video of a dragon she made during the pandemic received 1,000 views on TikTok — a small number for her these days — she says it gave her the confidence to open an Etsy shop.
“I was like, ‘Oh my God, this could be something,'” she told CNBC.
Foster’s designs quickly gained traction on TikTok, where she now has more than 250,000 followers. She recently shared a behind-the-scenes video that showed her packaging an order for someone who ordered one of each stuffed animal in her Etsy shop. The video quickly garnered over 500,000 views, and her entire inventory sold out within a day.
“The audience is not there.”
Demand for Foster’s products soon outstripped her ability to make them by hand, so she turned to crowdfunding site Kickstarter to raise money for manufacturing costs. It raised over $100,000 in the most recent one Kickstarter campaignwhich came after three of her videos went viral on TikTok.
“My business wouldn’t be what it is today without TikTok,” she said.
With the threat of a TikTok ban looming, Foster said she’s been sharing content across Instagram, YouTube and Twitter to try to expand her following. At this point, she says, her work will probably continue if TikTok goes away, but that will be difficult.
“The audience just doesn’t exist, especially for young creators,” she said.
Aside from the money, Foster worries about losing the following she’s worked so hard to build. She said she met “amazing” friends, artists and other small business owners on the platform.
She said, “You are never alone. It means a lot.” “I’m nervous about potentially losing sales, maybe losing customers, but it’s more than just losing a community that would break my heart.”
For Spangler, the artist, the controversy surrounding TikTok is maddening not only because of what it might mean for his livelihood, but because it seems to him that lawmakers are unaware of what the app does.
Spangler recalls a Republican congressman asking Chew in his testimony about whether TikTok connects to a user’s home Wi-Fi network.
“If you had even a working knowledge of anything related to technology, if you watched those sessions, it was pretty embarrassing,” Spangler said. “What’s even more frustrating is that this could potentially be taken from me by people who have no idea how any of this works.”
Spangler directed his anger at his artwork. After the hearing, he designed a T-shirt featuring a zombie-looking congressman with the words “Does TikTak Use Wi-Fi?”
Share a video about it on TikTok and make nearly $2,500 in T-shirt sales in less than two days.
He watches: TikTok’s regulatory scrutiny could be a tailwind for Meta
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