“Will a TikTok ban significantly impact creator economy startups? Not really, founders assert.”
President Joe Biden has officially signed a bill, heightening the possibility of a TikTok ban, signaling a potential shift in the social media landscape. While some in the creator economy express fatigue over previous false alarms, they’re adopting a more nonchalant attitude this time around. Eric Wei, co-founder of Karat Financial, reflects this sentiment, stating that while a TikTok ban might have been devastating two years ago, the current reaction is more subdued.
Wei’s confidence stems from the belief that successful creators drive the success of startups within the creator economy. As a Series B startup offering financial services to creators, Karat Financial isn’t overly concerned about the potential fallout. In fact, Wei sees the situation as an opportunity for growth. He suggests that startups catering to creators could frame a TikTok ban as an impetus for diversification, offering solutions to support creators in new ways.
Despite the gravity of the situation, the threat of a TikTok ban feels somewhat familiar, akin to “The Boy Who Cried Wolf.” However, this time, the stakes are higher as the bill requiring ByteDance to divest TikTok if it fails to secure an American buyer within nine months has been signed into law by President Biden.
The creator landscape has evolved significantly since 2020, when the prospect of a TikTok ban first arose during Donald Trump’s presidency. Now, with Trump’s bid for the presidency again and his newfound opposition to the ban (due to concerns over Meta’s potential dominance), established creators have had ample time to adapt to the potential absence of TikTok. Over the past three years of legal battles and with two different presidential administrations, they’ve been preparing their businesses for a TikTok-less world.
Eric Wei, while observing a group chat among creators, notices a lack of panic. Instead, he sees humor and resilience, with creators joking about potential shifts and disruptions. However, not all creators are taking the situation lightly. Wei highlights that certain types of creators, such as TikTok livestreamers and those who monetize through TikTok Shop, could face significant challenges. Platforms like YouTube Shorts and Instagram Reels may not offer comparable features, potentially leaving these creators in a vulnerable position. Additionally, politically-oriented creators may find themselves without a suitable alternative, particularly with Instagram Reels recently imposing restrictions on political content.
While established creators may have been preparing for this eventuality for years, newer creators could be hit harder by the transition away from TikTok, especially if they haven’t yet built followings on multiple platforms. Despite the challenges, creators have had ample time to anticipate and strategize for the potential ban.
Harry Gestetner, CEO of creator monetization platform Fanfix, emphasizes that creators are not caught off guard by the situation, having discussed it extensively over time. He remains optimistic, noting that the ban is not immediate, allowing creators around a year to transition their audiences to alternative platforms.
James Jones, CEO of Bump, a financial services company for creators, is approaching the situation with a similar mindset, viewing it as a parallel opportunity.
Jones emphasizes that the TikTok ban will undoubtedly send ripples through the creator community. However, creators have become increasingly adept at diversifying their monetization strategies across various platforms. He draws parallels to the demise of Vine, which paved the way for TikTok to emerge and thrive in its absence.
TikTok’s unique appeal lies in its ability to propel creators to fame, with the For You Page offering unparalleled discovery potential. However, platforms like Instagram Reels and YouTube Shorts, once considered inferior alternatives, have since matured and now offer viable alternatives.
Initially, TikTok’s Creator Fund, a fixed pool of funds distributed among eligible creators, provided limited support for creators relying solely on views. Recently, TikTok introduced its Creativity Program, offering more favorable terms, but not all creators qualify. As a result, many creators are compelled to diversify their content across multiple platforms to establish a stable career. YouTube Shorts has implemented revenue-sharing models similar to its Partner Program, while Instagram Reels offers sporadic bonus programs.
Gestetner echoes these sentiments, noting that some creators have grown disenchanted with TikTok due to ongoing issues such as account removals, shadow banning, and lack of responsiveness from the platform. Such challenges have underscored the importance for creators to spread their efforts across multiple platforms to mitigate risks associated with platform dependence.
“Five years ago, most creators focused their efforts on a single platform,” he noted. “Now, it’s common for creators to have a presence on at least three, and sometimes up to five, six, or even seven platforms.”
This imperative for diversification extends beyond platform usage to income streams. Creators must diversify their revenue sources, including fan memberships, product sales, live events, and educational courses.
“In our business, we anticipate either no impact or potentially a positive one,” Gestetner remarked. “The ban reinforces creators’ skepticism towards major platforms and their reluctance to rely solely on one for monetization.”
While the TikTok ban might create an opportunity for a new short-form video app to emerge, it’s unlikely to replicate the sudden proliferation seen when Elon Musk acquired Twitter. Wei referenced Triller as an example, noting initial excitement about it as a TikTok alternative, which waned over time. Creators are unlikely to invest in a new platform that may not endure.
However, the absence of TikTok will still be felt, particularly by fans. Gestetner believes that platforms like YouTube Shorts and Instagram Reels are improving, but acknowledges that the TikTok experience will be missed by many.