TikTok’s Billion

The app’s livestreaming section has turned into a huge business as users pay for quick hits of cheap, personalized (and frequently bizarre) entertainment.

It’s August, but Santa Claus is hard at work. No, he’s not busy checking his lists or helping the elves make presents for all the good little children around the world. He’s livestreaming on TikTok, where he has 1.3 million followers.

And this year, Santa’s the one with the wish list. He’s hoping that the people watching his livestream will send him digital gifts using TikTok Coins, a currency that allows users to effectively beam cash to their favorite creators by purchasing playful digital icons: stars, owls, school buses, roses. As Christmas carols play in the background and the tips roll in, Santa thanks the senders with a jolly belly laugh. He never seems to talk about Rudolph or Mrs. Claus or the North Pole. In fact, he doesn’t really talk about Christmas much at all—he’s much too busy promoting his subscriber-only chat. “It’s so much fun!” he says.

Santa’s performance is far from the weirdest thing happening on TikTok’s livestreaming platform. I’ve spent hours scrolling through its dedicated tab in the app, and what I’ve seen has reconfigured my understanding of TikTok altogether. One man slaps himself every time he is given a gift. Another eggs his audience on with a counter set at 9,999,999,999,999, one below his goal of 10 trillion: Certain gifts move the number down; others move it up. (He feigns disappointment when one viewer sends him spiraling back down to 9,999,999,999,919.) “Sleepfluencers” livestream themselves, well, sleeping—sometimes earning tens of thousands of dollars a month—and salespeople hawk wigs, crystals, and fast fashion, QVC-style, around the clock. Name hustlers write your name on-screen, in various pleasing ways, if you send them gifts. I recently paid one a few cents to burn my name into a Popsicle stick. It was like striking a match, the flash of attention. Then it was over. I swiped away.

TikTok Live is its own distinct section of the mega-app, though the algorithm will occasionally surface livestreams in the app’s main feed. Last month, many people who don’t use TikTok got their first glimpse at the culture on Live when PinkyDoll, a 27-year-old streamer in Montreal, went viral for her non-player character, or NPC, work. She pretends to be a background character in a video game until she’s given gifts by the audience, which animate her. PinkyDoll says things like “Ice cream so good” over and over again with robotic precision, earning her up to $3,000 per stream, which typically run one to two hours each. NPC streaming is all over the Live tab, yet it represents only a small sliver of what’s unfurling there at any given second.

The livestreaming section is a nonstop online carnival. It is weird and flashy and maximalist and messy—and it is also big business. Market analysts estimate that users are likely spending billions of dollars there. TikTok may be many things to many people—national-security threat, mind reader, grief enabler, teenage talent show—but it is one thing for certain: a platform that its owner, ByteDance, is aggressively building into its own internet subeconomy, where products are sold and riches gained in the strangest of circumstances. “Dance videos” may be the stereotypical content of the app’s powerful For You feed, but that’s only a very small portion of TikTok; today, those algorithmically served bits and bobs feel more like a hook to pull users into a sprawling marketplace, where money changes hands to the benefit of the app making it all happen. ByteDance takes its cut of each of those gifts for Santa, after all: It splits revenue 50–50 with creators after fees are deducted, a spokesperson told me.

Read: Please get me out of dead-dog TikTok

That adds up to a lot of money for the platform. Earlier this year, TikTok became the first app to exceed $1 billion in consumer spending in a single quarter, per Data.ai, an app-analytics company. To do so, it beat out massive gaming apps such as Candy Crush and Roblox. A major chunk of that spending is rooted in TikTok Live: More than 99 percent of in-app purchase revenue in the U.S. came from people buying TikTok Coins, the currency used to give creators gifts, according to Data.ai. Those gifts, TikTok is careful to note, don’t confer monetary value directly; instead, they contribute to a creator’s overall “popularity” score, which earns them Diamonds—another gamified currency that can be cashed out for actual money. (Although people can give creators gifts on regular TikTok videos, the majority of Coins go toward Live gifts.) Sensor Tower, a market-intelligence firm, estimates that consumers have spent $9 billion on TikTok Coins worldwide since the app’s launch. And when purchases are made through Apple’s App Store or Google’s Play Store, those companies take a commission: Creators make money for TikTok, which makes money for the tech giants.

Giving a gift on TikTok is very cheap and, crucially, very easy. One popular gift is a digital rose, which costs one Coin, or somewhere around a penny, depending on what package you buy. A more expensive gift, like a cowboy hat, will cost you 199 Coins, or about $2. Zach Fitch, a campaign strategist at the influencer-marketing firm Ubiquitous, thinks these low prices attract users who may be otherwise unwilling to pay for content. They’re microtransactions, essentially: examples of the sort of spend-it-and-forget-it ethos that applies to a million cheap mobile games. “It just encourages people, I think, to make really, really small microtransactions that make them feel like they’re not really doing anything,” Fitch told me. “They’re having fun or laughing with their friends.”

Culturally, TikTok Live spending seems distinct from spending on other livestreaming platforms. Twitch allows its creators to earn tips from fans via a similar system, called Bits, but the dynamic there is fundamentally rooted in fandom: You watch a given streamer play Call of Duty for hours; you support them with some cash. On TikTok, you’re always ready to swipe to the next thing: The interactions can be quick and transactional. You’re spending a few cents to have a person—sometimes off-camera—write your name in cursive. It could be anyone, anywhere. You’re paying to be entertained.

For that reason, calling these payments “tips” isn’t quite right. You’re not offering gratuity; you’re paying up front for a sliver of attention or a slice of control. You don’t tip a livestreamer because you enjoyed watching them pop a giant water balloon; you give them one digital rose with the explicit purpose of adding more water to an unpopped water balloon—over and over, until the water balloon swells into a nearby needle and explodes. The audience is part of the performance.

From the March 2023 issue: We’ve lost the plot

That we want so badly to participate in the show may seem new, but it’s really not. In the aughts, reality shows such as American Idol pitched a “democratization ethos” wherein big media companies allowed “quote-unquote ‘ordinary’ audiences to participate in the spectacle,” Brooke Erin Duffy, a professor in the communications department at Cornell University, told me. The new-media companies of the internet era likewise offered us some agency, the opportunity to talk back. Livestreaming, on TikTok or off it, builds on this participatory tradition. As viewers, “we don’t want to be at the sidelines,” Duffy explained. “We want to participate in the game.”

My colleague Megan Garber recently argued that we live in an age of “immersive amusement,” in which we expect everything to be entertaining. Nowhere does that seem more readily apparent than on TikTok Live, where creators are at work nonstop, trying to hold audiences’ attention for as long as possible. On the one hand, Live seems to give creators a new way to monetize their work; on the other, it’s hard not to feel a little squeamish when you see people working so hard for cents on the dollar. But then, maybe we’re all too busy paying someone to burn our name into a Popsicle stick to notice.