How to make money from a TikTok hit. (Hint: You won't get it from TikTok.)
Peter Kafka
5 min read
"Boy Room" is a hit TikTok show that features comedian Rachel Coster visiting miserable places where young men live. Amazon is sponsoring the second season of the show, which is owned by Gymnasium, a TikTok-centric digital media studio.Leeban Farah/Gymnasium
TikTok! It's still here in the US. That's good news for creators that make money working on the platform.
Except: Most successful creators see very little money from TikTok itself.
Gymnasium cofounder Adam Faze explains how to turn TikTok eyeballs into money.
A week ago TikTok disappeared in America. Then it was back. It looks like it will stay that way, for at least a month or two — even though the legal questions around its existence remain … fuzzy.
This is good news for Adam Faze, who makes his living on TikTok. Faze co-founded Gymnasium, a content studio that specializes in TikTok videos, with some success: Perhaps you've seen "Boy Room," a can-you-believe-this-filth tour of young men's ... terrible living spaces.
The first season of "Boy Room" was a viral hit for Faze. But Faze says his company made almost zero dollars from its popularity. (Then again, it didn't spend much, either: Faze says each episode involved a crew of three people and cost around $2,000 for a two-minute show.) The money is coming in the second season of "Boy Room," which Amazon is sponsoring, and which will feature hints on ways to fix your Boy Room — which will involve buying things from Amazon.
I talked to Faze this week because there's been a lot of discussion about how important TikTok is to creators and influencers who make money on TikTok. But there's not a lot of discussion about how that actually works.
The TLDR: Being popular on TikTok doesn't translate to making money on TikTok, since TikTok doesn't routinely share its advertising money with its creators (the only TikTok competitor that actually does this is YouTube). The way to make money on TikTok is to make something popular that brands will want to be associated with, and work out deals with them directly.
Here's an edited excerpt of my conversation with Faze. You can hear the whole thing on my Channels podcast.
Business Insider: Why start a business focused on TikTok, as opposed to any other video platform?
Adam Faze: It's the quickness of how we're able to see if we have a hit or not. On TikTok, we usually know within the first three episodes we post if we have a successful show. That algorithm is just so phenomenal at defining who would or would not like something that, for us, it just is a no-brainer to test shows [on TikTok] first.
How do you make money from a viral hit on TikTok?
The benefit of coming into the space years after TikTok was introduced is we never revolved our business model around "How much is TikTok going to pay us?" We went into this company thinking we would never make a dollar from any platform.
We've probably generated about a half a billion views on TikTok since the company started. I think we've maybe made less than $20,000 from TikTok.
YouTube remains the only big video platform that consistently shares ad revenue with creators. Instagram, Snapchat, TikTok do not.
The reality is, short-form content is a great ad business for the platform. It's not for the creator — except for things now like TikTok Shop, where you have individual creators who are making hundreds of thousands of dollars a month off of, basically, QVC videos.
I think TikTok's opinion has always been that you use our platform to make a name for yourself, to become a star — and then you will find other ways to monetize off the platform.
So you often hear creators talking about a brand deal. What does that mean in TikTok terms?
For your regular, everyday influencers that have a following, fashion companies and airlines and theme parks are going to sponsor that influencer. They'll tell them to make a video and they'll say, "Hey here's $30,000, go make a video in the style that you normally would. And just be supportive of the business."
Mention us in some way and show off the product.
For us, we really want to find truly organic ways of bringing a sponsor into our content.
You said you can figure out if a show is a hit after three episodes. Do you have hunches prior to that? Did you think "Boy Room" was going to be a hit, or was it just random?
We only release things we're a fan of. So we always have a hunch that we think it's going to work. Out of the six shows [we've made] they actually were all a success, viewership-wise. Sometimes they were just very hard to monetize.
Unfortunately, that is a huge part of what allows us to greenlight shows — do we think we would be able to make money on this?
So, not just "Will people watch it?" but "Is this something an Amazon or someone else would sponsor?"
I'll give you an example. We used to make a show called "Clockwork Dynasty" with these two watch dealers from 47th Street who are dear friends to this day. It was basically "Pawn Stars." We built their watch shop in our office. People would come on the show and buy, sell, trade, luxury watches.
That show had a consistent 1 million-plus viewers an episode. But our audience was 99% boys between the ages of 18 and 24, which in the watch space isn't that monetized.
They're not buying luxury watches.
And so a show like that, sometimes you have to do the math. Unfortunately, it didn't make sense for us to keep making the show, even though we love it and people love it as well.
