This transcript was generated from the episode audio and may contain minor errors.
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Monetizing content on platforms like TikTok has opened up all sorts of pathways and avenues for creators. In the book I published last year, Gonzo Capitalism, I told the story about this guy who makes money as a sleep fluencer, basically paying people to keep him awake at night, all through the night in Australia, which is actually our day over here in North America. And he's earning $30,000 a month from this ridiculous, crazy, absurd project. And it's not just that, TikTok allows creators of all kinds to make money. However, TikTok, not shockingly, makes a lot of money itself.
And so here we're gonna hear today from a creator who's like, okay, I wanna make some money here, but how much commission is TikTok actually taking? Or ByteDance, the parent company of TikTok. They actually take a lot, like a huge commission. You're gonna be shocked to hear the percentage if you did not know this. And so let's talk a little bit about that commission process and discuss perhaps some strategies to effectively manage and maximize a creator's earnings on a platform such as TikTok.
I'm gonna title this TikTok as taking way too much commission, just because that's kind of the reality. So let's give a shout out to our sponsor and then hear Theo's question. [Music]
Hello, I'm Theo from San Francisco and I've recently started monetizing my content on TikTok. I've heard that TikTok takes a commission when withdrawing payments from the greater fund. Can you clarify how this works?
I drive reading and watching some videos, but it was a little confusing. Also, are there strategies or I don't know, best practices to minimize these fees and maximize my earnings when we're drawing from TikTok. [Music]
Theo, let's get the bad news out of the way first. Does TikTok take a commission? Yes, how big is that commission?
You might think 10%, you might think 20%. Well, guess what? And we could just kind of keep going. TikTok takes 50%, sometimes more, of every gift that you receive from viewers. So if you have a streaming model like Jakey, the sleep fluencer guy, all through the day or night, people are sending you gifts, these digital tokens, which you can then cash out.
In the cash out conversion process, you're going to lose 50% or up to 70%, some reports say, but I think 50% is the norm. So that is pretty steep, right? And it's basically just the cost of using their platform to monetize your content. They're also not super transparent about it. There's a whole conversion process, which is kind of designed to create confusion or at least distort the reality of what's happening.
So that's the bad news. As I said, the good news is, well, if you're bringing in enough people, then maybe it's still worth it. I mean, that's why Jakey, the sleep fluencer, was making $30,000 a month, at least at the height of his business. And I've heard from other people that are doing really, really well. The other thing I think is like, let's say you don't have an audience of that size.
Well, there's still lots of things you can do as a streamer or using social media. You could be selling your own products. You could be bringing people off social networks to purchase from you. And that's what a lot of people do. And that way they're kind of avoiding the whole commission process.
Now the platforms don't love when you do that. So they're gonna show your videos less and such. These are all like different considerations that you're gonna have to take into account. Like how much visibility do I want to receive from the platform? Well, if I want that, then I'm gonna have to pay a lot for that.
Or do I want to have a smaller audience, but keep more of the money myself? Again, you just have to decide what is your business model. Sponsored content, that's also completely separate. If you're working with an agency and there's a sponsor deal, well, the agency is gonna take commission, but it's gonna be more like 10 or 20%. It's not gonna be like the 50% or higher.
So it really depends on what you're doing. I always encourage people to not get caught up too much into that stuff. Focus mostly on building your audience. If you have an audience, there's a lot of things you can do. If you have an audience, then you're somewhat platform agnostic.
You can take your audience somewhere else, or at least encourage them to come somewhere else. You can change business models over the years. I never used to do anything with sponsors, and then since I've had the podcast, that's the business model for that. I used to sell a lot of digital products, now I sell very few, and I just kind of focus on creating. So, gotta figure out what works for you, but I think audience first is always the best strategy, at least the big picture strategy, and then you go from there into the monetization.
Listeners, let me know what you think. If you have an experience you wanna share or question, sidehustleschool.com. We'll continue to feature them throughout the year, along with updates from listeners as they launch and grow their projects. I'm always cheering you on, and I'll be here every day. My name's Chris Guillebeau, this is Side Hustle School.
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From the Onward Project.
