TikTok and the rise of new social
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You got to appreciate IT. It's like everyone wanted vine to come back .

and here IT is this is a and they're in kk. It's interesting thought this is one of the first chinese apps that has had a huge success here in the U. S. Twitter IT is bigger than Snapchat.

IT is literally an actual global community. Recently, a new APP called lasso was launched on the U. S. Market, short video format targeted for teens. And a few days after we learned that facebook was behind this new mysteries APP, a few weeks later, tenants also launches a new short video APP targeted for teens.

Both of these new apps could easily be just called copycats of the hugely popular tiktok, or musically, as he was called in the western market up until this summer. That's what today's episode is. Gonna be about tiktok, their rise to a global fame. And also, if a chinese company creating a new teams, s APP for the western world is a one time thing, or maybe the first step of a big .

new trend. Welcome china cast the fascinating.

I M. So a point of various studies, china's gaming in the street is now in fact the largest in the world. You may know their message test for international show IT state .

is .

claimed the apple major deal over .

in china, your chinese tech giant ten sent leading at eight point six billion lar opposition to buy a major state, a super cell.

forty two point three billion dollars in sales locked by a chinese e commerce site in one wild day.

About three years ago, musically blew up. I remember actually meeting them just a month or two after they just hit like number one, most Dolores ed APP in the us. Over the summer. And that was so shocking, right? For a chinese company to be able to do that.

So I think it's important to note that it's not so common for chinese apps or products, especially consumer facing digital, to do well sees. And I don't necessarily think that, that's unique to china. Better than going to any international market away from your home base is tough for any company and start up.

So I think it's worth pointing out that it's very significant that musically, which was headquartered in shanghai, did so well, a blending into north american markets and attracting teenagers from canon in the U. S. And then later from other countries. And and I think that part of that is due to the fact that is driven mainly by user generated content or ugc. So you imagine like if you open the APP and you see videos that are created by people in your country according to what's popular in your culture, is very easy for the kind of camelot ge itself as a local product.

I think the main reason why i'm so interested in this topic is, you know, we all knew about the user numbers of musically or tiktok, but now we're gonna see actual competition, you know, facebook getting in the game tends getting the game.

So IT, this feels a little bit like a few years back when he was all this hype about Snapchat and facebook trying check and then, you know, starting new features within instagram to compete with them as sa sa. And that's what we're gona talk about today. The rise of musically how is actually became this huge while being based in shanghai and also the upcoming war between facebook, ten cent and bite dance that owns tiktok.

But first, let's for our listeners that are probably not teens or not into new team trends, maybe go through what musically and tiktok actually is. Music actually launched as a lip sink APP, where basically users uploaded very short videos while they were lip thinking to like a favorite song they had and then later developed into having other types of short videos. But there's one consistent thing with all of these short videos, which is that they usually have a music background, and people are doing stuff to this music, either lip thinking or, you know, dancing or what not. They're using the apps in built in editing tools in order do their movements faster and like take me to the music and the .

beats yeah I think also just a fun fact is that uh when musically was first founded, the confounders wanted to create educational videos but then they had to make an abbot pivot when that wasn't working, and just something more entertainment focused, one of the confounders Lewis told me that they were in california. They could see a bunch of american teens like taking silly videos. And that kind of kick started their whole idea.

Of course, I don't know if is just that moment. There are a lots of short video products that have proceeded musically like vine, right, which R P. vine. But I think it's interesting that they had started off with something more serious and now it's the opposite.

yeah. So basically over the next few years, they are tried to quite A V C money from a and they also expanded aggressively, especially into europe and the U. S. And I think i've heard like crazy numbers, like in certain european countries, they basically have you know thirty to fifty percent of the like internet user based in terms of active users. And then after they actually became huge successful into west, we saw kind of the same type of behavior that sometimes happen on the chinese technology sector, which is a chinese internet company seeing what you are doing abroad. And so wait, this could actually maybe even work, Carry in china and just copy them.

So going in china, I remember when IT first launched, IT partnered up with rap of china. I don't know if you've ever watch rap of china, tom. I imagine you probably have Better things to do.

But IT was a rap competition which is actually pretty entertaining um and the competition, you know they had rappers um for all over china and then they had like a panel of celebrity judges endowing had partnered with rapp of china. I think you can see a lot of rap videos on downing as well, so that definitely help boost profile. Then after that, I think um people start noticing that is popular, continue to go even after the first season rap of china was over.

Obviously I guess there are people who haven't used musically or doing a good way to summer up its its short videos. Obviously I think about fifteen seconds or so pared with music. Music are very important part of IT.

But I think what makes you so addictive is that it's kind of an endless scrolling future. You have a video, you score up, there's another one you can keep doing that for hours, basically. And then if you like the video crater, you can obviously to the profiles see their videos.

Success yeah. And important to note, obviously, is that the company starting doing was bite dance at that time owner of 今日 头条， which was this already huge APP, and they were on this quest to build dominance on chinese internet markets with new apps and new products. I could you know, attract the Younger target group.

yeah. I think you I don't want to spend too much time on bite dance because it's huge company is one of the highest valued private companies. I think it's around valuation is more than uber, perhaps seventy five billion dollars or so.

But I guess what I would say about bye ancon, what they have done really well as that they were actually founded in twenty twelve, I believe, and they focused on like a one stop shop for news and that kind of content. But do the phone the two and twenty eleven and two thousand sixteen, the number of mobile internet users in china actually doubled from three hundred and thirty to fifty two, about seven hundred million people. And so like bite dance really caught china at the perfect time.

They're very, very early because you can imagine there's so many ways to get content now through your mobile phone, especially when IT comes to news. But I think bite dance was very early in terms of aggregating different types of news now that they've kind of mass mobile text content. I think short video, this is a natural transition.

So so obviously, you know, thanks to owning already a huge apps in china, also thanks to the sponsorship of rap of china, they could scale doing pretty fast. And I think by around April, may this year, downing had somewhere around three hundred million users, which actually is the reason we are here today, because around that point, they actually warm and acquired musically for almost a billion U. S.

dollars. And actually this summer, merging the two of them under the same brand, tiktok. But actually tiktok existed before he was kind of downs way to try to go global. And they were actually very strong in some southeast asian countries. But I think throughout the process, they're probably realized that the much faster role to global success is to just buy musically. And thanks to the huge u surveys back home in china and the huge valuation they could get through that you know they could literally just afford to buy their main global competitor using money they already raise from investors yeah .

I think more importantly, musically gave them access to markets that would be very hard for them to approach on their own.

So december twenty seventeen, by denser this conference and at this press briefing um I think the V P of corporate strategy you used to be at over china SHE said that they felt that you know countries in asia like japan and korea in your southeast asia culture, relatively speaking, is a bit closer to china so those are obviously, let's not say low hanging through but much more accessible where's a mature market like north amErica is much harder to break into. That's musically strength. They started off with teens in the U.

S. In canada. And then I think they got following in some countries in south america, europe as well. So it's kind of the other side of the world that takes I would have had to conquer on its own yeah.

that actually leads us into the first topic, which is this format of content, short videos, fifteen seconds, love music. Like, you know, we've seen a progression of content through mobile, right from the photos are instagram and then snap chat coming with shorter videos. And now we're seeing this progression into super short videos. Endless dream music is central that actually enables more people to create content without being like creatively. Ac, because it's only fifteen seconds and you always have a good song as a base.

I think with these really short clips, someone I say short I really mean um under a minute I think these really short video clipsed are also super compatible with things like memes, viral campaigns, stuff like that, right? Because you're not telling a story persue in this video is too short for that be just showing like a stunt, something crazy, something funny um and if it's like kind of campaign t tumbleweed where people roll around on the ground with western music in the background, um that's something that you couldn't really watch like a more than a minute of right but it's perfect for a few seconds so I think that made IT this new like music focused, super short video content really addictive and compelling, especially for Young people .

yeah so the two very interesting topics to discuss here is, number one, how this is impact. And now especially one facebook and ten center getting in there. But let's start with the second topic around this first, which is the fact that a chinese team with chinese entrepreneurs, chinese engineers based in shanghai manage to define and set a new global teen trend.

So I actually just hosted the panel recently where we discussed the globalization chinese take. And then one of the palace said something very interesting, referring to musically and tiktok. He said, you know, the designer of musically is world class.

He is a chinese guy, is awesome. Study that are like really top designs go in the U. S. And then this panel said, you know what, that's how easy IT is. Just go study at a really good design school, have a good taste, and then you can create after the western market is not that hard. Always seeing a new trend happening now with chinese entrepreneurs to create new western products out of the blue.

Um I would agree with part of that panel's response, but I have to think it's a bit more complex. So IT is true that a lot of talented chinese students then effort from overseas education, and obviously, it's not a one way thing, right? There are also contributing to whatever country in you're studying in, right?

So and would design like us to know with architecture of a lot of chinese friends who studied architecture in architecture schools, oversee europe, the U. S. And then when they come back, they're able to awesome of them, are able to use they've learned maybe western design concepts or whatever and apply that in china, where there's actually a lot more architecture projects because there's constant construction here.

And I think for a digital design, i'm sure there's there's a similar turn happening there, too. I think with musically, the thing that's a bit different though, as one, like I said earlier, very heavily driven by user generated content. And that sense as a designer, you don't need to do anything.

You just need to make IT possible for users to easily showcase their own content. right? Is about making their experience in the workflow super simple, their easy.

And your job as a companies make sure that you have local music. You have those copyright like you've obtained their rights to have local music because if i'm a team in the U. S.

And I want to use an american song and is not available, then that's a huge dishes for me, right? As a content. So I think in terms of like the visual design, because it's so ugc focus or user generate content focus, the designer just has to make IT like the U.

S. Has be per good. The user experience, the workforce have to be very easy. But in terms of like what you see and the visuals that comes from the users, I don't think the company can take credit for that.

Another way to look at IT is that, I mean, really skilled entrepreneurs worldwide are skilled entrepreneurs, right? Whether there are chinese, americans or swedish doesn't a matter. But I think we've seen a few years of all the talent in china being limited only to china, not because they don't want to go abroad because china has had so many opportunities.

So why should you try to do something else outside? You know with his huge growth over here and you know all the VC money floating around sa sra. But lately, the last few years, we've seen the chinese internet market mature way more. And and competition here is brutal nowadays in terms of being much easier for a lot of entrepreneurs to actually do something in brazil or in europe or in south asia.

Would you agree on that? It's true that things are more cut here, but I think it's also incredibly I mean, i've never been entrepreneur, so I can't speak crime experience, but I think it's incredibly discouraging to go into a foreigner.

I mean, it's true that china's internet industry has grown at great speed over the past ten, twenty years, but a lot of the products rely on a ton of local connections and knowledge, or the services are very localized. And because the chinese market is so huge, you can be a purely local market, do that super well and make a lot of money, and then with that money, then you can start preparing for overseas expansion. I think musically, in part because it's pivot into short video is so certain deputies, you know, they just went with IT.

My reaction to your question is that if that's the case, why haven't we seen more successful overseas chinese consumer facing products in clearly, it's not so simple, right? Even if competition is more cut. Third in china, not every chinese treatment ur can take its team into a new market, right?

But the question is if we will see more of because in some ways, musically workout of the first really big consumer heat from china.

Um i'm going to give you one of my noncommittal le answers. So I think what I can say that there's been an increase and interest from chinese companies to go overseas, you know in part because yes is super competitive of china, so you need to look for, let's say, Greener pastors or untapped markets, especially in southeast asia.

A lot of chinese companies have also wanted to go public overseas, you know, whether in hong kong or you are also exchange, but I do not know if they will be successful, right? Like I think a lot of IP s this year were disappointing for many of wide ranger factors, right, not just because of the companies themselves, but because of the geopolitical climate this year. So I think musically is very special too. I think like a success has a lot to do with the kind of market is in. So I can't really I don't know that I would say that we will see like a wave of musically level success from chinese entrepreneurs and is actually a .

very interesting discussion because i'm of the total opposite views basically just because there are so many things going on right now in china and we're getting in loads of top class talent like both chinese, you know, but also totally foreign entrepreneur s and creators and what not and and with all the VC money floating around with the deep pockets that exists here, we're seeing a lot of new Young entrepreneurs over here trying to create something for the world. But with china is a base only because they've got access to talent and access to capital here.

I don't think that it's because of a lack of talent that chinese companies will not be able to be successful overseas, right? I think they're talented entrepreneurs, software developers and designers in both markets. You know, looking at the U.

S. In china, I just think that like for any company that wants to make IT big overseas, either you create a product that's filling a gap. Maybe you're the first right first mover advantage and maybe musically was like that, right? Like they weren't that many fifteen second music based apps in north amErica when they launch.

So they definitely had a first move advantage and they localize super well and they spend a lot of effort like they had a an office in L A belief recruiting celebrity singers k wells in hollywood. So that was music. Is that advances, right? Or I think you just have to be you is a company or your product to your team is so much more experiences and what's available locally.

So maybe with huge U S. Tech corporate, they've been able to do this in many, many markets. So my point about chinese company struggling perhaps to expand overseas is simply because yeah not your home market.

So what's what's your advantage? Are you the first mover? Do you have a much more mature product um and product development team? Like what is that right? Because you're going have to fight with local entrepreneurs who like I don't think that you know like local entrepreneurs, other markets might copy chinese companies trying to move in, right? And if they had Better local connections or whatever than chinese companies will face the same barriers that foreign companies well, similar barriers that foreign companies face when they are in china.

Which actually takes us into next topic. So musically or tiktok have had first move advantage gone global down, a really, really good job. And now we're seeing you know the big giant facebook entering the space and probably feeling threatened by tiktok owning so many of the american and european and team and wanting to grab that market by themselves.

So before we start talking about, you know, that facebook is getting into this industry right now and what might happen, let's go through tiktok, their recent development and their future first. So actually, for me, one of the most impressive things about the tiktok or musically, is when I learned that, you know, in sweet, and I grew up in sweet, and obviously, so that's why this is even more relevant for me. But a survey showed that the main way to discover music among teams was tiktok or musically.

And we go to a remember that even though sweden is a small country, sweden is proud of one big thing, which is called spotify. So it's crazy that in the home country of spotify, another APP got the position of being the primary method to discover new music. And having a position like that in sweden, I E also, having positions like that in germany and france and bunch about the countries enables actually tiktok or musically to be a really good advertising channel when you can impact people that greatly and you actually look at doing in china, they've been doing quite a lot in terms of monetization of this exact type of product.

right? So you know, like all companies, whether the attack or in a fast moving consumer goods, everyone is obsessed with Young people, teens, the next generation of pain consumers, right? So I think, uh, this is also why people are focused on teen centric b like tiktok musically downing in china, right?

So in doing like you mentioned, there's ads. I have to say that though, if you're an instagram, you will probably see one add out of every five post, right, maybe even higher concentration. But on doing, I didn't see as many, but they were definitely there.

So different shop sellers can have their own doing account. So the ads be two ways, right? As can be more soft, unpaid, as then you just create your own fifteen second video or they can be harder ads, like ads that doing makes money from.

So if, for example, there's this one account that also ran her own toba shop and so this person like SHE does make up short videos, she's very, very good at his name of uh, short videos, very fast, pretty heavy makeup. So not my style, but that's fine because you're just watching for entertainment, right? You don't have to it's not like youtube where you're actually like going along with this person.

So at the end of A A video like this, little window pops up. And if you click on IT, IT goes to her, he was pushing specific, I think I was like eyeshadow because he is, I shadow in that particular video. And you can click on IT and go to a tabo shop just to give people a sense of, like.

what are these ads like? So I heard from an entrepreneur friend of mine that, you know, his view on this was that awin has perfected the arch of being able to match people with the right. As I literally, they're generating very high click rate. So if we look at the current business model because they have so efficient algorithms in terms of you generating clicks that they are getting paid for by advertisers right now, that revenue is actually higher until you acquisition cost, meaning that they basically have an unlimited marketing budget to get new users on to do in. And then they have advertises already ready to pay the more money in order to get that traffic, which is very interesting because at the end of the day, the reason why facebook is getting in here and tense is getting in here is because they are afraid of losing market chair when comes to users. So at the end of the day, we are talking about competition of advertising dollars.

I think something else is that last year, battens had this A I conference and had a bunch of group interviews. So a bunch of different media organza intervening one person basically um and the head of fight dances AI lab marwah use you know explain different things about the product and at that time thousand years ago, cycling how they have different technology that even if you don't have a direct social connection with someone like their friend or friend of a friend, you could be group as being like minded, you know, in terms of your usage patterns, what you're interested in, maybe even your geography.

This is like the core of the tiktok product, right? The more they understand about short video you are looking at, the Better they can do to get you too much more. And when applying that exact mindset on advertising, it's actually makes even more sense. My entire point being, in order for a brand to get high efficiency out of the advertising is not only about finding the right people, I lets say, you know, I found you even a beijing and my guess is that because of your age and your profession, maybe you would be interesting in buying this type of product that only solves part of the problem. The other part is understood exactly one and how to sell to you. And IT is the how that is the hardest thing because IT is in terms of what type of format, how do I visualize this product for you as a sa? And what I mean is that when the company can analyze their own content that they apply to their own users, IT enables them to actually gather huge insight about the users and therefore, how to showcase, let's say, make up to a specific fourteen year old somewhere .

yeah and otherwise, you're kind of maybe like, for example, if you do fitness products, then you think about what demographic groups stared typically or okay, typically are associated with your product and then you'll push ads according to that, right? Like Young people in big cities blab a ball, right? Where's maybe if you're undoing tiktok, let's say you're talking to buy dance by advertising.

They can just say, oh, why don't we push your add to people have shown an interest in working out and I feel like maybe that's from an advertising perspective, more compelling pitch than saying, oh, we can push IT to you know different demographic groups. But inside they can to say we know people who are interested in content that is directly related your product. We will push IT to those people.

which actually brings us to the final topic of today's episode, right? So facebook launching last so it's very early day, is obviously, and we don't know what's onna happen. But if we look at past performances, a one facebook have tried to do exactly the same thing, that they have more less always succeed, that they really identified messaging as a big thing.

So they started to build up facebook messenger and making IT a very, very successful product and then actually also buying WhatsApp. But then we see the same thing with them, you know, instagram then launching instagram stories because they wanted to compete with snapshot. And now I think the last quarter, instagram stories has twice as high growth as snapp chat. So our facebook gonna kill tiktok.

I guess from my perspective, I still feel like facebook is not the strongest when IT comes to mobile products because I had to acquire its way into success, right, which maybe is just because it's a bigger company and it's harder to be as addle as the smaller side ups, right? But I think what's been telling for me is that a lot of these founders, like the instagram founders, what's up? We've all left, you know, and i'm not totally tapped into what's happening in the U.

S. Tech industry, you know since based here. But I guess the mother media, of course, that sounds like they're some disputes over management or product decisions.

So I wonder how that i'll affect instagram now that the founders have decided to leave. And I think you know recently last as so new. I think I launched early november and more a few weeks ago. The guy who was in charge of last so left after IT launched, he's moving to netflix.

Yeah that doesn't mean that the APP on't do well or they can hire i'm sure they can offer like really compete benefits like they're really attractive employer for a lot of tech people, right? Despite all the bad press, I think still a lot of tech people want to work at facebook. That's my long way in the way of saying like this doesn't mean that they can't succeed, but IT not a great sign if the person whose in charge the product leafs are quickly doesn't want to stay longer to kind of see the growth of this potentially exciting APP. right?

Yeah, definitely. I I think there are a few things with this later launched that's different from how facebook have done is previously right, because previously wanted have directly competed with companies they basically wanted to kill. They've gone directly at them, such as launching a future in instagram to be with sn.

launching a non I mean, I guess if you ask me like what you think facebook advantages are, I mean, obviously they have this enormous social network. So when you open last, so like you logging with instagram mar facebook report, some of the existing user data into the apps is not part from a blank slate for a lot of lasso users. And I think, you know a big part of these short video apps and music, I will be easier for facebook to offer more music that also give you an edge.

I think we're seeing very similar behavior to how facebook have done IT in the past because in the past, when they would try to compete with both snap chat and what's up, if many times long, invest in a kind of a separate emptily, like a separate APP doing more, less the same thing and then usually fAiling with that, but then going head to head with IT and through that, probably learning a bunch of things.

And then they've taking the best features and best learnings and integrated into one of their core products, which would be, in this case, instagram or facebook. So if I were to speculate about the future, I mean, I think it's very apparent this type of product, this type of target group super important and almost critical for facebooks growth the same way as they viewed instagram back in the days. The only chAllenge now is that by is too big, so they will not be able to buy by dance, which means that if facebook use this type of entertainment content position among teams in the west, then that's a really big threat for their like longevity.

Yes, I think that facebook does really need to focus on the users to its platform and that also why instagram has become such as an important power product. It's done that like a lot of facebook users might actually just use instagram and not really in a facebook itself. So if they could get last soda take off.

And they can kind of refresh the user base. I mean, I have to say that facebook can come up or add features that two talk doesn't have that know people grab on to like you know maybe they'll have tipping rewards. So like let's say, in watching a video and I really like this crater and I send them like a digital faria, something to get the money. I don't think it's the cases close. And do you think they even opportunity to kind of average strength and maybe add features that took talk doesn't have yeah I guess what i'm cited to see where this goes.

Yeah, exciting. If you have any questions or feedback or anything you think we missed, please do let us know. We would very much appreciate.

Digital china is produced by me, joke of the van e and time show powered by radio, an independent media platform expLoring culture, innovation and life in china. You can find them at radio at china. Doc coffee. Thank you for this.

Well, i'm going to return like I me first. And is tiktok going to fy spotify? Yes, no.

no. Because facebook or attention is gone to buy spotify and use that also to chase after tiktok.

I have to drink figure.