To beat TikTok, Facebook is allegedly throwing money at creators

The era of the social media superstar leaping between platforms is upon us.

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POLAND - 2020/07/15: In this photo illustration a TikTok logo is seen displayed on a smartphone. (Photo Illustration by Omar Marques/SOPA Images/LightRocket via Getty Images)
SOPA Images via Getty Images

If you’re launching a new social media platform, it isn’t enough to have unique features that empower folks to be creative. You also need a bundle of cash, not just to advertise, but to poach high-profile stars from your soon-to-be-rival platforms. The Wall Street Journal is reporting that Facebook is opening up a small cabinet inside its war chest in order to recruit some of TikTok’s most famous stars. According to the report, team Zuckerberg has made “lucrative offers” to notable TikTok-ers in order to get them to make the switch.

Reels is a new Instagram feature that has, uh, drawn inspiration from TikTok in the same way that Facebook and Instagram’s ephemeral stories drew inspiration from Snapchat. Reels, which has been soft launched in Brazil, France and Germany, is expected to make a glitzy debut in the US in the coming weeks. If Facebook can launch and say that it’ll be the exclusive home of a star, it’ll do a lot to encourage sign-ups in the platform’s all-important early stages of life. 

It seems like this is what prompted TikTok to announce that it would launch a $200 million fund to help people stay on the service. Unfortunately, the fund has conditions, like a minimum age of 18, and you need to meet a set of conditions for acceptance, including how frequently you post. Depending on how Facebook, which has money to burn, makes its pitch, TikTok’s offer may seem miserly by comparison.

In its pitch to creators, Facebook is likely to leverage the fact that it’s in a stronger position politically than its Chinese-owned rival. TikTok has been caught up in the same wave of anti-Asian sentiment that has seen the US crack down on Huawei and other Chinese firms. A number of US companies have banned their employees from having the app on their corporate phones, and a ban may still happen. Eight of the top 10 creators on TikTok are based in the US, with substantial followings on other platforms, another plus for Facebook. 

In the early days of social media, the power was with the platform, and the stars who went viral had to work hard to find ways to make money from their success. These days, the tables have turned, and there’s a lot of cash to be made by a handful of creators who have demonstrated an ability to build a big audience. Tyler Blevins, the streamer better known as Ninja, had built an audience of nearly 15 million people on Twitch. Microsoft, looking to burnish its rival platform Mixer, reportedly paid Blevins up to $30 million a year to switch platforms

Most companies pay a fee to hook a customer into their world, either through advertising, giveaways or by signing an attention-grabbing star. This “Customer Acquisition Cost” shouldn’t be more than $10 per person, but if you’re looking for scale, it can be worth a fortune. If Ninja’s eye-catching deal with Mixer had attracted around five million people to sign up to the rival platform, then it was money well spent. Of course, given Mixer’s untimely demise, we’ll never know if the deal would have paid off in the long run. 

According to the WSJ report, Facebook/Instagram wants either exclusivity, or for Reels to be the first place new social clips are posted. It has also apparently offered to bankroll the production of these clips, which could be a substantial sum if it’s recruiting lots of creators. But, then again, if that sort of cash is less than the customer acquisition cost Facebook would have to pay otherwise, it may all be worth it. 

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