> Bytedance now faces questions over when or even how it will start making a profit.
$75B value and it still faces the most basic question. Makes me feel I don't understand business at all.
Also its main app seems to be musically. I have only heard of it but it seems a little to an app like Dubsmash. Did dubsmash ever make any money? What is the business model for such apps?
> $75B value and it still faces the most basic question. Makes me feel I don't understand business at all.
Business journalism really does a disservice when it pushes the "they have no revenue model" angle for these massively scaling traffic aggregators. It was a bit interesting when this was written of Yahoo, I guess, since we didn't have proof yet that online advertising was a viable business model.
In any case, the playbook is very well understood. Build a loyal audience numbering minimally in the hundreds of millions (Small audience pubs only achieve success with subscription-based models. Mid-sized audience aggregators may not have a viable business model at all). Demonstrate that the cost of building said audience is either free or pennies per user (e.g. unpaid viral audience growth). Make several dollars to tens of dollars per user per year by running advertisements to said audience. The more relevant or (lately) emotionally compelling the advertisements the more you'll earn per year per user.
Of those components, building an enormous audience is the hardest part, which is why every company that has followed this model, from google to snapchat, has focused on that long before building a corresponding revenue stream.
We've seen this model a dozen times and it's understood well enough that financiers are able to approximate the value of Bytedance future revenue streams rather confidently.
Not a fan of the company, but they are much more than musical.ly.
- Toutiao, the content farm (think Buzzfeed++), a pivot from the original news aggregator model. It has 120M DAU as of last October, per YC's report [1].
- Douyin, or Tik Tok, the short video platform, a pivot from originally a copycat of Musical.ly (ironically). It has 150M DAU [2].
- Dailyhunt, Toutiao for the India market.
- Musical.ly, an acquisition.
I have a strong disdain for the company, because the content is almost completely garbage, rumors, and click-baits, and it is dangerously addictive.
I've never used Musica.ly myself, and I don't have any kids of my own, but I came across this video [0] where a Youtuber looked at clips from it. It seems like a lawsuit waiting to happen, I can't see how it could be worth that much money. I wouldn't want any of my future kids anywhere near there.
Its main app isnt musically, its Jinri Toutiao, a news app that has reputedly $2B revenue. TikTok, Musically is just its new acquisitions and ventures. It owns a vast array of video content based sites and apps.
抖音(Dou Yin), or Tik Tok, is a huge traffic sucker in China. They went from millions MAU to now 100 millions of DAU in just one year. People are spending like hours on this app alone every day, and it is the perfect platform for commercials as well, could almost go unnoticed if it is well made.
Tik Tok is seriously addictive and the ultimate time killer. Too much so I think the Chinese government is pushing some anti-addiction measure to this platform, as what they did for the online gaming market.
I was digging to find it but gave up. if musical.ly is their main app then this is surely an overestimation of their valuation. I haven't heard a single good thing about musical.ly, but maybe that's just because it's not my crowd.
"ByteDance’s top earners make more than $1 million a year plus stock options, with total compensation sometimes exceeding $3 million. " I bet top earners at Google, Facebook etc make much more than this.
I can't be the only feeling a bit depressed that these highly valued companies are still in the "maximize eyeballs for advertising $" business. $75 billion for finding a way to keep people browsing low-content crap for longer. I'm certainly not singling out Chinese companies for this exact thing is the cornerstone of FB's business model and they're one of the biggest companies in the world.
If you want to make sense of this. It's better to think like physicist and start from "spherical cow" model.
The asymptotic limit to the whole market is set by people's income.
* Ad revenue will always be small fraction of total income
* All fun, social and leisure activity is fraction of discretionary income.
"Eyballs"/hour is the future source of growth because all societies move towards becoming post-industrial consumer based societies and people spend more time staring at the screen. Tech companies, no matter how tech, produce products and services where the value is increasingly coming from discretionary income and services. There may be several links between the product and the consumer.
I’ve been telling people about TikTok for a year now, since I live between Asia and the US lately. Most people don’t get it, or understand why it’s so big. The western variant Musical.ly doesn’t help, as the content (which reflects the culture) is different, and not in a good way. The recent efforts to merge the two apps are a huge mistake in my opinion. The beauty of Douyin was the innocent, childish creativity that developed organically there. Merging that Asian thread with a bunch of western brats “flexing” and trying to recreate Vine/Instagram celebrity culture is a bad move.
You have been living under a rock, although it’s not your fault. There is depressingly little information exchanged between east and west, other than reports on fringe stuff that emphasizes our otherness. If you knew anyone under age 20 living in nearly any Asian country (maybe India, Pakistan, Bangladesh excluded), they could tell you about Douyin/TikTok.
I'm not in the western world, but News Republic is on plenty of phones around here, as part of the initial bloatware. I have not used the product myself, so this is not a comment on the quality of the product.
My opinion on the long term potential of China's short video platforms has changed completely in the last three months. Used to be high on it, but now I think it's useful but not to this hyped up level, not even close.
The majority of videos on Douyin belong to one of these three categories,
1, girls putting on crazy amount of makeup staring at the camera or lip syncing. The platforms's software are often used to make the eyes larger and legs longer, to ridiculous degree.
2, cats, dogs and other pets,
3, tens of thousands of people imparting universal wisdom to you on how to get rich quickly, become a skillful pickup artist or life guru, etc.
Other than these three types, there are very little left. Of course you may find it differently. But IMO shortage of quality content will be a big problem going forwad for these platforms. In general most people in every country don't have the skill to produce videos of good quality, coupled with China's tight control on what can be shown, it's becoming suffocating for creativity. For example comedies or poignant news commentaries are very rare. A lack of respect for intellectual rights is still a problem in China, endless copying and pasting and boring and fake stuff. Anyway, content shortage is a problem everywhere, but it's just terribly bad in China.
Also, unlike say Facebook or Wechat, these video platforms lack the relationships between users that keep people around. Sure you can leave messages on Douyin but there are basically zero long term interactions going on. People on Douyin always tell others to meet at Wechat or Weibo or other places. Douyin is simply not made for social networking, and I don't see it can change that.
Actually there is Wechat's subscription accounts, which is for the more in-depth analysis and long posts. So it's more of a market segmentation strategy I would say.
Sort of similar to how Instagram and New Yorker work in US. You can use/read either of them, or both.
I would like to write something on Wechat subscription accounts soon, which like douyin so few people outside the Chinese circle knows.
Edit: Instagram is a better example than Snapchat.
> But as with Facebook at the same stage of its life, Bytedance now faces questions over when or even how it will start making a profit.
Amazing. $75b valuation, loads of cash to run ops and not have your burn rate run you into the ground. Clearly the worth here lies in the apparently very strong AI they use to detect trends. Again, as with Shazam, detecting trends early is obviously quite valuable.
This has got to set some sort of record for dubious valuations; effectively means that the worth of this particular vaguely AI related video/news business is worth a 12th of the entire bailout package that saved the UK banking-industry in 2008*
The company is a click bait companies. The innovation they made is to use ml or automation to generate and push content that users are likely to click.
Mostly off topic. Why has China produced most of the serious competition to US software titans? In particular, given that South Korea was way ahead of the rest of the world in cell phone and broadband universality for it's population, why haven't they been the birthplace of any social media or other internet companies that expanded abroad (instead they adopted YouTube and Facebook)?
A lot of commenters are arbitrarily commmenting without reading the article, Musically and Tiktok is really a new venture + acquisition for ByteDance, its not their main business but something they're trying out and trying to grow for the future. They're more a corporate group or a consolidating conglomerate of new media startups.
Their main business is Jinri Toutiao, a news aggregation + content site powered by ML recommendations that is very popular in China at ~120MM DAU and revenue targets of ~7.5B overall for the whole corporate group. Otherwise they have quite a bit of other popular video content and streaming sites based in China and Asia.
Throwaway account since I'm an old-school news editor but why is it that curated news companies like hvper.com or Techmeme haven't received the same amount of backing? I see more value in targeted + quality than random mishmash of AI-collected headlines.
This article seems a little misleading... It says in the very beginning
"Back then, the question was how a 29-year-old locally trained software engineer could outsmart the numerous news portals operated by the likes of social media behemoth Tencent Holdings Ltd. and extract profit where even Google had failed."
This seems to suggest that he figured out how to make a profit. But then further down it says "But as with Facebook at the same stage of its life, Bytedance now faces questions over when or even how it will start making a profit."
So now I'm not sure if it's making a profit or not.
I read once that they pay over 2M+ USD as an annual salary to entry level employees. I'm sure they're exceptional and talented, but still crazy to think about.
I'm sure that was for one person or a small handful. And that is rational, one engineer can add a million dollars of value in a day if they are really capable and focus on the most important problem.
I downloaded the app and used it for about an hour. Hated it. Uninstalled it. Must be only popular with the younger generation. I thought most of the videos on there were a complete waste of time to watch.
[+] [-] superasn|7 years ago|reply
$75B value and it still faces the most basic question. Makes me feel I don't understand business at all.
Also its main app seems to be musically. I have only heard of it but it seems a little to an app like Dubsmash. Did dubsmash ever make any money? What is the business model for such apps?
[+] [-] spanktheuser|7 years ago|reply
Business journalism really does a disservice when it pushes the "they have no revenue model" angle for these massively scaling traffic aggregators. It was a bit interesting when this was written of Yahoo, I guess, since we didn't have proof yet that online advertising was a viable business model.
In any case, the playbook is very well understood. Build a loyal audience numbering minimally in the hundreds of millions (Small audience pubs only achieve success with subscription-based models. Mid-sized audience aggregators may not have a viable business model at all). Demonstrate that the cost of building said audience is either free or pennies per user (e.g. unpaid viral audience growth). Make several dollars to tens of dollars per user per year by running advertisements to said audience. The more relevant or (lately) emotionally compelling the advertisements the more you'll earn per year per user.
Of those components, building an enormous audience is the hardest part, which is why every company that has followed this model, from google to snapchat, has focused on that long before building a corresponding revenue stream.
We've seen this model a dozen times and it's understood well enough that financiers are able to approximate the value of Bytedance future revenue streams rather confidently.
[+] [-] eddieplan9|7 years ago|reply
- Toutiao, the content farm (think Buzzfeed++), a pivot from the original news aggregator model. It has 120M DAU as of last October, per YC's report [1].
- Douyin, or Tik Tok, the short video platform, a pivot from originally a copycat of Musical.ly (ironically). It has 150M DAU [2].
- Dailyhunt, Toutiao for the India market.
- Musical.ly, an acquisition.
I have a strong disdain for the company, because the content is almost completely garbage, rumors, and click-baits, and it is dangerously addictive.
[1] https://blog.ycombinator.com/the-hidden-forces-behind-toutia...
[2] https://walkthechat.com/douyin-became-chinas-top-short-video...
[+] [-] sorenjan|7 years ago|reply
[0] https://www.youtube.com/watch?v=5PmphkNDosg (NSFW language)
[+] [-] nolok|7 years ago|reply
[+] [-] forkLding|7 years ago|reply
http://bytedance.com/products/
From what it seems, its trying to dominate the new media space in China and Asia through consolidation and acquisitions.
[+] [-] oh-kumudo|7 years ago|reply
Tik Tok is seriously addictive and the ultimate time killer. Too much so I think the Chinese government is pushing some anti-addiction measure to this platform, as what they did for the online gaming market.
[+] [-] hardwaresofton|7 years ago|reply
[+] [-] cm2187|7 years ago|reply
https://www.youtube.com/watch?v=BzAdXyPYKQo
[+] [-] baxtr|7 years ago|reply
[+] [-] 394549|7 years ago|reply
You understand business, just not the shell-game that's grown up around it.
[+] [-] emptybits|7 years ago|reply
https://www.washingtonpost.com/news/on-small-business/wp/201...
https://www.bloomberg.com/news/articles/2017-09-24/in-battle...
[+] [-] bigbang|7 years ago|reply
[+] [-] nolok|7 years ago|reply
[+] [-] rchaud|7 years ago|reply
[+] [-] Nokinside|7 years ago|reply
The asymptotic limit to the whole market is set by people's income.
* Ad revenue will always be small fraction of total income
* All fun, social and leisure activity is fraction of discretionary income.
"Eyballs"/hour is the future source of growth because all societies move towards becoming post-industrial consumer based societies and people spend more time staring at the screen. Tech companies, no matter how tech, produce products and services where the value is increasingly coming from discretionary income and services. There may be several links between the product and the consumer.
[+] [-] nihonde|7 years ago|reply
[+] [-] al_chemist|7 years ago|reply
I'll bite. What is it and why it's got so big?
[+] [-] andruby|7 years ago|reply
[+] [-] nihonde|7 years ago|reply
[+] [-] ranie93|7 years ago|reply
[+] [-] ReverseCold|7 years ago|reply
[+] [-] tpetry|7 years ago|reply
Seems we never heard of it because we‘re not in their target market.
[+] [-] mrleiter|7 years ago|reply
[+] [-] lake99|7 years ago|reply
[+] [-] kev6168|7 years ago|reply
The majority of videos on Douyin belong to one of these three categories, 1, girls putting on crazy amount of makeup staring at the camera or lip syncing. The platforms's software are often used to make the eyes larger and legs longer, to ridiculous degree. 2, cats, dogs and other pets, 3, tens of thousands of people imparting universal wisdom to you on how to get rich quickly, become a skillful pickup artist or life guru, etc.
Other than these three types, there are very little left. Of course you may find it differently. But IMO shortage of quality content will be a big problem going forwad for these platforms. In general most people in every country don't have the skill to produce videos of good quality, coupled with China's tight control on what can be shown, it's becoming suffocating for creativity. For example comedies or poignant news commentaries are very rare. A lack of respect for intellectual rights is still a problem in China, endless copying and pasting and boring and fake stuff. Anyway, content shortage is a problem everywhere, but it's just terribly bad in China.
Also, unlike say Facebook or Wechat, these video platforms lack the relationships between users that keep people around. Sure you can leave messages on Douyin but there are basically zero long term interactions going on. People on Douyin always tell others to meet at Wechat or Weibo or other places. Douyin is simply not made for social networking, and I don't see it can change that.
[+] [-] paradite|7 years ago|reply
Sort of similar to how Instagram and New Yorker work in US. You can use/read either of them, or both.
I would like to write something on Wechat subscription accounts soon, which like douyin so few people outside the Chinese circle knows.
Edit: Instagram is a better example than Snapchat.
[+] [-] oh-kumudo|7 years ago|reply
The core competency here is content. Douyin has a creator base, and the platform to deliver the contents to massive audience.
[+] [-] zjaffee|7 years ago|reply
[+] [-] kopos|7 years ago|reply
[+] [-] mrleiter|7 years ago|reply
Amazing. $75b valuation, loads of cash to run ops and not have your burn rate run you into the ground. Clearly the worth here lies in the apparently very strong AI they use to detect trends. Again, as with Shazam, detecting trends early is obviously quite valuable.
[+] [-] curuinor|7 years ago|reply
[+] [-] JCharante|7 years ago|reply
[+] [-] dingdingdang|7 years ago|reply
* https://en.wikipedia.org/wiki/2008_United_Kingdom_bank_rescu...
[+] [-] justicezyx|7 years ago|reply
[+] [-] settler4|7 years ago|reply
[+] [-] mkstowegnv|7 years ago|reply
[+] [-] forkLding|7 years ago|reply
Their main business is Jinri Toutiao, a news aggregation + content site powered by ML recommendations that is very popular in China at ~120MM DAU and revenue targets of ~7.5B overall for the whole corporate group. Otherwise they have quite a bit of other popular video content and streaming sites based in China and Asia.
Sources: http://bytedance.com/products
https://www.scmp.com/tech/start-ups/article/2122432/chinas-b...
[+] [-] hardwaresofton|7 years ago|reply
There it is.
[+] [-] fipple|7 years ago|reply
[+] [-] newsjunkie2k|7 years ago|reply
[+] [-] ssvss|7 years ago|reply
[+] [-] ibdf|7 years ago|reply
"Back then, the question was how a 29-year-old locally trained software engineer could outsmart the numerous news portals operated by the likes of social media behemoth Tencent Holdings Ltd. and extract profit where even Google had failed."
This seems to suggest that he figured out how to make a profit. But then further down it says "But as with Facebook at the same stage of its life, Bytedance now faces questions over when or even how it will start making a profit."
So now I'm not sure if it's making a profit or not.
[+] [-] dopamean|7 years ago|reply
[+] [-] foobaw|7 years ago|reply
[+] [-] fipple|7 years ago|reply
[+] [-] stale2002|7 years ago|reply
I haven't seen hacker news posts. I haven't recieved Bay area recruiting emails. Just out of nowhere.
Edit: oh. This is a conglomerate that aoorently owns music.ly
[+] [-] the_arun|7 years ago|reply
[+] [-] anonymous5133|7 years ago|reply
[+] [-] che_shirecat|7 years ago|reply