TikTok to give creators over $2 billion in the next 3 years as it takes on Instagram and YouTube

Key Points
  • TikTok is planning to support the next-generation of talent on its platform with a $2 billion TikTok Creator Fund.
  • TikTok, Instagram, and YouTube all want high-profile creatives with millions of fans to share content on their platforms. 
  • Owned by China's ByteDance, TikTok's new fund is designed to help influencers generate revenue on its platform. 
An AFP collaborator poses for a picture using the smart phone application TikTok on December 14, 2018 in Paris. - TikTok, is a Chinese short-form video-sharing app, which has proved wildly popular this year. (Photo by - / AFP) (Photo credit should read -/AFP via Getty Images)
-/AFP | GettyImages

 TikTok, whose parent company is based in China, has announced plans to give creators over $2 billion in the next three years as it goes head-to-head with U.S. rivals Instagram and YouTube. 

The video-sharing social media app said in a blog post Wednesday that it will give creators in the U.S. over $1 billion in the next three years, and more than double that globally. 

In Europe, TikTok said it will give creators $70 million over the next year and at least $300 million within three years. 

TikTok users will have to submit an application to TikTok in order to access the funding. If successful, TikTok will provide them with regular payments for posting content on its platform. 

Details of the application process and how much individuals can earn are yet to be revealed.

"To further support our creators, we're launching the TikTok Creator Fund to encourage those who dream of using their voices and creativity to spark inspirational careers," Vanessa Pappas, general manager of TikTok U.S., said in a blog post. 

Pappas said the fund had been set up "to help support ambitious creators who are seeking opportunities to foster a livelihood through their innovative content."

When the blog post was first published on July 23, Pappas said the U.S. fund would start with $200 million.

However, in an update on Wednesday, she said: "We have seen an incredible response to the Creator Fund and are excited to share that we expect this Fund will grow to over $1 billion in the US in the next 3 years, and more than double that globally."

Chinese roots

Owned by China's ByteDance, TikTok has become wildly popular around the world, racking up over 2 billion downloads in less than four years, according to app tracker Sensor Tower. 

This success has given U.S. technology companies, namely Facebook-owned Instagram and Alphabet-owned YouTube, something of a headache. All of the platforms want social media stars with millions of fans to appear on their apps because it helps them to boost their user numbers and generate more revenue. 

"Access to direct monetization pathways keeps top creatives posting on TikTok, and may also attract new creators from a growing raft of competitors," said Michael Norris, a research and strategy manager at Shanghai-based consultancy AgencyChina. 

In a bid to compete more directly with TikTok, Instagram is due to launch a new feature called Reels, which is due to be rolled out in the U.S. early August after being tested in India, Brazil, France and Germany. 

"TikTok is keenly aware of how many competitors are circling, looking to nab user time and top creative talent — especially Instagram Reels and Triller," Norris told CNBC. 

Facebook has been making lucrative offers to high-profile TikTok influencers with millions of followers to lure them over to Instagram Reels, The Wall Street Journal reported Tuesday. In some cases, Instagram has been offering hundreds of thousands of dollars to persuade TikTok creators to use Reels, the report said, citing people familiar with the matter. CNBC was unable to independently verify these claims.

TikTok's links to China are turning out to be problematic for the company, with countries raising concerns about the possibility of user data being passed to China's ruling Communist Party. TikTok has repeatedly said it does not and will not do this. 

However, it has been banned in India and President Donald Trump said Wednesday he is considering a ban as well.

In a bid to get around the issue, TikTok has tried to distance itself from ByteDance by hiring a U.S. chief executive — Kevin Mayer, Disney's former head of streaming. It has also set up local offices around the world and it is deciding where to put a new international headquarters, with London, Los Angeles, New York, Singapore, and Dublin possible contenders. 

As a last resort, ByteDance is also considering selling a stake of TikTok to U.S. investors. ByteDance investors have reportedly valued the app at around $50 billion.