TikTok Turns On the Money Machine

The ad revenue is already flowing, and e-commerce is next

- Zheping Huang, with Vicky Feng and Sarah Frier

Alyssa McKay used to work part-time at a frozen yogurt store in Portland, Ore., making minimum wage to help pay her college tuition. Now the 22-year-old earns more than $100,000 a year by pitching brands such as the luxury label Coach and streaming services Netflix and Amazon Prime Video to her 9 million TikTok followers, mostly teenage and preteen girls who wouldn’t dream of visiting Facebook. “TikTok definitely 100% changed my life,” she says.

The most downloaded app of 2021, TikTok now has a billion-plus users worldwide consuming short video clips on their phones. That still makes it smaller than Meta Platforms Inc.’s services Facebook and Instagram, but its average user in the US spends about 29 hours a month with it, more than Facebook (16 hours) and Instagram (8 hours) put together, according to mobile researcher Data.ai.

While the platform has been known for years as a place for creators like McKay to amass a huge audience, it’s only now starting to convert those audiences into a business that could rival Silicon Valley’s social media companies. Much of the money will come from advertising, but TikTok is also edging into music distribution, game publishing, and Twitch-style subscriptions. And it’s making significant strides toward following ByteDance Ltd., its Chinese parent company, into e-commerce in ways that could put it in more direct competition with Amazon.com Inc.