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TikTok, TikTok…the clock is ticking on the question whether ByteDance pays creators

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ET’s month-long reporting suggests that the ByteDance-owned short video app, TikTok, does pay some of its content creators under certain conditions. This raises the issue, given India’s IT laws, of the world’s most valued startup possibly being in violation of rules. ET has reviewed some TikTok contracts with creators and send the app questions before publishing this story. ByteDance's answers are incorporated.

Bengaluru/Mumbai: Following the controversy over TikTok claiming copyright over some of the content posted on its platform, the Chinese app, in its reply to the questions posed by the Ministry of Electronics and Information Technology (Meity), said as per industry practices, it “does not pay creators to create content, nor does it interfere with or control the creation of content on the platform.”

However, in the very next sentence, it said it engages with “certain users who can promote the platform and teach other users on how to generate the most value of the tools available on the platform.” ET has reviewed TikTok's responses to Meity. Meity officials who spoke off record told ET that ministry officials discussed the apparent contradiction in TikTok's responses.

Multiple documents, including past and current creator contracts, reviewed by ET reveal that TikTok not only pays creators to upload content on its platform but also incentivizes them to make it “viral” by cross-posting it on other leading social media platforms, through a "Forwarding Clips Commitment", as stated in these contracts.

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These contracts could feature payments ranging from $100 to $200 to as high as $1750 depending upon the popularity of the creator, with a minimum commitment of X number of “original clips” (ranging between 10-30) every “term month”, including five cross-posts to Instagram, with the TikTok logo or watermark.

TikTok has four performance tiers for these creators. While its top-tier creator could earn as high as $1750, tier 2, 3 and 4 creators are eligible to earn $1150, $550 and $250 respectively. This classification, according to the documents, is done according to “score rankings”, an internal metric which counts “total video views of Talent of the month.”

Not Money for All Creators
These contracts are not signed with every creator of TikTok, but with a very small number of influential creators, who are part of its over 200 million monthly active user base in India. ByteDance does not disclose these numbers or how it works with creators, but some people familiar with the matter told ET that this number could be in the “thousands”, or the top 10 per cent of TikTok creators in India. ET reached out to Qyuki, one of the agencies that manages some of the top TikTok creators. Qyuki declined to comment.

This practice would seem to be shared by other Chinese short video platforms, whose business model depends on creators making viral videos, and the user spending time consuming them. TikTok rival owned by Singapore-based Bigo Technology, "pays creators anywhere between $80-$150, should his/her video become popular on the platform," according to a popular creator based in a South Indian state.

“Of course, they pay creators.” says a person familiar with how influencer marketing works in India. “No creator works for free.” This phenomenon is also not exclusive to India, with TikTok allegedly paying "more than $1 million to an influencer to run a single video", according to a Wall Street Journal report in June.

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ByteDance defends these practices as being part of what it calls "standard marketing practices". This, the company said in its responses to ET's detailed questions on payments to creators, is done "to promote usage of the platform, make the platform more vibrant and encourage full realization of the potential of the platform." Other questions ET asked ByteDance were about modes of payments, contractual obligations, and alleged editorial control.

ByteDance also said: "This helps in sharing with all other TikTok users…a steady stream of popular content and (in) popularizing the use of the platform. Such users choose to publish their content on our platform by themselves." The company insists that it is merely “a passive host or an enabler”, and these practices do not mean that ByteDance is a middleman, nor does it represent “a manifestation of editorial control”.

But some lawyers who follow the space have a different opinion. "If a company sets targets for its creators to meet, and especially if it commissions work from them, such a contract could be a work for hire. But the law around influencers is yet to be developed in India,” said Nehaa Chaudhari, public policy lead at Ikigai Law.

TikTok’s PayPals
ByteDance pays creators via a PayPal account, which those in the creator ecosystem say is "standard practice" for Chinese companies. In some contracts, for instance, a sum of $200, which is equivalent to 40,000 “diamonds” is transferred to the creator’s “TikTok Wallet”. These “diamonds” form TikTok’s virtual in-app currency, which its users first receive in their wallet, and later redeem upon exchange to local currency (Indian rupees).

ByteDance, in its reply to ET, refused to comment on “diamonds” while saying that it does not “share proprietary business information.”

Creators on TikTok can also earn money via live-streams, where users often broadcast popular formats such as “unboxing.” Users often purchase these diamonds or coins, and gift creators during the broadcast. The price for these coins at the user's end, a creator said, ranged from Rs 100 for 80 coins. For a creator, it is possible to earn at least $120 if s/he did a live stream every Sunday for 2 hours.

“At the end of the month the company adds to these diamonds based on the amount mentioned in the contract,” said a creator on a condition of anonymity. Another person aware of how the creator industry functions added, “Even in this conversion of diamonds to money, who is enabling it? Of course, TikTok is playing the role of a convertor.”

Editorial control? “Not really”
In earlier versions of contracts reviewed by ET, going back to the time when ByteDance acquired lip-syncing short video app Musical.ly (and rebranded it TikTok), the company was paying as much as $1000 for 30 videos with a demand of 10 such videos to be made in accordance with 12 pre-decided hashtags such as #FitnessIndia, #OOTDIndia (Outfit of the Day India), #MyDanceSquad, #MyTalentInSports, among others. It is unclear if ByteDance continues the practice of pre-deciding hashtags for creators to make videos for.

“We do not compensate creators in any way to create any specific type of content and do not exercise any editorial control over the content created on our platform,” said a ByteDance spokesperson. It also added that these hashtags were mere recommendations, and recommendations did not constitute editorial control.

ET also reviewed documents where certain creators did not get paid or were paid reduced amounts when they didn't use hashtags or didn't cross-post content on other platforms, as agreed in the “statement of work”. This, the company explained in an email seen by ET, was because the creator did not “garner as many views as the others in the programme”.

Letter Vs Spirit of Law
Pinaki Misra, the member of parliament from Odisha's Biju Janata Dal told ET, "Reports and research on the alleged dubious business practices and strategy employed by Bytedance/Tiktok have been widespread. Now the information that the platform pays influencers to create content ... and also influencing young minds is most disturbing." Misra, MP from Puri, added, "The platform has also been regularly flagged for hate speech and casteist content. On the other hand it claims it is purely an intermediary to people in the government."

“It is not against the law, but it is against the spirit of the intermediary safe harbour rules,” said a New Delhi-based technology lawyer on a condition of anonymity. “What TikTok (or Musical.ly back then) is doing by giving hashtags a month or even a year in advance is the flip-side of proactively monitoring and pulling down of content. This is in fact, proactive promoting content that you decide should be popular. This is not how intermediaries are supposed to work,” the lawyer added.

Eshika Phadke, founder of Inflawence, a Mumbai-based legal risk advisory which specialises in influencer marketing agreed. “Even with the requirement of ten of the clips having to be centred around a particular hashtag, one could argue that they are playing no part in the actual content,” said Phadke but added, “The hashtags are broad, and nearly all content would fall under one of them anyway. ByteDance is just dictating the hashtag that needs to be used. The more concerning part is about the ten clips having to be in accordance with “specific requirements to be designated by Musical.ly.”

The New Delhi-based lawyer also added that TikTok has been careful while handing out these contracts so it isn’t held liable for breaking the law. “It doesn’t cross the line and doesn’t exercise editorial control, but by paying them and giving direction, it does violate the spirit of the law,” the lawyer said.

In another instance of clips depicting content of a graphic nature, say a bike stunt, TikTok usually serves a warning before the video. Upon download, the said video does not carry the logo or the watermark of TikTok, an element which normally appears on all its videos. Some in the industry feel that this could mean “editorial control” given that they have actual knowledge of the video.

ByteDance, however, replied that its logos and watermark are only for promotional purposes, and have nothing to do with the content or how they are vetted and that they weren’t edited. The remit of its AI and human reviewers, it added, was to only look at the content from the lens of its community guidelines.
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