These teenage TikTok stars reveal how their ‘goofy’ videos made them financially independent

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Josh Richards started uploading videos to the popular app TikTok — then called “Musical.ly” — more than three years ago.

“My sister was on the app and she made a video with me. It did really well on her account, so I decided to make an account for myself,” Richards said.

Jaden Hossler started opened a TikTok account in February 2019. In just under a year, he gained 3.7 million followers.

During the summer of 2016, he gained 26,000 followers on the platform. He said his videos mainly consisted of him “goofing around with his friends.” “My content is teen, edgy bad boy,” he told MarketWatch.

His videos saw success on the platform, and he now has 11.4 million followers. He also has 2.9 million followers on Instagram.

Jaden Hossler, 19, started on the platform in February 2019. Like Richards, he said he posts videos of himself “goofing around with the boys and making jokes.” In just under a year, he gained 3.7 million followers. On Instagram, he has 1.5 million followers.

TikTok, which is owned by Chinese internet technology company ByteDance, has become the social media app of choice for many teens. As of late 2019, it has more downloads than FB, -0.32%.

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In the past six months, Hossler and Richards have moved away from their parents and live in L.A. full-time. They live together with four other TikTok creators in what they’ve deemed the “Sway House,” a collaborative house for TikTok influencers.

They spend their days making videos together for the platform. While Hossler has graduated high school, Richards is completing his final year online.

But TikTok does not operate in the same way as, say, YouTube. TikTok does not pay creators any money. Instead, music artists pay for song promotions, and brands pay for product promotion. (TikTok was not immediately available for comment.

TikTokers can earn from ‘gifts’ sent by their followers

Richards and Hossler have been able to monetize their success on the app and hope to continue to expand to other social-media platforms.

“The first way I started earning money on TikTok was through going live and receiving gifts,” Richards explained.

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When TikTok creators start a live stream, the app offers viewers the ability to send these creators monetary “gifts.” The gifts accumulate in a virtual wallet built into the TikTok app, and creators can then collect the money they have received. TikTok takes a cut of this money, and creators can receive the other piece in their PayPal PYPL, +0.09%  account.

“This was how a lot of people on TikTok were making money,” Hossler said. “But very recently, TikTok made a drastic change to the system.”

Due to concerns with teens as young as thirteen sending and receiving thousands of dollars on the platform, TikTok restricted the gifting feature to those 18 and older. Since the change, it has lost much of its popularity, Hossler explained.

Brands pay for advertisements in TikTok videos

As Richards and Hossler have gained more followers on TikTok, brands have begun to reach out to them and offer them money in exchange for promoting products.

The two say they have both created sponsored videos for Crocs and, more recently, Cash App. “Cash App gave us a song to use and we each made skits that incorporated Cash App somehow,” Richards said.

Richards and Hossler did not reveal how much they earned for the video but did say that rates are dependent on the brand and the number of views the creator averages per video.

‘The first way I started earning money on TikTok was through going live and receiving gifts.’

—Josh Richards, a 17-year-old TikTok user

As gifts have declined in popularity, Richards and Hossler believe payment for song placements is the most common way creators are earning money on the app.

Each 15-second TikTok video includes a song in the background. The more views the video receives, the more attention the song gets. Artists hoping to quickly boost the popularity of a new song will pay popular TikTok creators to include it in their videos. Richards and Hossler have promoted multiple songs on the app.

Hossler estimated that an individual with 4 million followers and “good engagement” could earn as much as $2,000 for a song placement in a single video.

The teens helped form a TikTok talent agency

Most TikTok creators with millions of followers do not receive $2,000 for a song placement. “There’s a big problem with managers and people that are offering these deals,” Hossler said. “Kids are getting severely underpaid.”

Richards and Hossler recently helped create TalentX, a talent management group for young TikTok creators. The company is led by 23-year-old YouTuber GOOG, +0.27% GOOGL, +0.18%  Tal Fishman and influencer talent manager Jason Wilhelm.

‘There’s a big problem with managers and people that are offering these deals. Kids are getting severely underpaid.’

—Jaden Hossler, a 19-year-old TikTok user

Gavin Rudolph, a senior talent manager at TalentX and the former manager of rapper Ty Dolla Sign at Maverick Management, told MarketWatch he expects rates for brand deals on TikTok to increase in tandem with the app’s popularity.

“Brands haven’t done that much spending on TikTok, so they don’t know and it’s a real risk for them to spend it all,” he said. “As we build trust with some of these brands, they’re going to start shelling out a little more.”

Richards and Hossler are looking beyond TikTok

Besides TikTok, Richards and Hossler collectively have 4.4 million followers on Instagram. They also have YouTube channels, where they believe they can diversify their following and add another source of income. YouTube’s AdSense pays creators based on the number of views they receive on their videos and the number of ads in their videos.

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As they look to the future, Hossler hopes to release music and become the “biggest rock star in the world,” whereas Richards wants to focus on the entrepreneurial side of social media.

“Because of their following, they have the ability to start companies that people actually pay attention to in industries that they may not have paid attention to them before,” Rudolph said.