The new capitalism

By REMSO MARTINEZ | Spring 2022

Jimmy Gullberg has 129,200 followers on the social media platform TikTok, many of whom look to him for entertaining advice about his job as a physician assistant in Milwaukee.

Despite his growing audience, Gullberg isn’t quitting his daytime job anytime soon. Nor does he have any intention of letting his TikTok “brand,” @pacollective, stagnate. Since May 2020, with the COVID-19 pandemic in full swing, he’s begun producing 20 to 30 short videos a month using comedy to mentor students and illuminate the lives of healthcare workers.

These videos make money. How much, exactly, Gullberg won’t say. But he and other Wisconsin entrepreneurs are part of TikTok’s explosive international growth. In 2017, ByteDance Ltd., the Chinese-based owner of TikTok, generated $63 million in revenue. Last year, it was $4.6 billion, according to Business of Apps data.

Far surpassing Facebook, YouTube and other social media, TikTok’s short-form video platform (think of YouTube videos but much, much shorter) has attracted and encouraged a new, more direct kind of capitalism.

Companies ranging from fashion brands to credit cards are paying creators like Gullberg to promote their products and services, just like celebrity endorsements you see on TV, and TikTok takes a cut.

TikTok enthusiasts prefer to talk about their success in terms of followers. Three billion people around the world have downloaded the TikTok app, the most popular iPhone app downloaded last year in the United States.

Kim Witt of Madison puts together stunning cinema-quality special effects artistry and makeup videos for 938,600 followers. Jimmy Li, an amateur cook in Madison, makes short recipe videos for 70,200 followers.

Cashing the passion

In general, even relatively small entrepreneurs like Gullberg can earn between $300 to $1,000 in sponsorships for a single video and from $600 to $1,400 per month in commissions for sales on exclusive links provided by companies to these TikTok content creators. Some popular TikTok celebrities receive "tips," or direct donations sent from fans and supporters online.

TikTok has a Creator Fund, which pays creators with large enough followings between $200 and $5,000 per month based on views for original content, according to Small Business Trends. Individuals with as few as a thousand followers earn some income.

For Gullberg, 28, it provides an opportunity to channel a passion for educating and advocating for the physician assistant profession.

"TikTok puts the power in the hands of the creator," he says. There are millions of once anonymous creators whose popularity gives them "the bargaining chips when it comes to working with brands and companies and what is put on their page."

"Just as Aaron Rodgers has worked with State Farm Insurance on TV commercials, TikTok influencers/creators are working with companies and brands to reach more people on social media."

Like Gullberg, Jeffrey Matthias, a 34-year-old Milwaukee marketing professional, got a huge boost from the time he had on his hands during the pandemic. "JMatt," (or @JMattMke on TikTok), has built an audience of 172,000 highlighting local businesses and community events in the Milwaukee area.

As a midday radio DJ and digital content director for 103.7 KISS-FM in Milwaukee, JMatt says he recognized in 2019 that TikTok was influencing the popularity of music. Coming out of the pandemic, he recognized the importance of supporting the economic recovery of local businesses.

Pandemic boost

“I don’t think I’d be nearly as successful on TikTok if it wasn’t for the pandemic,” JMatt says. “I suddenly had an abundance of free time, and there were also a lot more users watching content on TikTok. I think TikTok has shown many people how accessible being a content creator really is. You don't have to have a large following to take off."

It has become increasingly common for TikTok creators to build huge followings doing the most idiosyncratic things. Tommy Winkler dropped out of the University
of Wisconsin-Parkside in January to devote his life to traveling to and trying the signature foods in every state in the country and posting videos of him doing it, according to a story in the Appleton Post-Crescent.

Winkler, 20, built his fame and an audience of 7.1 million followers posting videos to TikTok of a daily meal routine suggested to him by his loyal followers. While he didn’t disclose to the Post-Crescent how much he’s paid to eat on video, he was able to convince his parents, with whom he now lives in Mount Horeb, it was enough to at least postpone his college education.

“The older generation didn’t grow up around social media and people turning it into marketing themselves and making a job just by making videos and posting them through your phone,” Winkler told the Post-Crescent.

“My parents just thought it was crazy that they got me an iPhone and then I’m able to turn it into this huge, successful business.”

There are others, like Amanda Praefke, for whom TikTok isn’t solely a vehicle for making money or becoming famous. Praefke, who goes by @Cosmicsoul_guide on TikTok, is a 33-year-old addiction recovery coach from Muskego, who refers to the more than 43,000 followers on her lifestyle account as her community.

“My goal has and always will be to use TikTok as a way to express myself and build community,” Praefke says. “It gives me the space to share my unique experiences and find other people like me.”

While some might see it as a very direct and unrefined form of capitalism, Praefke says, “I agree with capitalism but believe that there needs to be some things in place to make sure we don’t end up with what we have now, which is not capitalism; it’s ‘corporatism.’ ”

Praefke’s concerns bring into sharp relief the massive growth and capability of TikTok, whose relationship with the Chinese government has made many nervous

Unease over China

In August 2020, then-President Donald Trump made an unsuccessful attempt to ban TikTok by outlawing "any transactions between TikTok's parent company, ByteDance, and U.S. citizens" for reasons on national security.

An investigation conducted by the Guardian in 2019 exposed leaked documents showing TikTok "instructing its moderators to censor videos that mentioned topics sensitive to the Communist Party of China," according to Vox.

The Chinese government did nothing to allay worries when it acquired a 1% stake in ByteDance. While there are no immediate expectations that this will affect the TikTok app, China's expanding influence in the technology industry will be watched closely by Western governments.

Regardless of her distaste for the politics and economics surrounding TikTok, Preafke has every intention of continuing to grow her community.

"I think every system currently in place is upheld by greedy, evil, and self-preserving fools, so I don't blame the systems themselves. I blame their keepers."

Gullberg could not disagree more and thinks TikTok has succeeded in showing the world the best of what the free market has to offer.

"I've witnessed firsthand the successes of amazing content creators that made something for themselves by showing the world their creativity," he says. "With persistence and hard work, they were rewarded for it, which they should be."

Correction: The TikTok entrepreneur referenced in the printed version of this story is Jimmy Gullberg, not Jimmy Goldberg. The Badger Institute regrets the error.

Read more Diggings