The Chinese content creation platform TikTok, which is the video sharing app called the fastest growing social network in history, has been highlighted since the beginning of 2019 and currently exceeds 800 million users. While breach of computer security app is controversial around the world, more and more young people are using it as social media for the next generation, with 69% of TikTok reporting from 16 to 16. 24.
Despite the tremendous success and rapidly growing user base, the truth behind the global sense is that the new Instagram is unlikely to be profitable. One of the main reasons for this is the cost of IT infrastructure – and the blockchain can have a solution.
Solve profitability problems
At present, most content creation and short video platforms like TikTok have high costs and two main sources of income: advertising and e-commerce. The latter is only common in China. TikTok's parent company, ByteDance, has managed to generate billions of dollars in revenue through its seamless integration with all major e-commerce platforms in China. In the U.S., the ad revenue model has proven to be effective thanks to YouTube and Amazon Twitch, which use parent company optimization algorithms.
YouTube and Twitch also use the servers available for Google Cloud or Amazon Web Services. This makes them an exception to the peer platforms that pay millions of dollars in bandwidth and storage costs, which are great costs for all video content platforms. In particular, YouTube used Google counterpart for almost free bandwidth. This is especially true for companies in China, where the bandwidth cost is very high since most data centers are owned by state-owned telecom companies.
As more and more users watch high quality 4K videos at 60fps, server costs and data collection for custom content platforms are growing exponentially. In 2011, Tudou – “China’s Chinese Website” – reported in a financial statement that the bandwidth costs were $ 28.6 million, accounting for 42.1% of the revenue value. At the end of 2011, there were 227 million unique visitors per month, which equals 7.9 unique visitors per month for every dollar spent on bandwidth. Nearly a decade later, Bilibili – another Chinese YouTube partner – revealed in her 2019 financial statements that she spent $ 132 million on servers and bandwidth and has 130 million active users per month, or just under a month. Uses of the spent dollar. Both companies, as well as Kwai ‘Chinese Instagram’, are currently facing very difficult times to make a profit.
TikTok, with 800 million monthly active users who download millions of videos daily – 500 million users in China and 300 million in other countries – takes this issue to a whole new level. With an estimated 6.9 exabytes of data (over 7,000,000 terabytes), software company Trembit estimates that around $ 8 million will be spent on infrastructure to deliver content alone monthly. Since the revenue strategy has not yet been explored, these breakout costs can pose a major obstacle to TikTok's path toward profitability.
Decentralized storage as a solution
Today, the cloud computing market, estimated at $ 364 billion by 2022, is the primary solution to widely storing data worldwide. It is dominated by public clouds such as Amazon Web Services, Microsoft Azure and Google Cloud Platform, which store customer data in their data centers.
According to a study conducted by McKinsey & Company in 2008 and a Stanford researcher and partner with the Anthesis Group in 2015, 30% of servers in data centers around the world are “functionally dead”, meaning they are active, available, but unused. For a period of six months or more. This infrastructure still uses electricity, which means a continuous flow of owners.
Imagine if TikTok can use these free servers to store video content around the world – at a much lower cost than any public cloud. This is exactly what blockchain computing allows.
The goal of decentralized computing is to use the available servers to store user data, which is divided into smaller pieces and stored unchanged across multiple nodes in a peer-to-peer network of service providers who can make money.