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To understand this you need to understand that:

1. This is massive with the tween/teen market. That is why not many people understand its popularity; you either need to know a tween, or have one as a kid.

2. Musical.ly became Vine after Vine shutdown. The content moved from lip-synced videos to more of a mixure of vine-like videos and lip sync.

As of now Musical.ly is still #58 on the app store. Its hard to say people aren't using it when its above some large companies on the charts (Linkedin, Shazam, Dropbox).

Their influencer network is huge as well. Nearly every popular musical.ly star has some sort of swag from the company. Think about that in the tween's mind: you're just a normal kid going to your normal middle school with your normal friends, then a national company wants YOU to be a spokesman for the company. That is quite literally getting famous for these kids.

Teen/Tween is the probably the dumbest market to target. They have no money, which means that they are not customers. This entire "Man, they grow up and they convert" is just amazing voodoo.
They don't have money, but their parents most likely have some. The platform can also be used to funnel interest into other areas of spending (concerts, merchandise, ads, etc).

A billion still seems like a lot, though.

Tell that to Justin Bieber and Hannah Montana.

If your kid begs for something they just might get it. The tween market is valuable and easily influenced.

Your "company" is not Justin Bieber or Hannah Montana. It does not have a product for them.
What a shitty "article." It doesn't say what makes the application unique.

You can make "lip-sync videos" with the plain built-in camera, so this thing must be providing some additional functionality that they were too lazy or inept to mention.