What’s Next for TikTok?

Today’s Trapital episode is about the ongoing TikTok saga. To break it all down on the pod, I was joined by Billboard’s Kristin Robinson. We talked about how this TikTok drama has impacted the industry. We also made some predictions on what TikTok’s future ownership may look like.You can listen here and read below for a few highlights.

Last week, I said that this TikTok saga felt like an Aaron Sorkin screenplay directed by Oliver Stone. It’s a Netflix film that gets all the Oscar nominations but zero wins. Yes, one of those.

If we were casting the film, two of the prominent roles would have been Donald Trump and Taylor Swift. On the surface, they don’t have much in common, likely hate to be mentioned in the same sentence, but played similar hands when it came to TikTok.

Trump and Swift each belong to organizations, the U.S. federal government and Universal Music Group respectively, that took strong public stances against TikTok for different reasons. U.S. lawmakers called for a TikTok “ban or sale,” while UMG temporarily pulled its music off the platform.

But neither Trump nor Swift accepted that. They both used their leverage to push back and make deals.

For Swift, TikTok wasn’t just a way to generate licensing revenue. The platform offered her lucrative promotional benefits to other parts of her business that far exceeded her royalties from the platform. Shortly after Swift’s direct deal with TikTok, UMG, the most powerful major record label in the world, lost some leverage and agreed to a new deal with TikTok.

Trump, meanwhile, had his own potential reasons for changing his position on TikTok. Was it the campaign contributions and backing from Jeffrey Yass, whose firm owns 15% of ByteDance? Was it to block his nemesis Meta from gaining more power in the absence of TikTok? Or was it Trump’s 2024 election efforts and continued channel to reach his supporters? It could be all the above, but the verdict is still out on the next steps. That said, the app was still working past the January 19 deadline despite its 14-hour shutdown.

We could dig deeper into Trump and Swift’s motivations, but frankly, this is less about them as individuals. Replace Swift with any other superstar (except Adele), or replace the U.S. government with another organization whose leadership relies on TikTok, and a similar dynamic would likely have played out.

When the stakes are high, and powerful people have too much to personally lose, the game changes. This is why I argued months ago that TikTok was too big to ban. If the decision was purely about policy or business, the disputes with both UMG and the U.S. government might have gone differently.

The late Charlie Munger famously said, “Show me the incentives and I’ll show you the outcome.” I doubt he saw this coming. Social media wasn’t his thing. Can you imagine following @charliemunger and there’s a greenscreen of him behind an article talking about Costco's quarterly earnings? That would have been wild. But still, this type of scenario, the fate of TikTok in America, is exactly the type of scenario he was referred to.

Make no mistake, the story is far from over. The list of parties eyeing the purchase of TikTok feels like a pro sports team sale. There’s a lineup of wealthy business leaders who get in the mix, and make CNBC appearances to grab attention, but rarely close the deal. The sale often goes to a party that didn’t get caught up in the public sweepstakes.

Let’s see how it plays out. Will ByteDance actually sell TikTok’s U.S. operations? If they do, will they include the algorithm? Would a potential new owner even want TikTok without its algorithm?

Then, the question isn’t “sale or ban.” It’s “ByteDance or bust.” And that’s the elephant in the room.

You should listen to the full conversation with me and Kristin for more on:

- TikTok and America: 2019 to today
- the drama leading up to TikTok’s Jan 19 deadline
- the impact of a “ban or sale” on artists and labels
- a ranking of each prospective buyer’s likelihood to land TikTok

Listen here: Apple | Spotify | Overcast

Chartmetric Stat of the Week - Global Expansion

Our friends at Chartmetric just released their Year in Music 2024 report. There’s a section on audience location that shows the countries from which artists gained new followers in 2024. On YouTube, less than 20% came from the United States. Only 19.5% are from the U.S. compared to 14.4% from Brazil, 6.7% from India, 6.1% from Mexico, and 5% from Indonesia. Of course, value vs volume plays a factor in streaming data, but it’s still a fascinating shift!