TikTok's Future in Music Streaming

ByteDance, the company that owns TikTok, is ready to take on the digital streaming providers with its own paid streaming service. From Bloomberg:

ByteDance expects to introduce the new app as early as this fall in a handful of territories, mostly poorer countries where paid music services have yet to garner large audiences, said the people, who asked not to be identified because the plans haven’t been announced. The company has already secured rights from T-Series and Times Music, two of India’s largest labels, according to executives with those companies.

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Though Asia, the Middle East and Africa are home to the majority of the world’s population, they only account for about 10% of Spotify’s customer base.

The China-based tech company is after a demographic that’s largely served by YouTube and Tencent, which are both primarily free services. The move has baseline strategic logic, but there are a few challenges:

• A paid streaming service in developing markets need to be priced low to gain traction. In India, both Spotify and Apple Music are priced below $2 per month. While the big DSPs can justify the low cost with more expensive customers developed markets, this new streaming service may struggle.
• Music rights have not been secured with the Big 3 records labels. While those emerging markets are less reliant on those catalogs, TikTok is largely driven by music from the major labels.
• It still does not address TikTok’s looming challenge: when will the parent company obtain the rights for the songs so that record labels and artists can be compensated from exposure on the app?

A breakout star like Lil’ Nas X is fine, but there are countless other artists who are struggling to navigate TikTok. From Time:

Such is the case for ZaeHD & CEO, two rappers out of Little Rock, Ark. Like Lil Nas X, they hoped to engineer viral success by recording songs specifically designed to be consumed as bite-size memes. Weeks before they released the full version of their song “All In,” they posted short videos of themselves and others dancing to snippets on Instagram, making it a minor sensation before it was even out.

Their social-media push worked: a portion of the song has been featured in 2.3 million videos on TikTok. But there’s one issue: that sample was put into TikTok’s system by another user, who labeled it “Em Em Dance,” by Keezy. The hashtag #ememdance has now been viewed over 32 million times with no reference to the song’s creators. “I have been looking for this song for the longest [time] I kept typing in mmm mmm mmm but nothing recognized it,” one YouTube comment reads.

Sleuthing fans like that one did find the song on other platforms, like Spotify and YouTube, which pay artists per stream. But as of publication time, the song is still labeled incorrectly–despite the fact that ZaeHD says his team has talked to TikTok about changing it–and the song’s stream count on Spotify is comparatively much lower, around 5 million.

This segment was a flashback to the Napster and Limewire days when songs were incorrectly titled all the time. I wish I had a dollar for every time I saw someone sharing ‘songs’ like Puff Daddy - “I’m Coming” or Nelly - “Must Be The Money.” But now, there are financial implications tied to the incorrect names.

TikTok is a powerful tool, but there’s a lot for ByteDance to figure out to be beneficial for artists that want to follow the success of Lil’ Nas X.