ByteDance Prioritizes Music Product, Places Former TikTok Chief at Helm

ByteDance has recently raised the priority level for its music products to P1, on par with its games and education services. (Source: ByteDance)

According to domestic media outlet 36Kr, ByteDance has recently raised the priority level for its music products to P1, on par with its games and education services. Meanwhile, Alex Zhu, Vice President of Product and Strategy for ByteDance and former head of its wildly popular TikTok platform, has taken over the project to lead the firm’s overseas music product, Resso.

Sources revealed that Zhu placed great importance on Resso, which was the main reason for the company to prioritize its music services. The platform embodies Zhu’s wish to construct the next TikTok-like product.

At the time of writing, ByteDance has not commented on the matter.

ByteDance’s move to develop its music service is both a pragmatic decision to improve the efficiency of copyright usage, as well as a perfect fit for the firm’s overall strategy of cashing in on digital traffic advertising.

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People close to ByteDance’s strategy team once remarked that the Beijing-based tech giant’s overall thinking regarding its strategic layout is that it would seize any possible battlefield that offers huge web traffic. From games and novels, to investing in a potential content startup, these moves have all been motivated by ByteDance’s appetite for online users’ attention.

ByteDance’s primary arena for music products is overseas markets. The strategy is to take Resso as a starting point, and tie it in with TikTok to create a vibrant music community.

The music division of ByteDance has existed for a long time and has been scattered across various departments. The team is responsible for communicating with record companies such as Universal Music and Warner Music about copyright partnerships.

After joining TikTok as CEO in May 2020, Kevin Mayer, a former senior vice president at Disney, had planned a detailed development strategy for TikTok’s overseas music product. But following Mayer’s hasty departure in August, plans to develop the product were put on hold.

To secure music copyrights for products like TikTok and Douyin – its Chinese mainland counterpart – ByteDance needs to pay huge annual royalties to record companies. Developing and operating a music product of its own would at least make such expenditures more worthwhile.

Data from third-party analyst firm Counterpoint Research shows that in 2019, Spotify held a 31% share of the global online music streaming market and a 35% share of the paid subscription market; Apple Music ranked second, with a 19% share of total paid subscriptions.

After Alex Zhu takes over, TikTok’s music product will evolve in the direction of creating a content community. In terms of product types, the global market for music streaming is highly saturated now, and it would be challenging for TikTok to compete with Spotify. Turning Resso into a music community product with high user activity thus represents a more feasible path.

It is worth noting that Resso is the second product that Alex Zhu led in addition to TikTok. Zhu is best known as the founder of Musical.ly, a popular lip-sync platform founded in 2014 in Shanghai. In 2017, ByteDance bought Musical.ly for $1 billion, beating competitors including Facebook and Racer. In 2018, Musical.ly officially became part of TikTok, with Alex Zhu as its leader.

Upon Kevin Mayer’s arrival in TikTok in May 2020, Zhu moved to the position of Vice President of Product and Strategy for ByteDance. He then stepped down from the role in April 2020, with Zhou Shouzi joining ByteDance as CFO and CEO of TikTok.

Sources say that since around March of this year, Alex Zhu began to work frequently on Resso’s product design. “Alex is ambitious about the product, and has somehow convinced himself that Resso is likely to become the next TikTok,” said the source.