TikTok Owner to Launch a Music Service Just as its Music Licenses are About to Expire
Just over a month ago news surfaced that TikTok’s music licenses were expiring, which could put the company in a complicated situation. The app known for short videos of people doing silly stuff to cheery tunes would surely lose most of its appeal if music was taken out of the picture, and major labels were quick to use it as a leverage to ask for higher licensing fees. Fast-forward one month and TikTok announces that it is launching a music streaming service to cater to lesser developed regions of the world, where Spotify and Apple Music are barely present.
ByteDance, the startup behind the app, has already signed deals with two of the biggest Indian record labels, T-series and Times music, a logical move, since India is the biggest market for TikTok accounting for the whopping 39 percent of the app’s users. ByteDance sees a lot of opportunities outside the American and European markets prioritized by other industry heavyweights. Asia, Africa and the Middle East house the majority of the global population but are overlooked by them due to the regions’ limited spending ability. Yet, ByteDance is eager to capitalize on those markets by providing a cheaper (and possibly free) alternative to Spotify and Apple music.
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Most streaming apps in China can be used free of charge. People in the country, where just some 10 years ago 99 percent of music was pirated, are not particularly fond of paying for intangible goods. Local tech companies have, however, found ways to keep their apps afloat by introducing different unique lifestyle additions to their apps that manage to encourage people to take out their wallets such as karaoke where users can tip other users. People from developing countries are likely to have similar sentiments towards paying for music, and in this respect TikTok’s Chinese roots could help it win them over.
Interestingly, it is not just TikTok that is dependent on music, the music industry is growing more dependent on TikTok as well. “Old town road” the number one song in the world right now was popularized on TikTok, and as one participant of a Chinese internet music talent show confessed in a private conversation: “They always ask me to write songs that could go viral on TikTok”. Thus, the new streaming service could not only help Bytedance create a new revenue stream for itself, but also provide artists with a pathway to reaching tons of new listeners.
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ByteDance is still to renegotiate its deals with Sony, Warner and Universal, the world’s biggest music labels. Without them, its efforts to become a dominant force in the world could be rendered obsolete. Even in India, where it already has a solid standing, those labels still hold rank and could help take TikTok’s game one step further. And it seems like having accepted the dire fact that, no matter the cost, without the labels its business will go south, ByteDance decided to ensure as much returns as possible on the forced investment. A new music service might be just the right move to tap into an existing user base, attract new followers from lesser developed parts of the world and make sure that all those music dollars don’t go to waste.