TikTok Inches Closer to Global Attack on Music Streaming Biz

Note: This article relates to the VIP+ special report “Music Streaming,” available only to subscribers.

TikTok Music continued its slow but steady worldwide expansion this week as parent company ByteDance retired its Resso brand in Indonesia and Brazil on Tuesday, replacing it with the launch of TikTok Music in those countries, as well as Mexico, Australia and Singapore in July.

While it would take some time to dethrone longtime incumbents like Spotify and Apple Music in the space, anything with the brand and growth potential of TikTok must be taken seriously.

While TikTok has not confirmed whether it plans to eventually roll out TikTok Music in the U.S., its current beta testing in the app’s second, third and fourth largest markets signal that an entry into its No. 1 market could be right around the corner. Not to mention, TikTok filed a patent with the U.S. Patent and Trademark Office for “TikTok Music” in May of last year.

From what we know so far about TikTok Music, it is subscription only and users must have a TikTok account to access it. TikTok has seen exponential growth over the past several years, and its reach has begun to outpace even the biggest social media apps in the U.S. In terms of total daily minutes consumed across all devices among U.S. adults, TikTok surpassed Instagram in 2022 and is set to top Facebook by 2025.

For younger generations who’ve grown up with TikTok and seek a more social experience from music streaming, TikTok could capture younger consumers’ loyalty by creating a truly all-inclusive entertainment ecosystem. It’s already common knowledge that TikTok is a critical music discovery tool; it makes sense to expand on that by creating a place to actual listen to full tracks without ever having to leave the app.

Even as TikTok Music poses a serious threat to the major streaming services — Spotify, Apple Music, Amazon Music and others — it could potentially present a better opportunity for record labels like Warner Music Group, Universal Music Group and Sony, as additional licensing partnerships would help create new revenue opportunities for artists under the labels.

In the past, music streaming platforms and record labels have been engaged in very public disputes regarding streaming royalties and the uneven distribution of revenues from streamed music. The emergence of TikTok Music is a bit of a wildcard when it comes to relationships with record labels and artists, and it will be critical that the two sides engage in proper dealmaking if TikTok Music continues to expand globally.

It’s just hard to deny the influence of emerging platforms such as shortform video, connected fitness, gaming and podcasts, even within music. Growth in those platforms is a major revenue opportunity for the music industry.

Music revenue from social media platforms grew 30.9% in 2022, according to IFPI. Analysts estimated 60% of emerging platform revenue in 2022 came from shortform video and/or social media, including TikTok, YouTube Shorts, Instagram Reels and Snapchat Spotlight.

Much of what will play out with TikTok in the music streaming space still remains to be seen, but the pressure can already be felt. The music streaming business is in the midst of an industrywide shift. The economics of the business are more important than ever, and the competition has been growing fierce over the past several years. With TikTok Music slowly infiltrating the category, all the major platforms need to be armed and ready to take on the new competitive threat or risk losing market share.

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