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With 1 billion users, TikTok is fast becoming one of the most important players in the music industry, and now it’s setting its sights on revolutionizing the way artists get discovered and made money.
Tolga Akmen | Afp | Getty Images
TikTok recently launched a new competitor to the music streaming giants Spotify And apple Music, as the popular short video app is looking for new ways to grow.
TikTok Music said on Wednesday that it will test its service in Australia, Mexico and Singapore. This announcement comes shortly after its launch Indonesia And Brazil earlier this month.
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Last week, TikTok also announced a new Extended license agreement With Warner Music Group, as you look to grow your music content library. Parent company ByteDance also recently canceled the free tier of Resso, another music streaming service it owns.
While these efforts are in their early days, analysts said TikTok has key advantages that other music streaming participants don’t have and that could help it grab market share.
“There is already this large proven user base that TikTok can convert into payments for TikTok Music subscribers — at a relatively low acquisition cost for customers,” said Jonathan Wu, senior research analyst at Phillip Securities Research.
According to DataReportal, Indonesia and Brazil are the second and third largest markets for TikTok, behind only the United States, has 113 million and 84.1 million active TikTok users aged 18 and over, respectively. Meanwhile, Mexico is the fourth largest market for TikTok with 62.4 million TikTok users.
There isn’t really much incentive to switch services for users who are already on Spotify or Apple Music because brand loyalty among users on these existing premium platforms is also very strong.
Jonathan Wu
Senior Analyst, Phillip Securities Research
“TikTok Music will make it easier for (users) to save, download and share their favorite viral tracks from TikTok,” said Oli Obermann, TikTok’s global head of music business development, during the Indonesia and Brazil launch.
TikTok is the second most popular music discovery resource for 16- to 19-year-olds, after YouTube, according to data From MIDiA Research with CNBC. MiDIA Research is a UK based research company covering entertainment and media.
If you’re already in the ecosystem, and you use TikTok a lot, you might be willing to switch.
Tatiana Cirisano
Music Analyst, MiDIA Research
in MiDIA Q4 Consumer Survey, 48% of respondents said YouTube is among the main places to discover music, while 41% cited TikTok. The survey included 9,000 respondents from the United States, the United Kingdom, Australia, Canada, Germany, France, Sweden, South Korea and Brazil.
“A lot of times people hear a lot of different songs on TikTok, but they don’t jump in to actually listen to it somewhere else or learn more about the artist,” said Tatiana Cirisano, music analyst at MiDIA Research.
“The strong potential of TikTok Music is that it can fill that gap,” Cirisano said.
some market share
The Swedish giant Spotify and Apple Music currently dominate the music streaming market.
Spotify commands nearly 31% of the global streaming market with Apple Music trailing at 13.7%, according to the Music Summit 2023 International Business Report.
But Cirisano said heavy TikTok users could turn into TikTok Music users if they use other services like Spotify. “If you’re already in the ecosystem, and you use TikTok a lot, you might be willing to switch,” Cirisano said.
However, Woo of Phillip Securities Research said that TikTok Music presents a “low risk” to Spotify and Apple Music.
“I think it will be very difficult to overtake Spotify and Apple Music in terms of market share given their occupancy, but TikTok Music can definitely eat some of them,” Wu said.
“There’s not much incentive to switch services for users who are already on Spotify or Apple Music, as brand loyalty among users on these existing premium platforms is also very strong,” Wu said.
He added that the monthly subscription prices for the three services are expected to be at “similar price points”. In Indonesia, Spotify Premium costs IDR 54,990 ($3.66) per month while iOS users pay IDR 49,000 ($3.26) per month for TikTok Music.
“As a consumer, why should I pay a monthly fee to listen to TikTok Music, when I can listen for free on Spotify, albeit with ads?”
TikTok declined to comment on TikTok Music’s expansion plans. Spotify and Apple Music did not respond to CNBC’s requests for comment.
increased growth?
TikTok has been looking for growth outside the United States, where it faces growing political headwinds. It was the pioneering app Banned in Montana, the first state to do so, as well as India. TikTok’s CEO has previously said that the company will pump “billions of dollars” into Southeast Asia over the next few years.
The company’s e-commerce market, TikTok Shop, has been expanding aggressively in Southeast Asia, and is competing against it seaShopee Ali BabaLazada. These e-commerce efforts also include live streaming shopping.
TikTok said in July that streaming shopping isn’t the only area it’s looking into when asked if it was the “final destination” for TikTok’s areas of expansion.
“Entertainment is not the only destination, but it is definitely one of the key areas, especially in Asia Pacific that we are very lean towards,” Shant Oknayan, TikTok’s head of business Asia-Pacific, Middle East, Africa and Eastern Europe, said during a summit in Jakarta earlier this month.
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