TikTok Expands into Music Streaming, Rivals Spotify and Apple Music.
TikTok, the top-rated short video app, has recently entered the music streaming arena, posing a formidable challenge to established giants like Spotify and Apple Music. Seeking new avenues for growth, TikTok Music has announced the commencement of testing its music streaming service in Australia, Mexico, and Singapore.
This move follows its successful launches in Indonesia and Brazil earlier in the same month. TikTok has also struck an expanded licensing agreement with Warner Music Group to bolster its music content library, showcasing its determination to diversify and strengthen its offerings.
Notably, ByteDance, TikTok’s parent company, has taken significant steps in this direction by discontinuing the free tier of Resso, another music-streaming service it owns.
Analysts recognize TikTok’s distinct advantages in the music-streaming space, setting it apart from other new entrants. One of its key strengths lies in its massive existing user base, which can be seamlessly converted into paying subscribers for TikTok Music. This enables TikTok to achieve customer acquisition at a relatively low cost, providing a potential edge over competitors.
The popularity of TikTok in various regions underscores its global reach and market potential. According to DataReportal, Indonesia and Brazil are TikTok’s second and third-largest markets, following closely behind the United States.
With 113 million and 84.1 million active TikTok users aged 18 years and above in these countries, respectively, the app enjoys a considerable user base. Moreover, Mexico, with 62.4 million TikTok users, stands as TikTok’s fourth-largest market, further expanding its scope for growth and market share capture.
As TikTok Music embarks on its journey into music streaming and with its strategic positioning, the industry is keeping a close eye on how this development may impact the competitive landscape and redefine the way users consume music content.
While still in its early stages, TikTok’s foray into music streaming holds the potential to disrupt the status quo and introduce exciting new dynamics to digital music consumption.
During the launch of TikTok Music in Indonesia and Brazil, Ole Obermann, the global head of music business development for TikTok, emphasized that the new music streaming service would provide users with a seamless way to save, download, and share their favourite viral tracks from the TikTok platform.
This move represents TikTok’s endeavour to capitalize on its immense popularity and create an all-encompassing music experience for its users.
Recent data from MIDiA Research, a reputable U.K.-based research firm specializing in entertainment and media, sheds light on TikTok’s significance as a music discovery platform, particularly among the younger audience.
According to MIDiA’s fourth-quarter consumer survey, TikTok is the second-most common source of music discovery for individuals aged 16 to 19, following closely behind YouTube.
Among the survey’s 9,000 respondents from the U.S., U.K., Australia, Canada, Germany, France, Sweden, South Korea, and Brazil, 41% identified TikTok as one of their primary places to discover new music, while YouTube led with 48%.
Tatiana Cirisano, a music analyst at MIDiA Research, highlights an intriguing trend observed among TikTok users. Despite encountering various songs on the platform, many still need to transition to exploring the music further or learning more about the artists.
This presents a unique opportunity for TikTok Music to bridge this gap and serve as a conduit for turning short video discoveries into full-fledged music consumption experiences.
The potential for TikTok Music to influence music consumption behaviour is substantial. By providing a seamless integration between viral tracks discovered on TikTok and a fully-fledged music streaming service, TikTok Music aims to capture the attention of its vast user base and encourage them to delve deeper into the music they encounter on the platform.
As the service expands its reach and capabilities, it could redefine how young audiences interact with music and artists, ultimately shaping the landscape of music streaming and discovery in the digital age.
As of 2023, the global music streaming market is primarily dominated by two major players: the Swedish giant Spotify and Apple Music. According to the International Music Summit Business Report 2023, Spotify currently commands a substantial share, holding almost 31% of the global streaming market, closely followed by Apple Music with 13.7%.
Despite Spotify and Apple Music’s strong market positions, TikTok’s entry into the music streaming arena poses an exciting challenge. Tatiana Cirisano, a music analyst at MIDiA Research, suggests frequent TikTok users may be inclined to explore TikTok Music, mainly if they already use other music streaming services like Spotify.
This potential migration is driven by the allure of experiencing a more integrated music discovery and streaming process within the TikTok ecosystem.
While TikTok Music’s presence will likely impact the market, Jonathan Woo, a senior research analyst at Phillip Securities Research, views it as presenting a relatively low risk to Spotify and Apple Music.
He acknowledges the significant incumbency advantage enjoyed by the established platforms and considers it challenging for TikTok Music to surpass its market shares. However, Woo believes TikTok Music could still gain market share by attracting users seeking a unique music discovery experience.
Monthly subscription prices are also a critical factor in this landscape. Woo notes that TikTok Music, Spotify, and Apple Music are expected to have similar pricing structures. For instance, in Indonesia, Spotify Premium costs 54,990 Indonesian Rupiah ($3.66) monthly, while TikTok Music is priced at 49,000 Indonesian Rupiah ($3.26) monthly for iOS users.
This pricing similarity raises questions for consumers about why they should pay for TikTok Music when Spotify offers a free tier, albeit supported by advertisements.
It is worth noting that TikTok declined to comment on its expansion plans for TikTok Music, while both Spotify and Apple Music did not respond.
As the competition intensifies, the dynamics of the music streaming market will continue to evolve, with TikTok Music’s innovative approach potentially reshaping user preferences and influencing the overall market landscape in the coming years.
In pursuit of continued growth and expansion, TikTok has been actively seeking opportunities beyond its core market in the United States, where it faces mounting political challenges.
The platform has encountered setbacks, such as a ban in Montana, becoming the first state to do so, and a ban in India. TikTok’s CEO announced plans to invest “billions of dollars” in Southeast Asia over the next few years as part of its strategy to diversify and tap into new markets.
One of TikTok’s significant endeavours to boost growth in the region is its foray into the e-commerce sector through TikTok Shop. With aggressive expansion efforts in Southeast Asia, TikTok Shop competes against established players like Sea’s Shopee and Alibaba’s Lazada.
A notable aspect of TikTok’s e-commerce push is its embrace of livestream shopping, a popular trend that combines entertainment with online shopping experiences.
When questioned whether livestream shopping represents the ultimate destination for TikTok’s expansion endeavours, the company emphasized that there are other focuses. While TikTok acknowledges the importance of “shoppertainment” and its potential in the Asia Pacific region, its expansion vision is more extensive and encompasses various avenues beyond just e-commerce.
Shant Oknayan, head of business across Asia Pacific, the Middle East, Africa, and Eastern Europe at TikTok, reaffirmed the company’s commitment to exploring multiple areas for growth during a summit held in Jakarta.
While TikTok Shop and livestream shopping play prominent roles in their expansion strategy, they view these efforts as part of a broader and multifaceted approach to expanding their presence and impact across diverse markets.
As TikTok intensifies its focus on Southeast Asia and diversifies its offerings, it aims to cement its position as a critical player in the region’s digital landscape. By capitalizing on the popularity of short-form video content and integrating e-commerce elements, TikTok seeks to engage users more interactively and dynamically, fostering greater brand loyalty and attracting new user segments.
As the company’s expansion plans unfold, it will likely continue to explore innovative avenues and partnerships to fuel its growth trajectory and solidify its position in the competitive Southeast Asian market.
