TikTok Expands With New Subscription-Based Music Streaming Service

With a billion users, TikTok has rapidly become one of the most important players in the music industry, and now has its sights set on revolutionising the way artists are discovered and get paid.

Tolga Akmen | Afp | Getty Images

TikTok recently launched a new rival to music-streaming giants Spotify and Apple Music, as the popular short video app seeks new avenues for growth.

TikTok Music said on Wednesday that it will be testing its service in Australia, Mexico and Singapore. That announcement comes shortly after it launched in Indonesia and Brazil earlier this month.

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Last week, TikTok also announced an expanded licensing agreement with Warner Music Group, as it looks to grow its music content library. Parent company ByteDance also recently scrapped 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 entrants do not possess and that could help it seize market share.

“There’s already this large installed base of users which TikTok can convert into paying TikTok Music subscribers – with a relatively low customer acquisition cost,” said Jonathan Woo, senior research analyst at Phillip Securities Research.

TikTok Expands with New Subscription-based Music Streaming Service

According to DataReportal, Indonesia and Brazil are TikTok’s second- and third-largest markets, behind only the U.S., with 113 million and 84.1 million active TikTok users aged 18 years and above, respectively. Meanwhile, Mexico is TikTok’s fourth-largest market with 62.4 million TikTok users.

There really is not that much incentive to switch services for users already on Spotify or Apple Music as brand loyalty amongst users on these premium incumbent platforms is also very strong.

Jonathan Woo

Senior analyst, Phillip Securities Research

“TikTok Music will make it easy for [users] to save, download and share their favorite viral tracks from TikTok,” Ole Obermann, global head of music business development for TikTok, said during the Indonesia and Brazil launch.

TikTok is the second-most common source of music discovery for 16 to 19 year olds, behind YouTube, according to data from MIDiA Research shared with CNBC. MiDIA Research is a U.K.-based research firm covering entertainment and media.

If you are already in the ecosystem, and you are using TikTok that much, you might be willing to switch over.

Tatiana Cirisano

Music analyst, MiDIA Research

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