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TikTok parent ByteDance set to compete with Spotify as the company plans music-streaming expansion

We see competition on the horizon as TikTok’s parent company, ByteDance, negotiates with music labels and sends Spotify shares tumbling.

ByteDance music-streaming service on TikTok

ByteDance Ltd. announced its plans to begin negotiations with music labels about expanding its music-streaming service globally to be able to compete with industry giants such as Spotify and Apple Music.

Talks and partnership propositions have been laid on the table, but according to news reports, there are still significant hurdles that remain to be negotiated to finalize the deal, as talks have been strained at times over disagreements about how to value TikTok’s promotional benefits for the record labels.

ByteDance announced that they plan to have its service eventually integrated with TikTok’s platform and to serve as a sole space to connect, explore and discover music within its social community.

The prospects of having one digital space that functions on the foundation of short-form videos, together with discovering and streaming music can threaten other streaming platforms such as YouTube and especially subscription-based business models such as Spotify.  As a matter of fact, when news broke of Wall Street Journal’s published report on ByteDance’s plans for expansion it immediately sent Spotify’s stocks tumbling.

Most people don’t know that TikTok’s mother company already has a separate music-streaming service, called Resso, which is currently only available in India, Indonesia, and Brazil. Bytedance has discussed that it plans on launching the platform in more than a dozen additional markets to eventually make the platform globally available so that users can discover songs on the short-form video app and then easily subscribe to music.

What would ByteDance Resso’s integrated music-streaming service in TikTok mean for market competitors?

TikTok exploded in popularity over the course of 3 years as the interactive video-based platform shifted younger generations from other social platforms to breed a new digital culture of entertainment content creation.

The highly addictive and enjoyable form to consume content on TikTok gave way to new forms of music discovery. Many Billboard Hot 100 hits got their start or boost from trending videos on the service that are accompanied by dance challenges, compilation videos, or voiceover singing.

ByteDance’s expansion in music streaming would be a means to keep its large user base within its “ecosystem”, which would easily allow users to discover a new song and in the same breath choose whether or not to use it for a quick TikTok post. Allowing for a seamless 360 content discovery and creation experience.

This could jeopardize platforms such as Apple Music or Spotify, as users would no longer deem it necessary to have multiple subscription accounts to eventually discover music that’s in any way made viral on social platforms. Therefore, to be the first to catch songs or discover artists on a viral platform and have it saved onto a curated playlist to either listen to or create content just makes sense to have everything in one space.

Ultimately, Resso plans to follow the same business model as Spotify’s “freemium” service, which offers a free, ad-supported tier as well as an on-demand subscription tier. Free access to the music service supported by ads would function as an introduction to the platform’s service offering since the inability to skip ads eventually lead “platform testers” to convert to full subscription models to have free reign and a seamless streaming experience.

This would open another channel of potential revenue and may be a means to incentivize music creators to further the amount of content they push out on TikTok to not only increase exposure and gain a more significant income stream but increase user growth and engagement onto the app. A definite win-win situation for both creators and ByteDance, we wait and see if a mutually beneficial deal between the labels and TikTok’s mother company would soon be available for testing.

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