August 1, 2023: This month, TikTok's second and third largest markets—Indonesia and Brazil—launched its music streaming service. Read on!
The well-known short-video app TikTok recently unveiled a new competitor to music-streaming goliaths Spotify and Apple Music as it looks for fresh growth opportunities.
On Wednesday, TikTok Music said that it would be testing its service in Singapore, Australia, and Mexico. It was just launched in Brazil and Indonesia earlier this month when that news was made.
In an effort to extend its collection of music content, TikTok also disclosed an enhanced licence agreement with Warner Music Group last week. Additionally, Resso, a different music streaming service owned by parent company ByteDance, just discontinued its free service.
Despite the fact that these initiatives are still in their early stages, analysts claimed that TikTok has certain benefits that other music streaming services do not, which could aid it in capturing market share.
According to Jonathan Woo, senior research analyst at Phillip Securities Research, "TikTok can convert this large installed base of users into paying TikTok Music subscribers -- with a relatively low customer acquisition cost."
With 113 million and 84.1 million active TikTok users who are 18 years of age or older, respectively, Indonesia and Brazil are TikTok's second- and third-largest markets, behind only the United States. With 62.4 million users, Mexico ranks as TikTok's fourth-largest market.
Ole Obermann, the company's global head of music business development, claimed during the launch of TikTok in Indonesia and Brazil that TikTok Music will make it simple for users to save, download, and share their favourite viral tracks from TikTok.
According to statistics from MIDiA Research provided with CNBC, TikTok is the second-most popular place for 16 to 19-year-olds to find new music, only behind YouTube. A UK-based research company that focuses on media and entertainment is called MIDiA Research.
In the fourth quarter of MIDiA's consumer survey, 48% of the people surveyed ages 16 to 19 named YouTube as one of their primary sources for music discovery, while 41% named TikTok. 9,000 people from the United States, the United Kingdom, Australia, Canada, Germany, France, Sweden, South Korea, and Brazil participated in the study.
Tatiana Cirisano, a music analyst at MIDiA Research, said: "People often hear a lot of different songs on TikTok, but they don't make the jump to actually listen to it elsewhere or learn more about the artist."
The ability to bridge that divide is TikTok Music's most significant potential, according to Cirisano.
Apple Music and Swedish juggernaut Spotify presently control the music streaming business.
According to the International Music Summit Business Report 2023, Apple Music comes in second with 13.7% of the worldwide streaming business, with Spotify holding close to 31% of that market.
However, Cirisano claimed that regular TikTok users may switch to TikTok Music if they already use other services like Spotify. According to Cirisano, "If you're already in the ecosystem and you use TikTok that much, you might be willing to switch over."
Nevertheless, TikTok Music presents a "low risk" for Spotify and Apple Music, according to Woo of Phillip Securities Research.
Given Spotify and Apple Music's market dominance, Woo stated, "I do think it would be quite difficult to surpass them in terms of market share, but TikTok Music could definitely eat into it."
According to Woo, there is not much of an incentive for consumers of Apple Music or Spotify to transfer services because of the high level of brand loyalty among customers of these established premium platforms.
He continued by saying that the monthly membership costs for each of the three services are anticipated to "be at similar price points."