In the list that Music Ally maintains of ‘Obvious Strategies For A Company That Reportedly Lost $1.2bn In 2018’ it’s fair to say that ‘Launching Your Own Music-Streaming Service’ comes fairly low down: in between ‘Buying All The Bitcoin’ and ‘Betting Your Entire Cash Assets On A Racehorse Because It Has A Friendly Face’. Even if you enthusiastically support the Spotify perspective that music-streaming can be a profitable standalone business at scale, the costs and margins on the way to that point are daunting. And remember: the friendly-faced horse almost never wins the race *looks sadly at torn-up 2019 Grand National Betting Slip*.
But perhaps we’re being too gloomy in our reaction to the news that Bytedance, the Chinese company that owns social app TikTok, may be venturing into the music-streaming game. The South China Morning Post claims that the company is “working on a Spotify-like music streaming app for overseas markets” which will launch “soon” – with a team of more than 100 people working on it. There aren’t many more details in the story, with Bytedance itself declining to comment. “Spotify-like music streaming app” is a phrase that could cover a range of services and a spectrum of ambition (and costs).
We do know that Bytedance has been in what sound like fairly hair-raising negotiations with major labels over how the music used in TikTok (and its Chinese originator Douyin) is licensed: claims of demands for “hundreds of millions” in advance guarantees, and counter-arguments about the promotional value of these apps included. And we also know that TikTok is moving into music discovery with a new talent-contest-like feature called ‘Spotlight’ which will try to break new artists to a global audience. There’s a lot going on already, around the core user-generated content (UGC) aspects of TikTok, as well as its possible promotional value for musicians. That’s an interesting base for some kind of dedicated music-streaming offering.
Today’s report does make one thing clear: that whatever plans Bytedance has, they are international rather than focused on its homeland. Likely sensible, given the sheer scale of rivals like Tencent Music’s trio of services, as well as NetEase Cloud Music. While going up against Spotify and other global players may be no less daunting, markets like Japan, South Korea and south-east Asia more generally – plus India, where TikTok is big already – offer considerable opportunity. The dealmaking here could also be fascinating: crafting agreements with Bytedance that encompass user-generated content AND a proper streaming service might be another template for any future such deals in the west: whether that’s Facebook expanding beyond UGC, or Spotify expanding into it…