There’s a tension around musicians’ potential use of tipping and similar features on big social platforms, born from a view that these tips economies are an ineffectual sticking plaster for a lack of proper music royalties.
‘If these platforms are using music, they should pay for it properly rather than expect musicians to essentially revert to busker status, begging fans for tips’ would be our summary of that view.
We understand and have sympathy with that. But we also think that tips economies and fairly-valued licensing deals – including usage data to ensure the royalties are distributed accurately – should not be mutually exclusive.
Campaigning for more (or in some cases, just some!) royalties from big social platforms shouldn’t hold artists back from exploring tips economies, if it’s something they feel comfortable with.
That’s why Music Ally writes about what Twitch is up to with its bits, cheers and channel subscriptions, while also covering the arguments over its licensing status. It’s why we look for success stories of musicians using YouTube’s Super Chat and Super Stickers while also still keeping you posted on the ‘value gap’ arguments.
Twitter, Instagram, Snapchat, TikTok… it’s a good idea for artist teams and the wider music industry to understand how these tips economies work, in case they can be helpful.
Anyway, TikTok. It’s ramping up its tips economy with the launch of a program called ‘Creator Next’, described as a hub where “eligible creators can easily unlock new and existing tools to be rewarded for their creativity on TikTok”. Two of those tools are brand new: ‘Tips’ and ‘Video Gifts’.
The first is a standard tipping feature using payments firm Stripe, with fans able to tip their favourite TikTokers, who keep 100% of the money (minus payment service fees).
Video Gifts are an extension of TikTok’s existing ‘Live Gifts’ feature, where fans buy virtual diamonds and give them to livestreaming TikTokers, who can then redeem them for money. The extension is that this can now be done for non-live videos posted on TikTok too.
TikTok already has a growing economy of its users spending money in this way: analytics firm Sensor Tower estimated that the app generated $919.2m of ‘consumer spending’ in the first half of 2021 alone, up 73% year-on-year. Rival researcher App Annie has predicted that spending in all social apps will hit $6.78bn in 2021, driven by tips and subscriptions for livestreams.
The Twitch Rockonomics study in April this year offered some interesting data on how some musicians are making money from its tips economy. Yes, that study was commissioned by Twitch itself as part of its desired narrative around its value for the music industry. Even with that important caveat in mind, it was still a sign that Twitch’s tools can work for musicians, not just for gamers.
Perhaps TikTok’s tips economy can work for musicians as well as for its native creators (not that these are necessarily separate groups at the younger end of things). TikTok’s music boss Ole Obermann recently talked about additional experiments helping artists to sell merch, and ambitions to drive sync revenues too.
On TikTok, Twitch and the other big social/video platforms, a picture is emerging of how these new revenue streams might pay off for musicians. It does not remove the pressure and need for fair licensing deals, and we’d argue that good deals can be the launchpad for these companies to do more with music, and thus provide an even stronger base for artists using their other money-making tools.
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