tiktok roundup

It’s that time of the year again! Meat-eating households are debating how many pigs-in-blankets they need per person (answer: 17). The Scotch Egg Marketing Board is, once again, ruing its decision to turn down LadBaby. And Music Ally is continuing with our series of 2022 roundup articles.

Today we’re clocking in with a piece that’s all about the Tik and the Tok. Yes, TikTok was never far from the music industry headlines in 2022, for better or worse. Here we take a look at the big talking points, with links back to our coverage.

Read on and enjoy! And you can find the rest of our 2022 roundups here. So far we’ve covered industry data sources, Spotify’s strategic moves, startup acquisitions and diversity must-reads, among other topics.

(Oh, and yes, if you’re wondering, the AI we’re playing with for images for this series of posts had A Bit Of A Moment when asked to generate pics with TikTok’s logo. Still, in an alternative world Taidk Trok Trok is all the rage…)

01 TikTok has social and streaming services alike spooked

It really has. The most successful digital services all have a moment where it feels like they’re at the centre of culture (and particularly youth culture), but it’s a moment that at best lasts two or three years before something else turns up.

Facebook, YouTube, Instagram, Spotify, Snapchat and others all had it, but for the last couple of years it’s been TikTok. And as is always the case, the older (but still not happy to be seen as uncooler) platforms are spooked.

From Meta being accused of orchestrating a PR campaign against TikTok in the US to the intense efforts and resources being put into TikTok-style short videos by YouTube (Shorts) and Instagram (Reels), via Spotify’s experiments with a vertically-scrolling For You music-discovery feed, there were plenty of signs in 2022.

There was also no shortage of research and/or forecasts quantifying the scale of TikTok’s disruption. eMarketer claimed that “US TikTok users will spend more time with the social media platform this year than YouTube users will spend on YouTube”. The Pew Research Center noted TikTok overtaking Instagram, Snapchat, Facebook and Twitter in terms of the proportion of US teens using it, if not quite yet YouTube.

Just like those other platforms before it, TikTok is trumpeting its moment at the centre of digital culture, and just as surely, within a year or two it’ll be facing disruption from a younger, cooler platform. But for now, TikTok’s clout is leading to a TikTokisation (possibly not a word) of the older guard.

02 Big artists are still joining but others feel pressured

Any platform that convinces Beyoncé and Dolly Parton to sign up clearly has something about it, continuing a trend that has seen a host of established artists join TikTok and seek a piece of its zeitgeist. TikTok can work well for these acts as well as younger, emerging artists who are native to the platform.

However, unhappily for the app, that wasn’t really THE story about musicians and TikTok this year. In late spring there was a flurry of stories about artists feeling under pressure to join TikTok and (to paraphrase) “make their music go viral” at the behest of their labels.

“Having a tiktok do well really is great for streaming numbers etc. but the industry as a whole needs to understand the toll it is taking on artists and help to think of solutions to support that isn’t asking for a good post for the #ratemyshit trend,” as artist Self Esteem neatly summarised it. Another artist, Halsey, claimed their latest track was being held back until they got enough TikTok buzz.

This isn’t TikTok’s fault, as such: it’s just the buzz platform of the moment. The real issue is how the music industry reacts to that: forcing artists to adopt it and putting them under pressure to go viral is the wrong path. And (as management body the MMF’s Digital Burnout Report explored in May) this is a wider issue still: about “the sheer volume of release and content demands on artists” for streaming and socials alike.

03 Music rightsholders are rumbling over royalties

All of the above relates to TikTok’s growing importance as a platform for music promotion, but 2022 was also the year when it faced some pressure of its own around music consumption – and specifically how it pays labels and publishers for the music used in its app.

TikTok does have a set of licensing deals, but (as is common with even the biggest music streaming services) they are relatively short-term, and thus need to be renewed every couple of years. This next set of renewals is proving… tricky.

Those private negotiations spilled out into public (via the industry’s time-honoured method of off-the-record briefings to trade journalists) in November, with reports making it clear that major labels wanted TikTok to significantly increase its royalties. Another well-sourced report specified that labels want a share of TikTok’s advertising revenues, rather than just flat-fee upfront payments.

There’s an element of past battles (e.g. YouTube) being rerun here: rightsholders want to nail down deals that they feel match the value that music provides to TikTok, before it gets even bigger (and thus even more able to push back at the negotiating table).

TikTok, meanwhile, is reminding rightsholders to factor in the promotional value of its app – or as its music boss Ole Obermann, a veteran of platform/label hardball from his days at WMG put it: to recognise TikTok’s role in “enhancing musical engagement” in a way that “translates directly to more financial and creative opportunities for music creators”.

TikTok is important for music, and music is important for TikTok, so new deals will get done. In the light of current debates about the lack of transparency around such agreements, it will be interesting to see how the details of its new deals are shared with the wider industry and artists.

04 SoundOn and StemDrop signify growing music ambitions

But about music’s importance to TikTok: that became clear this year beyond tracks going viral and artists breaking through.

In March, it got into music distribution with its SoundOn initiative, enabling artists to upload their music directly to TikTok, be paid royalties directly for its use within the app, get analytics and promotional tools AND have those tracks be distributed to other streaming services.

Later in the year it added a ‘Pre-Release’ feature for artists to debut clips of music on TikTok in advance of the tracks’ full releases: which is exactly where TikTok would like to sit within their marketing campaigns.

StemDrop was also a fascinating new TikTok music thing. You could describe it as ‘Simon Cowell’s next X Factor’ or (as we did) as TikTok’s next music format. A partnership with UMG, Syco and Samsung to make stems of tracks available for anyone on TikTok to use in their own songs, with a talent-contest structure around that.

It raised (and answered – thanks to Savan Kotecha, one of the star songwriters creating the StemDrop stems, who got involved in the Twitter discussion) some thorny questions about derivative, collaborative works and royalties. StemDrop could still be a short-lived gimmick, but it could also be the start of TikTok doing more around music creation.

Talking of gimmicks, an album with Warner Classics called ‘TikTok Classics – Memes & Viral Hits’ was a fun idea, turning tracks that had gone viral on TikTok into orchestral works. Another deepening of the company’s music partnerships.

05 TikTok is also now in the music livestreaming game

The ability to go live on TikTok isn’t new, but in 2022 it became more firmly established as a platform for music livestreams and pre-recorded concerts, often with a dash of inventive tech.

Rosalía’s TikTok Live in March was filmed entirely on mobile phones, and Camilla Cabello’s April performance used augmented reality to overlay visual effects on the video footage for example. Meanwhile, TikTok is also marrying livestreams with its genre-based hashtag campaigns: Wet Leg for #AltMusic in November and Bicep for #ElectronicMusic in December.

In between these set-piece events, a growing number of artists are going live on TikTok in more informal ways, to launch albums and tours or simply answer questions from fans. It’s another way that TikTok is trying to compete with established platforms like YouTube and Instagram.

06 TikTok could power the next big music-streaming service

Let’s get to the heart of why TikTok is spooking established streaming services; why its negotiations with rightsholders are high-stakes; and why there’s a wider pattern of its growing ambitions around music. This time next year, TikTok may itself be the core of the next big disruptive music streaming.

It’s an open secret. TikTok’s parent company ByteDance has filed for a ‘TikTok Music’ trademark in the US; while a pair of reports in the Wall Street Journal (one in October and one in December) clarified that the plans may involve a global expansion of ByteDance’s existing Resso streaming service, but with a deep integration with TikTok.

Hints at how that could work might be seen in Qishui Yinyue, another music streaming app launched by ByteDance in China this April, which synchronised with Douyin (TikTok’s Chinese equivalent, also owned by ByteDance) so that people could access playlists across both apps.

On a global level, there’s a very well established ‘Big Four’ streaming services: Spotify, Apple Music, Amazon Music and YouTube Music. If anyone is able to turn that group into a ‘Big Five’, it’s ByteDance/TikTok/Resso. Licensing deals permitting, of course.

07 Brands, TikTok and music is a problem to be solved

If you’re a regular TikTok user, you can search its catalogue of music clips and use them in your videos to your heart’s content. If you’re a brand… you can’t. As much as Beyoncé’s latest banger may suit your next viral clip, if you want it, you’ll need a sync licence for it. Soz.

If you hadn’t taken this in already, 2022 provided some high-profile lawsuits to hammer the point home. Drinks brand Bang Energy was found liable for copyright infringement in a case brought by Universal Music Group, before Sony was granted summary judgement in its own case against the brand. Warner Music Group subsequently filed its own lawsuit to complete the trio.

The judgements in the first two cases had some important grey areas though: Bang Energy was on the hook for its use of commercial music in its own videos on social platforms, but not for individual influencers’ use of music in their videos – even when they were being paid by the company to take part in its campaigns.

Anyway, there’s a problem to be solved here around brands’ use of music on TikTok (and other platforms like Instagram whose music licences are strictly for user-generated content).

Can TikTok solve it? Ole Obermann has talked publicly about his belief that brand-usable music could be “a billion or even multi-billion dollar business in a very short period of time” for TikTok, and the company has been increasing its ‘Sound Partners’ catalogue of music for brands ever since.

08 Kids and privacy is a problem TikTok NEEDS to solve

There are undoubtedly some big opportunities for TikTok around music, but on a wider level there are currently some equally big threats to the company’s future prospects – particularly from regulators and politicians.

For the former, the younger end of TikTok’s userbase is a key concern. Research by UK communications and media regulator Ofcom earlier this year found that 74% of 16-17 year-olds and 51% of 8-11 year-olds (and, still startling, 16% of 3-4 year-olds) use TikTok in the UK for example.

Where there are young people, there are important protection issues: around data storage, privacy, content moderation and safety to name but four. TikTok has already faced investigations (with teeth) from regulators around children’s data and privacy, including some attorneys general in the US.

Again, this isn’t just a TikTok problem: it’s a hugely important part of any digital service’s job if it’s used by lots of children and teens. But with TikTok still the buzz app for Gen-Z and below (see point 01 above) it will also be the lightning rod for regulator’s interest in enforcing the rules of the road.

09 TikTok’s US political headaches didn’t end with Trump

In the final, dark days of the Donald Trump presidency, it looked like ByteDance might be forced to sell TikTok to an American company or have it shut down there. That threat receded somewhat when Trump was defenestrated by American voters, but it didn’t go away entirely.

In fact, this year TikTok’s unwanted status as a national-security problem in the eyes of US politicians and lawmakers only increased, fuelled by tensions with China, and questions about just how deeply TikTok was sharing data with its Chinese parent company.

Did TikTok’s promise in June that it was routing 100% of its traffic from American users through US firm Oracle’s cloud infrastructure settle those tensions? It did not. We’ve seen FCC commissioner Brendan Carr repeatedly call for TikTok to be kicked off Apple and Google’s US app stores. We’ve seen controversial accusations (pushed back on hard by TikTok) of teams at ByteDance tracking American citizens.

We’ve recently seen Indiana’s attorney general sue TikTok over user data and children’s safety, slamming it as “a malicious and menacing threat unleashed on unsuspecting Indiana consumers by a Chinese company that knows full well the harms it inflicts on users”.

It feels like a gathering storm for the company, and while the US following India in banning TikTok seems hugely unlikely, individual regulators, lawmakers and politicians can still make life difficult for the company.

10 TikTok’s in-app spending is bigger than you thought

Well, only if you haven’t been reading Music Ally’s coverage, of course. A lot of people think of TikTok as a free app that makes its money from advertising, but the diligent work of app analytics company Sensor Tower has shed light on the growth of its in-app spending.

We’re talking about TikTok users spending money on its virtual ‘coins’ currency, which they can then use to tip creators and/or promote videos. That spending was estimated at $2.3bn in 2021 (up 77% year-on-year) although that included Chinese version Douyin.

Sensor Tower  later estimated that TikTok users spent $914.4m in-app in the third quarter of 2022 alone, taking it to $6.3bn of lifetime spending. That Q3 figure was bigger (by a distance) than any single mobile game too: a big deal, since games have historically been the biggest app store earners.

Understanding that TikTok users spend money rather than just watch videos for free is important. Why? Because that dynamic is what may fuel some of the features that musicians use in the future: from tips in livestreams to creator-level subscriptions (which launched in May, by the way).

11 TikTok is just getting started with advertising too

Let’s not ignore advertising though: that’s growing rapidly for TikTok too. In April, research firm Data‚ai predicted that TikTok might make $11.64bn from ads in 2022, up from $3.88bn the year before with half of the revenues expected to come from the US.

Another research firm, Insider Intelligence, was even more bullish. It reckons that by 2027, TikTok will be making $122.5bn of annual video advertising revenues – 37% of the entire online video advertising market.

Of course, these are just predictions: nobody saw the Covid-19 pandemic coming, and we shudder to think what unknown unknowns may pop up between now and 2027.

Predictions can be influential though. They’re influential, for example, on major labels’ negotiating demands when seeking a share of these advertising revenues as part of new licensing deals. And they’re also influential on the strategies (whether copying TikTok’s features or lobbying behind closed doors for it to be regulated hard) of the established rivals who feel threatened.

12 Coming next: AR, shopping, avatars, games…

If TikTok wants to hold on to its cultural centrepiece status for as long as possible, it needs to keep innovating. There is plenty going on outside core-music features at the company, and many of these new tools may be useful for musicians too.

Having opened up its ‘Effect House’ tool to all creators in April, we’d expect to see TikTok doing even more with augmented reality tech in 2023: particularly given its popularity on Instagram and Snapchat. These filters/lenses have proven popularity for music, too.

Shopping is another big area of investment for TikTok, which has been reported to be hoping to power $23bn of purchases in 2023 alone. There is some debate over whether TikTok has since reined in its ecommerce aspirations, but shopping is also part of its expanding advertising inventory. There could be more potential here for music merchandise sales, even if artists resist the lure of becoming QVC-style pitchpeople through their livestreams.

In 2022, TikTok also launched a Snapchat-style avatars feature, and took some more experimental steps into mobile gaming with tests in Vietnam. It clearly wants to be more than just a social videos platform: how music fits into these expansions (note, its first step into gaming in 2021 was a music game) promises to be very interesting.

While you’re here…

– January’s NY:LON Connect conference we co-run with Music Biz has sold out of in-person tickets, but virtual tickets are still available. Check the lineup here!

– The Knowledge is Music Ally’s free weekly newsletter, arriving in your inbox every Friday with news, analysis and marketing tips. Sign up for it here!

– In October we launched a series of five courses to help labels, managers and artists make the most of Amazon Music. The free courses each last 30-45 minutes. Find them here!

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Stuart Dredge

Music Ally's Head of Insight

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