US dollars money

Rightsholders may be energetically seeking a slice of TikTok’s advertising revenue in its next set of music licensing deals, but it’s already well known that the app also has another fast-growing revenue stream: user spending.

It’s something we wrote about last October, when research firm Sensor Tower estimated that TikTok users spent $914.4m in the app in the third quarter of 2022 alone. That’s money spent on TikTok’s virtual coins currency, as well as on creator-level subscriptions – a feature launched in May 2022.

So, there’s already a proven willingness for people to spend money within TikTok: around $6.3bn of lifetime consumer spending by the end of Q3 2022 according to Sensor Tower. With that in mind, reports that the app is working on a feature to paywall individual videos are very interesting.

First reported by The Information, then followed up by Insider and The Verge, the claim is that TikTokers would be able to set a price to watch some of their videos – $1 is the example given, although it seems creators could choose other amounts too. In that sense, it would just be an a la carte extension of the app’s existing subscriptions feature.

Clearly this is a feature that musicians might be able to use, as part of TikTok’s creator community. But the reports also shine a light on how social media is evolving in terms of ‘creator monetisation’, and perhaps highlight potential developments in the music streaming world.

We still tend to think of all the big social platforms as free content supported by advertising. Yet all now have layers on top of that business model for superfans to spend money on their favourite stars and channels, whether that’s perks around the free content (to stand out in the chat for example) or to access paywalled material.

Over in music streaming, it’s still largely about free, ad-supported tiers and service-level subscriptions: $9.99 a month (and rising, finally) with efforts around superfan spending on top of that largely restricted to merch and tickets, and Spotify’s still-low-profile ‘Fan Support’ (formerly ‘Artist Fundraising Pick’) feature.

So here’s a thought. Picture a scene later in 2023 when a.) TikTok has launched paywalled posts in its main app; b.) parent company ByteDance has sealed the deals to aggressively expand its Resso music-streaming service globally with strong TikTok links; and c.) gifting, creator-level subscriptions and paywalled content are core features of that service.

The phrase ‘tips economy’ rubs some artists and music industry folk up the wrong way, because in our world ‘tips’ is associated with busking, and busking is associated with amateurs, and professional musicians should be beyond that, right? But are we missing a culture shift?

As more musicians explore the tips and subscription economies of the big social and video platforms, be it Twitch, YouTube, Patreon or TikTok, and as those companies roll out new ways for fans to spend money on their favourite creators and refine their models, it’s hard not to see all of this cross over to music streaming in a more serious, focused way sooner rather than later.

Music Ally’s next Learn Live webinar will help you understand what’s required for artists to thrive in new international markets!

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Stuart Dredge

Music Ally's Head of Insight

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