We know that TikTok’s parent company ByteDance wants to launch its Resso music-streaming service in more countries beyond its launch markets India, Brazil and Indonesia.
We also know that low conversion rates from Resso’s free tier to its paid subscription may be one reason music labels have been slow to license such an expansion.
Well then, here’s some interesting news: Resso is removing that free tier.
This morning the service has written to its free listeners announcing that from 11 May, Resso will be a premium-only music subscription service. They’ll all get a 30-day free trial for it.
“Resso’s move to a premium-only service will allow the development of a better user experience for music fans, while increasing opportunities for rightsholders and artists,” said ByteDance’s global head of music Ole Obermann in a statement this morning.
“We are committed to building the world’s leading social music streaming platform and ensuring artists and music creators can rightly benefit from its growing success.”
Resso will charge R$16.90 a month in Brazil (around $3.39) for its service, undercutting Spotify’s monthly charge of $19.90. In India it matches Spotify on iOS (119 rupees – around $1.45) but is 20 rupees cheaper on Android.
Despite speculation last year that Resso might be rebranded to ‘TikTok Music’, that is not part of today’s announcement. Resso remains Resso, at least for the time being.
How many listeners does Resso have? ByteDance has never published figures, and declined to provide any to Music Ally for this story. Tech site The Information claimed in November 2021 that Resso had more than 40 million monthly active users split roughly equally between its three markets, but that estimate is now 18 months out of date.
The app has been downloaded more than 100m times from Android’s Google Play store, but since that store’s public metrics are in ranges, that means downloads anywhere between 100m and 500m – which a.) doesn’t include Apple’s iOS, and b.) doesn’t tell us much about how many of those downloads converted into active listeners, let alone paying subscribers.
(Today’s news may have its biggest impact in India, where Resso was already one of the three biggest streaming services – as measured by streams – in the autumn of 2021. It’s not the first major service to remove its free tier there either: Gaana did it in September 2022, albeit for different reasons – financial concerns after new funding and a potential acquisition fell through.)
Removing the free tier is a significant move for Resso and its parent company, with ByteDance eager to launch the service in more than a dozen more countries, while also integrating it more deeply into sister app TikTok.
However, in October 2022 the Wall Street Journal reported that labels were reluctant to sanction any such expansion due to Resso’s conversion rate from free to paid users being “in the low single percentages”. The month before that report, Resso lost Sony Music’s catalogue after its licensing deal with the major label was not renewed.
ByteDance isn’t just trying to persuade labels to license Resso’s expansion. It is also mired in hardball negotiations over the next set of deals for music usage on TikTok, with labels reportedly pushing hard for a share of that app’s roughly $10bn-a-year advertising revenues.
Ditching Resso’s free tier doesn’t address that challenge, but it does remove a key stumbling block in the way of the service’s global expansion.
Thee are strong parallels with Spotify in 2011, when its efforts to launch in the US were being stymied by labels’ concerns about its free tier and conversion rates, and (stoked behind the scenes by Apple) fears that free streaming would cannibalise music download sales.
Spotify bowed to the labels’ pressure and announced restrictions on its free tier in April 2011, and within three months was finally able to launch in the US. It never actually brought those restrictions in for the US, and fairly quickly removed them elsewhere in the world too.
We’ll now see if going premium-only is what’s required to get Resso’s global expansion the green light from music rightsholders in 2023, although the simultaneous TikTok negotiations are an added complication.
In his keynote at the NY:LON Connect conference in January, Obermann was asked about licensing progress, and was carefully diplomatic in his answer.
“Sometimes stuff goes a little slower than I would like it to, because we have to work through and explain: if we do this, is it going to cannibalise that, and is it going to be a threat to some other revenue stream that is big and healthy and growing?” he said.
However, Obermann made sure to add an optimistic note that “there’s a lot more open-mindedness probably on both sides” in 2023. His company will be hoping that shutting down down Resso’s free tier opens those minds on the other side even more.
Launching Resso in new countries is just one challenge for ByteDance though. Winning back Sony Music is another. Music Ally understands that a return of Sony’s catalogue is not part of today’s announcement, but that talks continue between the two companies.
The crucial question is how ByteDance will grow Resso as a premium-only music service, with limited-time trials as its main funnel rather than a free tier, and against a backdrop where two of its biggest competitors (Spotify and YouTube Music) still have popular free services.
Apple and Amazon have managed it, but they have huge advantages in their respective ecosystems (devices and ecommerce) with hundreds of millions of people to market to.
ByteDance isn’t a minnow by comparison: it has its own powerful funnel in TikTok, and a proven willingness to spend enormous marketing sums on driving installs of its apps.
The company will certainly be able to get a lot of people to try Resso out on free trials. Its key challenge will be to make the service so slick AND innovative, and its social features so sticky, that significant numbers of those listeners convert into paying subscribers.
Music Ally’s next Learn Live webinar will help you build the strategies for artists to thrive in new international markets!