This month, TikTok launched its music streaming service in two of its biggest markets, Indonesia and Brazil. It is also experimenting with TikTok Music in Australia, Mexico and Singapore. Jonathan Woo at Phillip Securities Research believes that since TikTok already has a wide user base, converting them into paid subscribers will have a low customer acquisition cost. Tatiana Cirisano of MiDIA Research believes that since heavy TikTok users are already invested in the platform, they will likely switch over to TikTok Music.
TikTok has recently launched a rival to streaming giants Spotify and Apple Music as the short-video app looks for new avenues of expansion. On Wednesday, it was announced that TikTok Music will be testing its services in Australia, Mexico, and Singapore, after launching in Indonesia and Brazil just this month. Following the announcement, they also entered an extended licensing agreement with Warner Music Group, to build out their music content library. To combat their rivals, parent company ByteDance disbanded the free tier of Resso, their own music-streaming service. Analysts speculate that this may give the app an edge, as they already have a large userbase that could convert to paying subscribers with low acquisition costs. According to DataReportal, the U.S., Indonesia, and Brazil are the app's largest markets in terms of active users aged 18 and above, with Mexico following as the fourth largest.
Ole Obermann, global head of music business development for TikTok, commented about how the new TikTok Music will simplify the process of saving, downloading, and sharing viral tracks from the app. MIDiA Research, a U.K. based research firm in the entertainment and media industry, have reported that TikTok is the second most popular source of music discovery among 16 to 19 year olds, right after YouTube.
MiDIA's fourth-quarter consumer survey revealed that 48% of 9,000 respondents in the US, UK, Australia, Canada, Germany, France, Sweden, South Korea and Brazil cited YouTube as their main place for discovering music, while 41% pointed to TikTok. Tatiana Cirisano, music analyst at MiDIA Research, commented: "Many people encounter songs on TikTok but don't look further into it or the artist. There lies the potential of TikTok Music to bridge that gap."
The International Music Summit Business Report 2023 states that Swedish giant Spotify is currently the major player in the music streaming market with nearly 31% of the global streaming share, with Apple Music slightly behind at 13.7%. Cirisano believes that avid TikTok users might switch to the new TikTok Music service if they already have an account with other streaming services such as Spotify. They might be "willing to switch over," he said.
Discover more information regarding technology and crypto from CNBC Pro. Analyzing the alterations in Nasdaq-100, and the ramifications they hold for major technology equities. According to Citi, there is no indication that the surge of Nvidia is about to cease. Standard Chartered is optimistic that their estimate of bitcoin reaching $100,000 by 2024 will come true. The competition between chipmakers is intensifying, with a Chinese stock soaring by 30% over a five day period.
Analyzing effects of Nasdaq-100 modifications on extremely large tech organizations, Citi proclaims that the boost for Nvidia is not likely to dissipate soon. In addition, Standard Chartered estimates an increase of their predicted 2024 Bitcoin value of $100,000. The rivalry between chip makers is becoming increasingly intense as the 5-day share price of a Chinese company increased by 30%.
Woo of Phillip Securities Research said TikTok Music presents a "low risk" for Spotify and Apple Music, noting that it would be difficult for the upstart to surpass the incumbents in terms of market share. He remarked that there is not much incentive for users to switch services, due to existing brand loyalty on the premium platforms. Woo went on to note that monthly subscription prices for all three services are expected to remain similarly priced. In Indonesia, Spotify Premium costs 54,990 Indonesian Rupiah ($3.66) monthly while iOS users pay 49,000 Indonesia Rupiah ($3.26) a month for TikTok Music, leading to the question of why would a consumer pay to listen on TikTok Music when they can do so for free, albeit with ads, on Spotify. TikTok declined to comment on TikTok Music's expansion plans, with Spotify and Apple Music failing to respond to CNBC's requests for comment.
TikTok has sought to increase its presence outside the U.S. where it is facing rising political opposition. Montana is the initial state to ban the app, with India following suit. CEO of TikTok stated that the company will spend billions of dollars in the next several years to expand in Southeast Asia. It has accelerated the growth of its e-commerce platform, TikTok Shop, contending with Sea's Shopee and Alibaba's Lazada. Livestream shopping is also a part of its business plan. When asked if it is a conclusion of its wide-ranging plans, Shant Oknayan, the Head of Business in Asia Pacific, Middle East and Africa & Eastern Europe at TikTok, said that “Shoppertainment is not the only destination, but it is definitely one of the main areas, especially in Asia Pacific that we are leaning in heavily into.”
Comments