The news that ByteDance is shutting down its on-demand music streaming service TikTok Music after 18 months may have come as a surprise to some. After all, TikTok has more than 1 billion monthly active users worldwide and has uniquely redefined music discovery by converting a generation of smartphone users to short, music-based videos.
But the demise of TikTok Music was completely predictable. Building a sustainable on-demand music streaming service is extremely difficult. The digital music graveyard is littered with streaming products that didn’t last long. Remember Rdio, Boinc, Guvera, Turntable.fm, SpiralFrog? Even if a platform is well-funded by a huge company, success is not guaranteed. Sony’s Music Unlimited didn’t last. Microsoft’s Zune was similar. Shami, founded by Chinese e-commerce giant Alibaba, shut down in 2021 after 12 years.
Bytedance’s climb became even more difficult as he took on a different role at TikTok Music. TikTok was an insurgent that built itself without the typical constraints faced by popular streaming services. This app created a new use case for music in the same way that downloads succeeded to CDs and streaming succeeded to downloads. TikTok Music, on the other hand, was constrained by licensing terms governing on-demand services.
As a result of these rules, Bytedance built something more like Spotify than TikTok because it had no other choice, said Mark Mulligan of MIDiA Research. “TikTok Music had a lot of potential to be something that looked nothing like other[digital service providers],” he says. “But in the end, we needed to create something that was pretty similar to other streaming services.”
Mulligan argues that the problem is that TikTok Music is similar to every other music streaming service, and not a solution for new market entrants. He said on-demand music has become a well-functioning public facility, like a water service, but it doesn’t build community, foster fandom, or generate conversions, which TikTok does well. , explains that this is something TikTok Music couldn’t do. “We all really value the water that comes out of our taps, but rarely do we go to our local bar and talk to our friends about how great the water is that comes out of our taps,” says Mulligan. Masu.
These aren’t just utility companies that TikTok Music is competing with. Market leader Spotify has a market capitalization of $76 billion, but it is much smaller than the next three companies, Apple, Google, and Amazon. These four companies, and smaller companies like them, have spent years pouring resources into building products and features that keep people listening to music, podcasts, and, in the case of Spotify, audiobooks.
TikTok is also great at generating engagement, but getting people to listen to an entire song is different from offering a never-ending series of 15-second video clips, says the music technology and consulting and advisory firm. says Vicki Nauman, founder of CrossBorderWorks. “You can’t necessarily replace it with anything else.”
That could change if TikTok Music can differentiate itself in its catalog by offering music not available on other music platforms. This is how on-demand video streaming works. However, music services around the world have more or less the same catalogue. Providing music from around the world has long been part of the value proposition of music subscription services. As a result, music streaming services compete with each other on user experience.
The on-demand service “needed to make[the user experience]very elegant, very intuitive, and really customized for the consumer,” Nauman explains. In her experience, people underestimate how difficult it is to create great products and implement the technology that supports them. “It’s incredibly difficult,” she says. “It’s not just about the user experience, it’s about the technology needed to manage tens of millions of trucks,” she continues. “I think a lot of companies just really misunderstand it.”
Changing consumer habits has also always been an issue. It would be presumptuous to assume that anyone who has the TikTok app will become a subscriber to TikTok Music. Even though Apple offers free trials to new iPhone owners and bundles the music service with its money-saving package Apple One, not all iPhone owners subscribe to Apple Music. Alphabet owns both the Android operating system and YouTube, but not all Android Phone owners subscribe to YouTube Music.
TikTok Music’s failure “doesn’t surprise me to some extent,” said Russ Krupnick, president of MusicWatch. He says that when MusicWatch surveyed American TikTok users about interest in a standalone TikTok streaming service, the response was “surprisingly low” and “very lukewarm.” (TikTok Music didn’t launch in the U.S.) “It’s a little bit harder to get most people to switch[subscription services]at this point. You’re more likely to get people to use multiple services.”
According to MusicWatch, in the U.S., self-paid subscribers, excluding free trials, use more than 2.3 music subscription services. These include Amazon Prime, which online shoppers buy primarily for free shipping, and satellite radio service SiriusXM. Asking people who pay for multiple services to pay for another music subscription plan is a tall order for a new entrant like TikTok Music. Additionally, MusicWatch found that Spotify ranks second only to Amazon Prime in terms of subscriber enthusiasm. Even if the economy worsens, Spotify users are relatively unlikely to cancel their plans.
Zooming out, the demise of TikTok Music reveals something else about the music streaming market. In 2024, the number of global platforms will reach a steady state, and new entrants are unlikely to emerge (and, like TikTok Music, any attempt will fail). Experts who spoke with Billboard don’t expect another company with the financial and physical strength to take on the vast amount of music licensing and rights management demands.
“We’re at a crossroads where all of these broad catalog licenses are being exhausted,” Nauman said. Game companies have the money, she added, but they don’t need to license the entire catalog. Fitness companies that used to license large catalogs are now “looking for simpler solutions.”
If any new entrant is successful, according to Mulligan, it will be a “regional hub” where the streaming service can license a small amount of local music and focus on markets where Western repertoire is less important. It is said that there is a possibility. For example, in China, a market dominated by local music licensed by local rights holders, Tencent Music Entertainment had 117 million subscribers and 4,410 cloud music subscribers at the end of 2023. 10,000 (the last number released by the company). However, local services are being threatened by larger global corporations. In some populous markets such as India and the Philippines, powerful Western companies are crowding out local companies.
After all, ByteDance doesn’t need TikTok Music to make an impact in the music world. Mulligan believes the “vast majority” of music activity, not revenue, could be on TikTok within three to five years. He said young people want to create as well as consume, and TikTok could become a self-contained ecosystem that makes more use of users’ time — something ByteDance is now abandoning. At the expense of a sort of on-demand streaming business.
