TikTok’s music master plan is coming into focus

Oh how the tables have turned. Just a few months removed from its very public clash with Universal Music Group over music licences, TikTok is reportedly looking to buy up music rights of its own. Not only would this ease TikTok’s reliance on licences, but it would also presumably allow TikTok to prioritise its owned content in the algorithm, and do what music executives have been tearing their hair out trying to for years: reverse-engineer viral moments. Eventually, the move could help TikTok dramatically reduce its rights costs. After all, why waste money paying rent when you could just buy the house?

This may be the most blatant example of licensee becoming licensor that the modern music industry has seen, but it is not the only one. Platforms can buy rights, as TikTok is now doing, but they can also build (i.e., produce their own music) or partner (with creators). Examples include Tencent Music generating its own music to populate playlists (and other DSPs surely considering it), Riot Games building its own in-house music team with a roster of virtual artists, and SoundCloud and TikTok developing label service-like offerings.

Writer Cory Doctorow’s aptly-titled description of the average platform lifecycle — or as he puts it, “how platforms die” — is highly relevant. His theory goes like this: Platforms first super-serve users in an effort to grow, then abuse users’ interests in order to serve their business customers, and finally, abuse everyone else’s interests in an effort to serve their own. Just like that, the disruptors that promised democratisation simply become the new gatekeepers. More than a decade into both the streaming and social media eras, we are now approaching stage three.

Of course, TikTok’s “Music Content Investment Team” does not immediately turn it into a competitor to the biggest record companies in the world. However, rights acquisition is far from the only tool in TikTok’s arsenal. Parent company ByteDance has been steadily building an ecosystem that gives it a role in every piece of the music value chain, and the picture is coming into focus:

• Creation: Mawf, Ripple, TikTok Studio, AI Song

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• Label services: SoundOn 

• Rights ownership: Music Content Investment

• Consumption / engagement: TikTok, TikTok Music

• Sync / micro-sync: Commercial Music Library (now with an Adobe partnership)

The TikTok Music streaming app, which has yet to launch in the US, seems like the final piece of the puzzle. Yet perhaps ByteDance has reasoned that the music industry’s future growth is not just in consumption, but also in creation and re-creation. Which side of that equation a platform decides to major in is crucial. Today’s music platforms major in the former; tomorrow’s look set to prioritise the latter.

This is not far off from MIDiA’s theory of bifurcation. A new generation of both creators and consumers are spending more of their music-related time on social platforms, splitting the industry into two, parallel consumer worlds: the lean-back world of streaming consumption, and the active, lean-in world of social. This also comes with a bifurcation of music culture (on social) from music monetisation (on streaming). But TikTok’s ecosystem strategy adds another strand to bifurcation theory: not only do social platforms hold the keys to the cultural power surrounding music, but a bigger chunk of the monetisation power as well.