MBW Explains is a series of analysis features that explore the context behind major music industry topics and suggest what's coming next.only MBW+ subscribers Get unlimited access to these articles. MBW Explains is supported by JKBX, a technology platform that provides consumers with access to music copyright as an asset class.
what happened?
The super popular short video app TikTok has become, for lack of a better term, a major player in the music business.
The app has been the seed of some of the biggest music phenomena in recent years, including Lil Nas X's biggest hits. old town road.
From time to time, they have surprised observers with their ability to revive classic songs and turn them into hits again, as in the case of Fleetwood Mac. dream And the simple plan i am still just a childhave found new life as their second hit, 41 and 18 years after their first release, respectively.
According to TikTok, 13 of the 14 No. 1 hits on the U.S. Billboard Hot 100 in 2022 were “driven by significant viral trends on TikTok.”
At this point, there's no question that TikTok is having a huge impact on recorded music in terms of which artists and songs become famous. But even if this observation were reversed, it still rings true that music is the main reason for his rise in TikTok popularity.
It's no wonder that major record companies are publicly hinting at and privately pushing for a bigger slice of TikTok's ad revenue pie.
Two questions have haunted this conversation in recent months. To what extent will TikTok be willing to pay extra to license copyrighted music for videos that users post on its platform? And how far will TikTok resist attempts to increase its revenue share? And will they instead replace music from major labels and independent labels with their own music ecosystem?
Last week, we moved a lot closer to answering these questions when TikTok owner ByteDance announced Ripple. Ripple is a free-to-use music production app with two main features: an AI “melody-to-song” generator and virtual recording. studio.
The Melody to Song feature allows users to hum a melody directly within the app, and Ripple builds an instrumental music track around it that is the same length as the original hummed melody.
(In response to growing concerns within the music industry about training AI models on copyrighted music without permission, ByteDance has asked MBW to use Ripple with music licensed to or owned by the company. (He said that he trained him.)
Virtual recording studios work much like other portable digital audio workstations such as Splice, BandLab's Cakewalk, and Apple's GarageBand.
Ripple users will be able to upload their musical creations to TikTok and other social media platforms. At least for now, it will be released to a small number of beta testers via invitation.
For many observers, the idea that TikTok would want to enter the increasingly crowded field of AI music generators and digital audio workstations for its own purposes is incomprehensible. But if TikTok is trying to replace music from major and independent labels with music you don't have to pay for, it makes sense.
What is the background?
Ripple's release comes amid negotiations between TikTok and major record companies over the size and structure of payments the video app will make for the use of copyrighted music in videos uploaded to TikTok. It was done during the.
So far, TikTok's deals with record companies have been so-called “buy-out” deals, in which the social media site pays a lump sum for the use of licensed music across its platforms for two years.
Current contracts with major record companies Sony Music, Universal Music Group, and Warner Music Group were signed from November 2020 to February 2021, so time is running out. . And the major companies reportedly want to replace the one-time payment deals with a portion of the ad revenue from TikTok's music-driven videos.
But TikTok has been tough on it in a number of ways.
Earlier this year, it was reported that TikTok was disabling certain users in Australia from adding major label licensed music to their videos. Additionally, certain uploaded videos featuring these tracks will be muted.
Sources told MBW that the move was aimed at giving TikTok leverage in negotiations with record labels. If the experiment shows little or no significant drop in user engagement, TikTok could argue that music matters. do not have It's a key part of the TikTok experience.
TikTok reportedly lost users during the experiment. – Evidence that music is like that teeth ByteDance is an important part of TikTok, as evidenced by its own actions.
“We have a lot of people [working at TikTok] Coming from record labels, publishers and organizations, we understand how complex, capital-intensive and specialized the business is. It doesn't fit into our strategy of being a record label. ”
Ole Oberman, TikTok
In the spring of 2022, TikTok launched its own music promotion and distribution platform called SoundOn. In addition to distributing on TikTok, SoundOn can also distribute music to other platforms such as Spotify, Apple Music, and Instagram.
You can also explicitly distribute your music to ByteDance's social media platform, Resso, for sharing. The app is currently available in Brazil, India, and Indonesia, but Ole Overman, TikTok's global head of music business development, told MBW in May that the app would not be available worldwide. He said that this is the company's ambition.
The platform was initially launched in the US, UK, Brazil, and Indonesia, but has now expanded to Australia, New Zealand, Canada, and Mexico. SoundOn will pay the creator his 100% of the royalties generated by the music in the first year, and thereafter he will pay 90%. This is a pretty good amount when compared to traditional music labels.
SoundOn signed exclusive deals with Death Row Records and Snoop Dogg earlier this year, providing a highly publicized opportunity to bring the label's catalog to TikTok for a week before returning to the major streaming platform.
Now, with the release of music creation app Ripple, it's hard to avoid the impression that TikTok is positioning itself as an all-in-one shop for music creators. He uses Ripple to generate songs and turn them into tracks, which he passes to SoundOn to distribute on TikTok and other platforms. There is no need for labels such as major or indie.
But the company insists it has no intention of becoming a music label.
“TikTok is not intended to be like a record label,” Overman said in an interview with MBW.
“SoundOn was born from one of our main objectives. [we have] “At TikTok, we're going to work with our creator community to help them make money, get discovered, and build partnerships and relationships with brands,” Overman said.
“SoundOn is not only the answer to all of that, but how do we deal with the fact that there is so much unsigned, unknown, or unidentified music making its way to TikTok? And the community? How can we improve that?”
Furthermore, he added: “We have a lot of people [working at TikTok] Coming from record labels, publishers and organizations, we understand how complex, capital-intensive and specialized the business is. It doesn't fit into our strategy of being a record label. ”
What happens next?
In the coming months, major record companies (Sony, Universal, Warner) are likely to announce news regarding new deals with TikTok.
It will be interesting to see whether these deals are a repeat of TikTok's previous agreements with both companies, given the majors' reluctance to continue with a “buyout” model, but details of those deals are not publicly available. It is unclear whether it will be done. is anyone's guess.
And the extent to which TikTok concedes to the majors will depend on a number of factors, including the outcome of the Australian experiment.
Preliminary reports suggest that many young Australian users are using the app less or even quitting it altogether after being blocked from using licensed music. If this is true, it will have great influence on record companies.
“We are confident that even if we are forced to remove our catalog, or portions of our catalog, we will still be able to maintain a service that is attractive to our users.”
Ole Oberman, TikTok
However, the performance of SoundOn and Ripple also affects this. If these apps prove popular with TikTok users, the argument that users of the platform can (and do) generate their own music and therefore don't need to rely on licensed music Based on this, there is a reason why ByteDance will continue to fight hard against the music industry. Music from major record companies.
It's going to be more than just subscriber numbers. For TikTok to succeed with this dramatic shift in how its platform is used, it will need to ensure that not only are people signing up for Ripple and SoundOn, but that they are actually producing music and distributing it. I'll have to check the evidence. And most importantly, his TikTok with this music has gone viral and the song itself has become popular.
It's a tall order, but TikTok has touted some of SoundOn's early successes, including that of 20-year-old Canadian Kathryn Lee, who plans to release an EP through SoundOn in 2022, according to a TikTok press release. released and streamed 49 million times on Spotify alone.
Nevertheless, major record companies have their own influence and can refuse to license their music to TikTok if they can't get a satisfactory deal. Depending on which company, this could mean losing anywhere from 15% to a third of the major label music available to TikTokers.
That could severely impact the user experience on TikTok, but Oberman doesn't seem particularly worried about such a scenario.
“Even if we are forced to remove the catalog, or portions of it, we are fairly confident that we will still maintain a service that is attractive to our users,” he asserted in May.
No one knows whether this is bravado in the face of negotiations with record companies or a sober assessment of TikTok's position in the market and cultural sphere.
lastly…
All of this comes at a time when TikTok's future is uncertain due to rising tensions between China and the West.
TikTok, the world's most popular Chinese-owned app, has drawn criticism across North America and Europe.
Concerned about ByteDance's close ties to the Chinese Communist Party, which could mean the Chinese government has access to detailed user data around the world, many governments have banned TikTok on government-issued devices. are doing.
These include the United States, the United Kingdom, the European Union, Canada, Australia, and others. Some countries, including Afghanistan and India, have outright banned TikTok, as has the US state of Montana, but TikTok has vowed to fight the ban on free speech grounds.
The House Foreign Affairs Committee has given President Joe Biden the power to ban TikTok nationwide after TikTok CEO Xiang Zhichu was gunned down for four and a half hours outside the U.S. Capitol this spring. I have submitted a bill to provide for this.
However, the bill has not made much progress since then, and many critics say the law targeting specific companies is unusual and constitutionally questionable.
Nevertheless, TikTok, unlike other platforms, is at the center of major geopolitical changes in the world today.
Oddly enough, TikTok's potential campaign to become a music juggernaut hinges on developments in the ongoing US-China trade war and developments over Taiwan's status.
This puts a big question mark on its future, and even licensing negotiations with majors and platforms. TikTok may soon become the leading music generation tool competing with the likes of Universal and Sony. Or, TikTok could quickly disappear, or something somewhere in between.
All of this adds uncertainty because the range of possible outcomes is so wide that it can keep anyone in the music business up at night.world music business
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