🍝 TikTok Is Eating The Music Industry's Lunch
After conquering the heights of Social Media, ByteDance's money printing juggernaut sets its sight on the Music Business
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Happy Monday everyone!
Last week, Hip-Hop legend Snoop Dogg announced that he’s bringing the infamous Death Row Records back to music streaming services after almost a year since he acquired it.
Founded in 1991, Death Row Records is responsible for launching some of the most legendary albums in Hip-Hop history including Dr. Dre’s The Chronic, Snoop Dogg’s Doggystyle, and 2Pac’s All Eyez On Me ⭐️
And at the peak of their glory in the 90s, they raked in almost $100 Million from their music per year 🤯
From strong ties to gang wars that symbolised the 90s Hip-Hop battle between the West & East Coast in the US, to their co-founder Suge Knight serving a 28 year sentence for manslaughter, this is unlike any other Record Label 😅
I went deep into the history of Death Row Records when Snoop acquired it last year, and if you haven’t read it yet do check it out 👇🏻
Despite having a catalog boasting of some of Hip-Hop’s most iconic songs, Snoop decided to take it off streaming services after he acquired it last year.
Why exactly?
Well, the biggest reason he cited was the inability of platforms like Spotify & Apple Music to effectively monetise & pay artists, but here’s Snoop himself explaining the decision in detail (from the 1:50:00 mark) on an episode of the popular talk show- ‘Drink Champs’ 🍾
Makes sense right? So what’s new with Death Row Records now?
Well, Snoop finally decided that the time was right to bring it back to streaming services, albeit with a twist 🔀
Instead of opting to do a traditional release on Spotify, Apple Music, YouTube etc, he decided to go exclusive with TikTok, at least for the first week 📅
Here’s Snoop laying out his plan to release the music on streaming services:;
“Since I took Death Row off streaming almost a year ago, not a day goes by without people asking me to put it back up.
“As the Super Bowl rolled around, I knew fans would be looking for the music from our iconic performance in 2022, so I wanted to reintroduce the most historic catalog to the people. I reached out to the folks at TikTok to make more history…enjoy ya’ll.”
And for all the fans that are wondering, Death Row Records catalog will be back on streaming services real soon.”
You might be thinking, well bleh its just a week earlier than other streaming platforms or whatever but I think that kind of misses the point.
The fact that an artist of Snoop’s stature chose TikTok to go exclusive, & use it’s distribution platform: ‘SoundOn’; signals a very strong intent on the Chinese company’s part- that they’re willing to play with the ‘Big Boys’ when it comes to the Music Business 💰
Australian Bait & Switcheroo 🇦🇺
Why else do I feel that TikTok is ready to eat the Music Business’ lunch?
Earlier this month, reports came out suggesting that TikTok is trialling a new version of their app in Australia, wherein users cannot use music owned by major Record Labels for plugging in their short-form videos 📲
Why exactly?
According to this one article, it’s an attempt by TikTok to show the major Labels that their music does not significantly increase engagement of users on the platform ❌
But why does that matter so much?
For the past 2 years, Labels have been breathing down the necks of TikTok to change their model from a fixed payout basis to a revenue share, wherein the Labels can earn a % of the Ad revenues that are generated from engagement on the short-form videos that use their music, instead of receiving a flat fee from TikTok.
Their argument is that the music on TikTok is the primary reason that the app has blown up worldwide, & is used by more than 1 Billion people on a daily basis
Not just that, it raked in $11 Billion in Ad Revenue last year, & is projected to only go up over the coming years 📈
The Labels feel that because music effectively helps TikTok engage its users better & hence earn more from Ads, they should naturally get a piece of it
And TikTok is not having any of it. By trialling this new version in Australia, they hope to show how even without music owned by the Labels, their engagement & monetisation will probably be just fine 🤷♂️
I’m not sure how this will pan out for either TikTok or the Labels, but I would love to be a fly on the wall when this negotiation discussion goes down.
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What Can The Labels Do?
As far as TikTok is concerned, the Labels really don’t have much leverage.
The Australian Recording Industry Association (ARIA) which represents the interest of the major Labels (Universal, Sony & Warner), slammed TikTok parent ByteDance for its decision to limit access to major-released music for select Australian creators and users on the TikTok app.
“It is frustrating to see TikTok deliberately disrupt Australians’ user and creator experience in an attempt to downplay the significance of music on its platform.
“After exploiting artists’ content and relationships with fans to build the platform, TikTok now seeks to rationalise cutting artists’ compensation by staging a ‘test’ of music’s role in content discovery.
The real point that they are driving home is that as per TikTok’s own claims, almost 80% of the content shown on its platform is algorithmically driven.
Meaning that whatever ‘Test’ that they carry out in Australia to prove that engagement does not suffer without major Label music, can effectively be gamed as they control what end users see & consume.
Yes, Music is huge on TikTok but the algorithm which drives discovery of short-form videos on the platform effectively controls what users see, & is something very easy for TikTok to control to their advantage.
In one of my earlier pieces, I wrote about how artists are blowing up & driving Ad revenues for TikTok, but neither them nor the Labels get a piece of the action 👇🏻
Our Take On This?
Almost for the past couple of years, I have been trying to understand how the Music Business works & sharing my learnings via this newsletter.
I come from a place wherein it helps to know more about the business, as with Incentify we’re building a social network for music, with a goal of eventually enabling artists to distribute & monetise their music directly from fans.
If you’re an artist or just curious about what we’re upto, please reply here or DM us on Instagram, would love to chat!
When I started writing this, in the entire ecosystem of the music business, TikTok was starting to emerge as a cute new platform for artists to blow up & their music to get millions of more streams as a result.
And to that end, everything was fine. Labels were getting paid from yet another platform & TikTok was huge but it was still making only around $4 Billion from Ads back in 2021.
However, over the past 2 years this has ballooned more than 3x, while TikTok has moved up the value chain by launching their own distribution & artist management platform with SoundOn; & even their own streaming app called Resso.
And with the latest developments of Snoop choosing TikTok to go exclusive & their ‘experiment in Australia’ they’ve officially transitioned from a cute fun app to an 800 pound gorilla ready to gobble up the Label’s lunch 🦍
Do I feel they’ll succeed at it?
Well, they have the direct relationship with 1 Billion plus consumers, the technical capability to build their own platform & have recently even shown the ability to attract top artists.
The biggest threat for them is regulation & political bias, given that calls to ban TikTok have materialised already in India- the second biggest digital population & are gathering steam from various politicians in the US & Europe.
One thing is for sure, this will be an interesting story to track in 2023. What do you guys think?
Have a good week everyone!
P.S- Here’s a playlist of the best Death Row Records songs to soundtrack your week!
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