TikTok takes on Spotify, Apple Music as it expands into music streaming

TikTok precocious launched a caller rival to music-streaming giants Spotify and Apple Music, arsenic the fashionable abbreviated video app seeks caller avenues for growth.

TikTok Music said connected Wednesday that it volition beryllium investigating its work in Australia, Mexico and Singapore. That announcement comes soon aft it launched in Indonesia and Brazil earlier this month.

Last week, TikTok besides announced an expanded licensing agreement with Warner Music Group, arsenic it looks to turn its euphony contented library. Parent institution ByteDance besides precocious scrapped the escaped tier of Resso, different music-streaming work it owns.

While these efforts are successful their aboriginal days, analysts said TikTok has cardinal advantages that different music-streaming entrants bash not person and that could assistance it prehend marketplace share.

"There's already this ample installed basal of users which TikTok tin person into paying TikTok Music subscribers – with a comparatively debased lawsuit acquisition cost," said Jonathan Woo, elder probe expert astatine Phillip Securities Research.

According to DataReportal, Indonesia and Brazil are TikTok's second- and third-largest markets, down lone the U.S., with 113 cardinal and 84.1 cardinal progressive TikTok users aged 18 years and above, respectively. Meanwhile, Mexico is TikTok's fourth-largest marketplace with 62.4 cardinal TikTok users.

"TikTok Music volition marque it casual for [users] to save, download and stock their favourite viral tracks from TikTok," Ole Obermann, planetary caput of euphony concern improvement for TikTok, said during the Indonesia and Brazil launch.

TikTok is the second-most communal root of euphony find for 16 to 19 twelvemonth olds, down YouTube, according to data from MIDiA Research shared with CNBC. MiDIA Research is a U.K.-based probe steadfast covering amusement and media.

In MiDIA's fourth-quarter user survey, 48% of respondents said YouTube is among their main places for discovering music, portion 41% pointed to TikTok. The survey fielded 9,000 respondents crossed the U.S., U.K., Australia, Canada, Germany, France, Sweden, South Korea and Brazil.

"A batch of times radical perceive tons of antithetic songs connected TikTok, but they don't marque the leap to really perceive to it elsewhere oregon larn much astir the artist," said Tatiana Cirisano, euphony expert astatine MiDIA Research.

"The almighty imaginable for TikTok Music is that it could adjacent that gap," said Cirisano.

The euphony streaming marketplace is presently dominated by Swedish elephantine Spotify and Apple Music.

Spotify commands astir 31% of the planetary streaming marketplace with Apple Music pursuing with 13.7%, according to the International Music Summit Business Report 2023.

But Cirisano said that dense TikTok users could person into TikTok Music users if they are utilizing different services specified arsenic Spotify. "If you're already successful the ecosystem, and you're utilizing TikTok that much, you mightiness beryllium consenting to power over," said Cirisano.

Still, Woo of Phillip Securities Research said TikTok Music presents a "low risk" for Spotify and Apple Music.

"I bash deliberation that it would beryllium rather hard to surpass Spotify and Apple Music successful presumption of marketplace stock fixed their incumbency, but TikTok Music could decidedly devour into immoderate of it," said Woo.

"There truly is not that overmuch inducement to power services for users already connected Spotify oregon Apple Music arsenic marque loyalty amongst users connected these premium incumbent platforms is besides precise strong," said Woo.

He added that monthly subscription prices for each 3 services are expected to "be astatine akin terms points." In Indonesia, Spotify Premium costs 54,990 Indonesian Rupiah ($3.66) monthly portion iOS users wage 49,000 Indonesia Rupiah ($3.26) a period for TikTok Music.

"As a consumer, wherefore should I wage a monthly interest to perceive connected TikTok Music, erstwhile I tin perceive for escaped connected Spotify, albeit with advertisements?"

TikTok declined to remark connected TikTok Music's enlargement plans. Spotify and Apple Music did not respond to CNBC's requests for comment.

TikTok has been looking for maturation extracurricular the U.S., wherever it faces mounting governmental headwinds. Its flagship app was banned successful Montana, the archetypal authorities to bash so, arsenic good arsenic India. TikTok's CEO antecedently said the institution volition pour "billions of dollars" into Southeast Asia over the adjacent fewer years.

The company's e-commerce marketplace TikTok Shop has been aggressively expanding into Southeast Asia, competing against Sea's Shopee and Alibaba's Lazada. Those e-commerce efforts besides see livestream shopping.

TikTok successful July said livestream buying isn't the lone country it is looking into erstwhile asked if it is the "end destination" for TikTok's areas of expansion.

"Shoppertainment is not the lone destination, but it is decidedly 1 of the main areas, particularly successful Asia Pacific that we are leaning successful heavy into," Shant Oknayan, caput of concern crossed Asia Pacific, the Middle East and Africa & Eastern Europe astatine TikTok, said during a acme successful Jakarta earlier this month.