Los Angeles: ByteDance Ltd., owner of the popular video app TikTok, is developing a paid music service that will challenge industry leaders Spotify and Apple Music in emerging markets, according to people familiar with the matter.
ByteDance expects to introduce the new app as early as this fall in a handful of territories, mostly poorer countries where paid music services have yet to garner large audiences, said the people, who asked not to be identified because the plans haven’t been announced. The company has already secured rights from T-Series and Times Music, two of India’s largest labels, according to executives with those companies.Read more ↓
While the new app isn’t named after TikTok, ByteDance will try to convert some of TikTok’s audience into paying customers, the people said. TikTok and Douyin, its Chinese equivalent, have been downloaded more than 500 million times and have become two of the most influential apps in the contemporary music industry.
ByteDance, based in Beijing, declined to comment.
The new app will include a catalog of songs available on-demand, as well as video, and isn’t a clone of Spotify or Apple Music, according to the people. The app is far enough along that many music industry executives have been given demonstrations of it.
ByteDance’s plans for a paid service were previously reported by the South China Morning Post, but the story made no mention of the timing of its release or the rights deals.
ByteDance is already one of the world’s most valuable startups, valued at more than $75 billion in its most recent round of fundraising. The company’s first signature app was Toutiao, a news aggregation app whose name means headlines.
TikTok extended ByteDance’s reach around the world, a rare feat for a Chinese technology company. It also gave it a large user base to monetize through ads. With this new paid music app, ByteDance is looking to reduce its reliance on advertising and prove subscription music can work in emerging markets.
Paid music services have boosted music sales across the world, and are now the single largest source of revenue for the global record business. But the approach is still largely a Western phenomenon.
Though Asia, the Middle East and Africa are home to the majority of the world’s population, they only account for about 10% of Spotify’s customer base. Tencent Music Entertainment, the dominant music company in China, makes six times more money from what it calls social entertainment than from subscriptions.
The most popular online music services in Asia, such as Tencent’s QQ Music and Google’s YouTube, are available for free. YouTube has had particular success in markets like India, Indonesia and the Philippines. TikTok was the most downloaded free app in India in the first quarter of the year.
The new paid service will increase the competition between ByteDance and Tencent, which owns WeChat, China’s most popular app. At home, ByteDance and Tencent are already locked in a fierce competition to gain more attention from China’s smartphone-savvy young people. Douyin has become one of the biggest challengers to WeChat, spurring the latter to block Douyin links on its platform.
Tencent’s music services are focused on China at the moment, but could expand in the years ahead…….Read more>>