Additional sources are confirming that ByteDance, the company that owns TikTok, is in the process of developing a paid music streaming service, according to Bloomberg. There was talk of ByteDance developing such a music streaming app back in early April. At the time, sources told the South China Morning Post that the company planned to launch the service “soon” and that over 100 people were working on it.
ByteDance’s service is rumored to launch this fall with a focus on emerging markets. Exact territories aren’t named, but Bloomberg says the company will target “mostly poorer countries where paid music services have yet to garner large audiences.”
There isn’t much information about the app yet, except that it will offer a catalog of songs and videos on-demand, will have both free and paid tiers, and, according to Bloomberg’s source, “isn’t a clone of Spotify or Apple Music.” ByteDance has acquired a tremendous user base in a short amount of time, thanks to smart acquisitions and the explosion of TikTok’s popularity, and it’s been working on all kinds of new apps to find its next hit, including a Slack work messaging competitor called Lark and a Snapchat clone named Duoshan, but a music streaming service might be a more direct way to convert a portion of the TikTok audience into paying subscribers.
ByteDance will need these customers as TikTok is reportedly still not profitable despite its popularity, according to Billboard. And getting people to pay anything at all for music streaming in emerging markets is a big ask. In India, less than one percent of music streaming subscribers pay for a subscription and about 14 percent have a bundled subscription (such as Amazon Prime, or through a mobile contract).
But it looks like ByteDance sees opportunity in India as the app’s first market as it has reportedly secured rights from two of India’s largest labels — T-Series (which recently became YouTube’s biggest channel) and Times Music. And re-negotiations for licensing deals with the world’s largest music groups — Sony, Universal, and Warner — are currently underway. An industry source tells The Verge that TikTok is relying on old licensing deals it acquired through purchasing musical.ly. These deals were originally given at much cheaper rates to musical.ly in 2016 as at the time it was still considered a startup. Now as TikTok, the app has over 1 billion downloads, and was the fourth most-downloaded non-game app for 2018, surpassed only by WhatsApp, Facebook Messenger, and Facebook.
ByteDance could bring the app to a country like India without waiting for catalogs from the major labels, but that’s highly unlikely. It already has to renegotiate licensing deals with the majors for TikTok itself. And Bloomberg says licensing deals for this new paid service are contingent on coming to an agreement on those catalogs for TikTok. Not including them at launch could give those labels a bad taste in their mouth about ongoing negotiations. Additionally, chatter about ByteDance considering an initial public offering this year puts extra pressure on the company to have all of its music rights in place. The industry source tells The Verge that now it’s about moving ByteDance from a startup license to a commercial license, which likely means a significant hike in how much the company pays to use music.
ByteDance’s new app will reportedly arrive this fall.