TikTok is changing the music industry and Spotify could be next

Benee performs at the Bonnaroo Arts & Music Festival on June 18, 2022 in Manchester, Tennessee.

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Zoi Lerma was working at a bagel shop in Los Angeles in early 2020 when she first heard the song “Supalonely” by Benee.

She liked it so much that she choreographed a dance to the tune and posted it on TikTok. Since then, her videos have racked up more than 45 million views, making her a TikTok celebrity and helping create Bene a global feeling.

As of September 2, “Supalonely” has appeared in more than 5.7 million videos from thousands of TikTok users. Benee performed two sold-out arena shows in New Zealand in October 2020, and she nominated for New Artist of the Year 2020 at the People’s Choice Awards. Her hit song has gone platinum, which means it has sold the equivalent of 1 million copies in eight countries and has more than 2.1 billion streams across all platforms.

“When it started trending on TikTok and emerged on TikTok, I would hear it on the radio or, you know, hear it in stores,” Lerma, now 20, said in an interview with CNBC. . “I’ll hear it everywhere.”

A far cry from her days in the hot Southern California kitchen, Lerma now has 6 million followers on TikTok and makes a living promoting music on the app and using her influence to collaborate with brands. She is also part of TikTok Creator Foundationpay famous contributors as their videos grow.

TikTok, owned by China’s ByteDance, is turning the music business around by becoming more and more of a hit machine. Artists can go from enigmatic to global superstar, thanks to a viral video possibly posted by a complete stranger. Even Fleetwood Mac’s “Dreams” is back on the charts in 2020 after a clip of a man drinking cranberry juice on a skateboard explode on the app.

Record labels, artists, and creators are all trying to figure out how to profit in the new world dominated by TikTok and to make sure they don’t get left behind.

While ByteDance is best known for its social media app TikTok, the Beijing-based company is now consolidating its capabilities in semiconductor design. ByteDance will not manufacture chips to sell to others, but it will design the semiconductors it requires for specific applications internally.

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“If a song is going viral on TikTok and the artist has no name, it will get a million streams as a result. Spotifylabels are scrambling to sign that song or that artist,” Tatiana Cirisano, a music industry analyst and consultant at Midia Research. “They’re obsessed with expanding market share and making sure they don’t lose any market share to independent artists.”

The importance of TikTok is undeniable. A year ago, the app topped 1 billion monthly users. Last month, a Pew Research Center survey found that 67% of teens in the United States use TikTok, and 16% said they use it almost constantly.

The rest of the social media industry is trying to catch up. Facebook and Instagram dad Metafor example, pumped money into a short video feature called Reels.

While TikTok’s finances remain secure because ByteDance is private, industry analysts say the app is winning a larger share of the online advertising market, as brands track eyeballs .

1 . Flow Driver

In 2021, more than 175 trending songs on TikTok entered the Billboard Hot 100, more than double the previous year, according to TikTok’s annual music report.

“It’s a household name and it really works,” said Mary Rahmani, a former TikTok executive who founded the company and record label last year. Moon Project. “It’s still the #1 platform driving streams.”

In terms of current dollar flows in the music industry, TikTok’s main influence lies in its ability to drive listeners to services like Apple Music and Spotify.

In 2021, Spotify paid more than $7 billion in royalties, according to a company report. The company pays record labels, artists, and other rights holders based on their “online shares,” calculated on a monthly basis. An artist who receives one of 1,000 US streams for the month will take home $1 of every $1,000 paid to rights holders from the US royalty pool.

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TikTok is positioned to monetize its role as the music industry’s taste maker, but the company hasn’t revealed its plans. But there are some hints to the parent company’s thinking.

In May, ByteDance, filed a trademark registration application for “TikTok Music” with the US Patent and Trademark Office. The service will allow users to play, share, buy and download music, according to the filing. A TikTok spokesperson did not provide any further details and sent CNBC a joint statement about the company’s role in the music industry.

With hundreds of songs generating over 1 billion video views and dozens of artists signing on to record due to their success on the platform, TikTok started trends that reverberated across cultures, industries, and communities. rankings,” the statement said.

TikTok currently has partnerships and licensing agreements with major brands like Universal Music Group, Warner Music Group and Sony Music Entertainment, all agreements signed between 2020 and 2021. Cirisano of Midia Research says artists are not paid directly based on how often they watch or use their music.

Music is not a new market for TikTok. In 2017, ByteDance acquired a startup called, which is a popular app that allows users to create videos with other people’s music. ByteDance merged the service with its homegrown TikTok app the following year.

‘A brand new fan base’

Singer-songwriter , whose hit single “Down” topped the Billboard charts in 2009, started posting on TikTok in 2019 as a fun way to express yourself and be creative. He currently has more than 460,000 followers on the app and says it has given him exposure to the younger generation.

Sean said in an interview: “I am reaching a whole new fan base. “I’ve been doing music for 20 years, so some of them were just kids when my music came out and they started exploring my latter category through this. So it’s real. It’s a pretty compelling tool for that.”

Like many other major labels and agencies, Sean has also used TikTok as a tool to discover new artists. He signed with singer Véyah after finding her on TikTok, where she has more than 470,000 followers.

Now she’s going from the girl who used to sing in her bedroom on TikTok to LA, working on an album and working with major producers who have produced megahits for so many artists, Sean said. great doctor.

Jeremy Skaller, co-founder of management, media and production company Heavy group, was warned of the risks of the skyrocketing popularity that could come with TikTok’s virality. Not everyone is prepared for what happens next, he said.

“Once a label signs you for $1 million, the pressure to perform takes over the art, which is why signing on too soon can be so disruptive,” says Skaller. what could have been a beautiful long career,” says Skaller.

Even established artists are facing challenges on TikTok.

Artist Halsey recently complained about the pressure to post on the app, writing in a TikTok Videos“My record company says I can’t release [new music] unless they can fake a viral moment on tiktok. “

Halsey’s company, Capitol Music, later released a statement on Twitter committed to supporting the singer.

Cirisano says artists often rely on their labels for marketing. But given the popularity of TikTok, they are now promoting a lot on their own.

“It’s just something that’s too demanding for artists, apart from other things they’re doing,” says Cirisano, which frustrates a lot of them.

But there are also benefits. Some artists are able to monetize their TikTok to become richer without the help of a brand, a path that was nearly impossible before the social network.

Loren Medina, owner of Guerrera PR, says music marketing is a “different world” than it was 10 years ago. Medina, who worked at Sony from 2005 to 2009, now represents avant-garde Latin artists like Jessie Reyez and Omar Apollo. Historically, she says, for artists to be successful, they need to be prioritized for a label that is willing to support them financially.

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“It’s just so different,” she said. “We actually had to hire street teams to go out on the streets and hand out flyers, hand out CDs. There’s more to it than face-to-face, hand-to-hand.”

Labels are still important in the industry, she said, but they are “not the end of the world”. Artists are now using the massive audiences they reach on TikTok to create a dedicated fan base that can buy a ton of merchandise and fill bars and concert halls.

One of Medina’s clients is Kali Uchis, whose song “tele” has been a hit on TikTok and now has more than 700 million streams on Spotify. Although Uchis had an established career before going viral, Medina said her appearance on the app was what ultimately catapulted her to global stardom. She won Top Latin Song for “tele” and Top Latin Female Artist at the 2022 Billboard Music Awards.

“Her career blossomed, really, really, really blossomed thanks to a song on TikTok,” she said. “It wasn’t going to be a single, and so we had to rotate and rearrange everything and make that song the focal point because it was explosive.”

Services such as Zebr appeared to try and streamline the work that comes with TikTok celebrity. Record labels and artists can use Zebr to pay creators to use a piece of music in their content. The app allows creators to choose the campaigns they want to run and process the checkout process.

Zebr CEO Josh Deal, Designated Person Forbes ’30 Under 30 in Europe For entertainment this year, brands and artists have gotten much smarter with their marketing approach on TikTok.

“A lot of times they just throw money at agencies and hope they put it with their influencers,” he said. “Now, the strategy is getting a lot more sophisticated. They’re understanding why the rails break and how they break. And it’s really just a kind of reverse engineering.”

Since choreographing the hit video “Supalonely,” Lerma has collaborated with artists and labels to promote the music. She’s hired to work on specific songs, but retains a lot of creative control over what she posts.

“They don’t really tell you what to dance, or how they want it to look,” says Lerma. “You just have to get your own freedom with what you want to do.”

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