TikTok is moving the music industry and Spotify could be next

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

Josh Breasted | WireImage | Getty Images

Zoey Lerma was working in a Los Angeles bagel shop in early 2020 when she first heard Benny’s song “Suplonely.”

He liked it so much that he choreographed a dance to this tune and posted it on TikTok. Her videos have garnered over 45 million views to date, which turned her into a TikTok celebrity and helped create pigtail A global sensation.

As of September 2, “Suplonely” has appeared in over 5.7 million videos from thousands of TikTok users. Benny did two sold-out arena shows in New Zealand in October 2020, and she was Nominated For New Artist of 2020 at the People’s Choice Awards. Her hit song has gone platinum, meaning it has sold the equivalent of 1 million copies in eight countries, and has over 2.1 billion streams across all platforms.

“When it started trending on TikTok and picked up on TikTok, I would listen to 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.”

Away from her days in a hot Southern California kitchen, Lerma now has 6 million followers on TikTok and makes a living by promoting music on the app and using her influence to partner with brands. he is also part of tiktok creator fundWhich pays popular contributors when their videos start.

TikTok, owned by China’s ByteDance, is rapidly turning the music business on its head by becoming a hit-making machine. Artists can go from obscurity to global superstardom, thanks to a viral video that may have been posted by a complete stranger. Even Fleetwood Mac’s “Dreams” re-entered the charts in 2020 after a clip of a man drinking cranberry juice on a skateboard explosion on the app.

Record labels, artists and producers are all trying to figure out how to profit in the new TikTok-dominated world and ensure they are not left behind.

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

Artur Vidak | Nurphoto | Getty Images

“If a song is going viral on TikTok, and the artist is not signed, and as a result, it is getting millions of streams SpotifyLabels are scrambling to sign that song or that artist,” said Tatiana Sirisano, a music industry analyst and consultant in Media Research. “They are passionate about expanding their market share and making sure they do not 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 US use TikTok, and 16% said they are on it almost constantly.

The rest of the social media industry is trying to play catch-up. Facebook and Instagram parent metaFor example, is investing money in its short video feature called Reels.

While TikTok’s financial position is still a secret because ByteDance is private, industry analysts say the app is winning a bigger share of the online advertising market, as brands follow eyeballs.

No. 1 Stream Driver

According to TikTok, in 2021, more than 175 songs trending on TikTok charted on the Billboard Hot 100, double the number from the previous year. Annual Music Report.

“It’s a household name and it’s really effective,” said Mary Rahmani, a former TikTok executive who founded the agency and record label last year. Moon Projects, “It’s still the No. 1 platform that drives the stream.”

In the context of the current flow of dollars in the music industry, the main impact of TikTok lies in its ability to push listeners towards the services. Apple Music and Spotify.

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

TikTok is positioned to capitalize on its role as the taste maker of the music industry, but the company hasn’t disclosed its plans. But there are some indications of the parent company’s thinking.

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

“With hundreds of songs over 1 billion video views and dozens of artists signing record deals as a result of their on-stage success, TikTok started trends that resonate across culture, industry and charts,” the statement said. The statement said.

TikTok currently has partnership and licensing agreements with major labels such as Universal Music Group, Warner Music Group and Sony Music Entertainment, all deals that were signed between 2020 and 2021. Media Research’s Sirisano said artists are not paid directly based on how many times their music is viewed or used.

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

‘Brand new fan base’

singer, songwriter Jay Sean, whose hit single “Down” topped the Billboard charts in 2009, began posting on TikTok in 2019 as a fun way to express herself and be creative. He now has over 460,000 followers on his app and he says it has exposed him to the younger generation.

“I’m reaching a new fan base,” Shawn said in an interview. “I’ve been doing music for 20 years, so some of them were kids when my music came out and they’re starting to research my back catalog through it. So it’s actually quite a fascinating instrument for that.”

Like many major labels and managers, Sean has also used TikTok as a tool to find new artists. He signed on after finding singer Vea on TikTok, where he has over 470,000 followers.

“Now she’s going from this girl who used to sing in her bedroom on TikTok, to living in L.A., working on an album and working with the big producers of the mainstream who created megahits for so many big artists. built,” said Sean.

Jeremy Schaller, co-founder of the management, media and production company heavy group, warned about the risks of skyrocketing fame that comes with the virality of TikTok. He said that not everyone is ready for what will happen next.

“Once a label signs you for $1 million, the pressure to perform affects the art, which is why getting a deal too soon can mess with what could otherwise be a beautiful, long career. It is,” Schaller said.

Even established artists are facing challenges on TikTok.

Artist Halsey recently complained about the pressure to post on the app, writing a tik tok video“My record company is saying I can’t release [new music] Unless they can fake the viral moment on TikTok.”

Halsey’s label, Capital Music, later released statement on twitter Promise of support for the singer.

Sirisano said artists relied on their labels for marketing. But with the fame of Tiktok, they are now doing most of their promotion on their own.

“It’s an extremely demanding thing for artists,” Sirisano said, “in addition to everything else they’re already doing,” which is frustrating for a lot of them.

But there are advantages too. Few artists can take their TikTok to as much money as possible without the help of a label, a path that was nearly impossible in the face of social media.

Guerrera PR owner Lauren Medina said marketing music 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 such as Jesse Reyez and Omar Apollo. Historically, she said, for artists to make it, they needed to be a priority for a label that was willing to support them financially.

Short-form video is here to stay, says Bernstein's Schmulik

“It was just so different,” she said. “We actually had to hire street teams to go out on the street and give flyers to people, CDs to people. Face-to-face, hand-to-hand was too much.”

Labels are still very important in the industry, but they are “not the end all,” she said. Artists are now using the huge audience arriving on TikTok to build a dedicated fan base that can buy tons of merchandise and fill bars and concert halls.

One of Medina’s clients is Kali Uchis, whose song “Telepatia” rocked TikTok and now has over 700 million streams on Spotify. Although Uchis had an established career before it went viral, Medina said that exposure on the app ultimately pushed him to global stardom. She won Top Latin Song for “Telepatia” and Top Latin Female Artist at the 2022 Billboard Music Awards.

“Her career blossomed, really, really, really blossomed because of a song on TikTok,” she said. “That single wasn’t going to happen, and so we had to pivot and just reorganize everything and focus on that song because it exploded.”

services like zebra Tik Tok has popped up to try and streamline the work that comes with celebrities. 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 which campaigns they want to work on and handles the payment process.

Zebr CEO Josh Deal, who was named Forbes ’30 Under 30 in Europe This year for Entertainment, said labels and artists have gotten a lot smarter with their approach to marketing on TikTok.

“At times they would throw money at agencies and expect them to keep it with their influencers,” he said. “Now, the strategy is getting a lot more sophisticated. They’re understanding why and how the tracks are breaking. And it’s really like reverse engineering.”

Since choreographing the hit video to “Supplementally”, Lerma has partnered with artists and labels to promote the music. She is hired to work on particular songs, but has a lot of creative control over what she posts.

“They don’t really tell you what to dance, or how they want to see it,” Lerma said. “You just need to have your freedom with what you want to create.”

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