When it comes to favorite songs, people are finding many of theirs on TikTok as of late. If you're one of them, you'd be among the 75% of TikTok users who say that they've discovered new music through the app.
Right now, the easiest way to find the catchiest TikTok ditties is to use Apple's (AAPL) Shazam app, a service that uses audio and time frequency technology. And once you've identified the song, you can use the app to find the song on your preferred music streaming service.
And if you're like 422 million people, that would lead you right to Spotify (SPOT), the largest of all the music streaming services. Spotify went public on the NYSE in 2018, and has continued to experience low profit margins despite continuous growth in revenue.
Spotify has long had a hold on the streaming market, launching long before competitors like YouTube Music and Apple Music. But now it has a new challenger to face that already has a strong hold on what its users like to listen to: TikTok.
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TikTok Takes a Leap Forward Into Music Streaming
Multinational company ByteDance has filed patents for a TikTok music streaming service. Since its launch in 2017, TikTok has experienced explosive growth, earning close to $4 billion in 2021 and forecasted to earn $12 billion in 2022.
For those who already use the platform, music certainly seems like the next logical step. TikTok creators are already utilizing music in exciting, creative ways--whether it's to teach, entertain, or promote, few things go better with short-format media than a catchy refrain.
The app is also as accessible to mainstream mega-stars as it is to independent creators looking for exposure. Popularity on TikTok can save creators and studios a good deal of money that might otherwise have to be spent on a marketing campaign. Artists have even recently used the app to crowd-test songs as they're writing them, making it possible for a song to be a hit before it's even released, like in the case of Spain's young pop star Rosalía's hit "Despechá".
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Can TikTok Really Compete with Spotify?
The interesting thing is that TikTok has already launched a successful music streaming service. Resso is ByteDance's first music streaming app. Launched in India, Brazil, and Indonesia in March 2020, Resso has already seen 304% growth thanks, in part, to music referrals from its sister social media app TikTok. It makes sense -- after all, this is a more direct line between artists and worldwide exposure. While growth is a positive indicator of TikTok's potential success, it's unclear yet if the company will see more success with profit margins.
It may be the biggest name in music streaming, but Spotify has always struggled to produce a return on its musical content. Over the last few years, the company pivoted to bolster its podcast offerings, acquiring podcasting networks Megaphone and the Ringer for upwards of $400 million in 2020.
Before that, in 2019, the company shelled out $340 million dollars for Gimlet and Anchor, two other popular podcasting networks. And the streaming service famously incurred social ire for bolstering Joe Rogan's podcast despite the controversial air-personalities stances on covid-19 vaccines.
Spotify's user numbers also make the company valuable for other reasons. The data collected thanks to the app's frequent use has plenty of lucrative applications. But if this household name in music streaming can't compete with TikTok's growing success, a large percentage of users could abandon the platform.
