The Rise and Fall of TikTok Music: A Cautionary Tale in the Streaming Wars

The news of Bytedance's decision to shut down its 18-month-old TikTok Music on-demand music streaming service may have come as a surprise to some, but industry experts say it was entirely predictable. Building a sustainable and successful music streaming platform is an incredibly challenging feat, as evidenced by the digital music graveyard littered with failed attempts from even the most well-funded and established players. TikTok Music's demise highlights the unique challenges faced by insurgent platforms trying to break into the highly competitive and saturated music streaming market.

Disrupting the Disruptor: The Challenges of Translating TikTok's Success to Music Streaming

The Constraints of Licensing and Regulation

TikTok's meteoric rise was built on its ability to create a new use case for music, revolutionizing the way users discover and engage with content. However, when it came to TikTok Music, the platform was constrained by the licensing terms and regulations that govern traditional on-demand music streaming services. Unlike the free-flowing, user-generated content that fueled TikTok's growth, TikTok Music was forced to adhere to the same rules and limitations as its established competitors, such as Spotify and Apple Music.This meant that TikTok Music was unable to fully leverage the platform's unique strengths and had to settle for a more conventional streaming service model. As Mark Mulligan of MIDiA Research explains, "TikTok Music had massive potential to be these so many things that didn't look anything like any other [digital service provider]. But they still ended up having to make something that looked pretty much like any other streaming service."

The Challenges of Competing in a Saturated Market

The music streaming market has become a well-functioning utility, with market leaders like Spotify, Apple, Google, and Amazon pouring vast resources into building robust products and features to keep users engaged. Competing against these established giants, with their deep pockets and years of experience, proved to be an uphill battle for the newcomer TikTok Music.Vickie Nauman, founder of CrossBorderWorks, a music tech and consulting firm, highlights the difficulty of translating TikTok's engagement-driven model to a traditional music streaming service. "You can't necessarily translate that to something else," she says, referring to the challenge of getting users to listen to full songs, rather than the short video clips that TikTok is known for.

The Struggle to Differentiate and Retain Users

One of the key challenges facing TikTok Music was its inability to differentiate itself from the competition. Global music streaming services typically offer access to the same vast catalogs of music, making it difficult for newcomers to stand out. Instead, these services must compete on the quality of their user experience, something that Nauman says is "incredibly challenging" to get right.Additionally, the music streaming market has become increasingly saturated, with the average American subscriber using over 2 music subscription services. Convincing users to add yet another paid service to their repertoire was a significant hurdle for TikTok Music, especially when competing against the brand loyalty and passion of established players like Spotify.

The Limitations of Translating TikTok's Engagement to Music Streaming

TikTok's success has been built on its ability to drive engagement and capture the attention of its users, particularly younger generations. However, this engagement-driven model doesn't necessarily translate to the world of on-demand music streaming, where the goal is to get users to listen to full songs and albums.As Russ Crupnick, principal at MusicWatch, explains, "Getting most people to switch [subscription services] at this point is a bit of a challenge. You're more likely to get people to use multiple services." The lukewarm response to TikTok Music's standalone offering, even among TikTok's own user base, highlights the difficulty of converting engagement on one platform into paid subscriptions on another.

The Uncertain Future of Music Streaming Newcomers

The demise of TikTok Music also sheds light on the broader challenges facing new entrants in the music streaming market. Experts believe that the number of global music streaming platforms may have reached a steady state, with little room for new players to emerge successfully.Vickie Nauman suggests that any future success for newcomers may lie in "regional hubs," where they can focus on licensing and catering to local music preferences, rather than trying to compete with the global giants. However, even these regional services are facing increasing pressure from the dominant Western platforms, which have the resources and scale to push aside local players.In the end, Bytedance may not need TikTok Music to maintain its influence in the music industry. As Mark Mulligan suggests, the majority of music activity could soon happen directly on the TikTok platform, as younger generations gravitate towards creating and sharing content, rather than just consuming it through traditional on-demand streaming services.