This month, TikTok began streaming music in Brazil and Indonesia -- the second and third largest markets. Tatiana Cirisano is a music analyst with MiDIA Research. She said that heavy TikTok users may "just be willing to switch to TikTok Music."
TikTok, the popular app for short videos, has recently launched a rival to music streaming giants Spotify and Apple Music.
TikTok Music announced on Wednesday that they will be testing their service in Australia as well as Mexico and Singapore. This announcement comes just a few days after the service was launched in Indonesia and Brazil.
TikTok announced a new licensing agreement last week with Warner Music Group to expand its music library. ByteDance, the parent company of Resso (another music streaming service owned by ByteDance), recently canceled its free tier.
Analysts said that while these efforts are still in their infancy, TikTok is a music streaming service that has certain advantages over other services. These could be the key to capturing market share.
Jonathan Woo is a senior research analyst with Phillip Securities Research. He said: "There's a large installed base of TikTok users that TikTok could convert into TikTok Music paying subscribers, at comparatively low acquisition costs."
DataReportal reports that Indonesia and Brazil, the second and third largest markets behind the U.S. with 113 and 84.1 millions active TikTok users above 18 years of age, are respectively. Mexico, with its 62.4 million TikTok subscribers, is TikTok’s fourth largest market.
Senior analyst at Phillip Securities Research
Ole Obermann said, "TikTok Music makes it easy for [users] download, save and share their favorite TikTok viral tracks," during the Indonesian and Brazil launch.
According to data shared by MIDiA Research with CNBC, TikTok was the second most popular source of music discovery among 16-19 year olds. MiDIA Research, a U.K. based research company covering entertainment and media, is the second most common source of music discovery for 16 to 19-year-olds.
You might consider switching if you already use TikTok so much.
In MiDIA’s fourth quarter consumer survey, 48% said that YouTube was their primary place for discovering new music. 41% said TikTok. The survey included 9,000 respondents from the U.S.A., U.K. Australia, Canada Germany France Sweden South Korea Brazil.
Tatiana Cirisano is a music analyst with MiDIA Research. She says that people often hear a lot of songs on TikTok but don't listen to them elsewhere or find out more about the artists.
Cirisano said that TikTok Music has the potential to close this gap.
Apple Music and Spotify, the Swedish giants, dominate the music streaming market.
According to the International Music Summit Business Report, 2023, Spotify controls almost 31% of global streaming market. Apple Music is next with 13.7%.
Cirisano, however, said that TikTok heavy users who use other services like Spotify could convert to TikTok music users. Cirisano said that if you are already part of the ecosystem and use TikTok a lot, you may be willing to make the switch.
Woo, of Phillip Securities Research, said TikTok Music is a "low-risk" option for Spotify and Apple Music.
Woo said that TikTok Music would definitely be able to eat some of the market share of Apple Music and Spotify.
Woo said that there is little incentive for existing Apple Music or Spotify users to switch platforms, as the brand loyalty of these users is very high.
He said that he expects the monthly subscription fees for all three services to be "at similar price points." Spotify Premium in Indonesia costs 54,990 Indonesian Rupiah (US$3.66) per month, while iOS users have to pay 49,000 Indonesia Rupiah (US$3.26) for TikTok Music.
"As a customer, why would I pay a fee for TikTok Music when I could listen to it free on Spotify?
TikTok refused to comment on the expansion plans of TikTok Music. Spotify and Apple Music didn't respond to CNBC requests for comments.
How can you boost your business?
TikTok is looking to expand outside of the U.S. where political pressures are increasing. The company's flagship app has been banned in Montana - the first state to do this - as well as India. TikTok CEO said that the company would pour "billions" of dollars into Southeast Asia in the coming years.
TikTok Shop, the company's online marketplace, has aggressively expanded into Southeast Asia. It competes against Sea's Shopee as well as Alibaba's Lazada. These e-commerce initiatives also include livestreaming shopping.
When asked in July if livestream shopping was the "end goal" of TikTok expansion, TikTok said it wasn't just one area they were looking at.
Shant Oknayan said, "Shoppertainment may not be the only destination but it's definitely one of our main areas of focus, especially in Asia Pacific," during a TikTok summit held in Jakarta this month.