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TIKTOK SAYS: WE’RE NOT

TO BLAME FOR PAID SUBSCRIPTION GROWTH SLOWDOWN


Ole Obermann, Global Head of Music at TikTok


AS FRANCE LOSES FIFTH LARGEST RECORDED MUSIC MARKET POSITION TO CHINA,

Could TikTok and its massive popularity amongst young consumers be responsible for a slowdown in paid subscription streaming growth within one of the world’s largest recorded music markets?

That’s the question MBW asked last week, when France’s local trade body SNEP published its annual recorded music revenue results, in which it reported that the market generated recorded music revenues of €920 million (USD $967m) in 2022.

According to SNEP, paid subscription-based streaming, which generated revenues of €426 million ($448m) in 2022, was France’s main driver of recorded music revenue last year, growing 11% YoY.

SNEP also reported that there were 11 million paying subscription accounts in France, up by +1.0 million YoY from 10 million in 2021. (Those accounts were shared by 16 million users, via family plans etc.)

Good news, right? Non.

This YoY growth in the number of subscription accounts in France actually slowed compared to 2021, when the number of paid subscription accounts grew by +1.3 million vs. 2020.



SNEP stated in its annual update last week that: “Regardless of age group, subscription-based streaming [in France] is struggling to reach the levels of the other major music markets“.

The idea that TikTok could have an influence on this trend stemmed from an IFPI consumer study from 2022, cited by SNEP itself last week, which showed that while 77% of people surveyed said that they discover new music via TikTok, 45% of young people in France, between the ages of 16 and 24 years of age, “claim to spend more time on TikTok than on online music services“. (see SNEP’s infographic below.)

Furthermore, SNEP’s MD, Alexandre Lasch suggested in a statement that TikTok’s “massive use diverts consumers from subscription-based services, the drivers of today’s music business model”.

SNEP also noted in its report that TikTok and short-form videos “have re-shuffled the deck in relation to music streaming”.



Now, following this week’s news that France was overtaken by China as the world’s fifth-largest recorded music market in 2022, TikTok argues that it is unequivocally not the reason behind France’s “struggling” subscription growth.

“THERE IS NO EVIDENCE TO SUGGEST TIKTOK IS DIVERTING MUSIC FANS AWAY FROM SUBSCRIPTION STREAMING SERVICES… AT TIKTOK WE ARE CURRENTLY WORKING WITH OUR INDUSTRY PARTNERS TO OPTIMIZE A MUSIC EXPERIENCE WHERE FANS DISCOVER ON TIKTOK AND CONSUME ON MUSIC SUBSCRIPTION SERVICES.” OLE OBERMANN, TIKTOK

Ole Obermann, Global Head of Music at TikTok, told MBW: “There is no evidence to suggest TikTok is diverting music fans away from subscription streaming services” in the territory.

He added: “Subscriptions are still growing [in France], albeit at a slower rate in more mature music markets. The TikTok community is filled with passionate music fans who are engaging with artists of all genres and from around the World.

“TikTok drives those fans to streaming services on a daily basis as fans seek out the full track, propelling sounds to even bigger audiences and commercial success. At TikTok we are currently working with our industry partners to optimize a music experience where fans discover on TikTok and consume on music subscription services.”

Obermann continued: “Industry bodies have reported that, even during a global slowdown in the economy, France is actually outperforming other major music markets in terms of percentage growth. We’re proud of our record supporting music in France and the many French music creators who have chosen to share their talent and creativity with our global community.”

Lasch’s comments and SNEP’s report on France’s “struggling” subscription streaming growth arrived amid calls from some in the music industry for TikTok to pay more to righsholders for the use of their music on its platform.

Many in the music industry argue that TikTok, which has over 1 billion global monthly active users, is growing off the back of music’s popularity on its platform.

Even the slightest chance that TikTok could be “diverting consumers” from properly monetized music on subscription platforms like Spotify or Apple Music in one of the world’s Top 10 largest recorded music markets would only strengthen calls for TikTok’s royalty payout model to change.

The major record companies will still be watching the developments in France very closely as they enter their next round of negotiations with the ByteDance-owned video platform.

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