In a bold move defying looming U.S. regulatory pressures, TikTok is now ramping up its involvement in the music industry. The social media titan, which boasts of a monthly active user base of about 1.8 billion, is forming a Music Content Investment Team that will transform the company from a content distribution platform to one that facilitates content ownership and management.
The new team is tasked with scouting and acquiring music companies and copyrights, aimed at enhancing TikTok's music offerings and retaining talents that often go viral on its platform. Based across major U.S. cities including Los Angeles, New York, and San Jose, the team will conduct financial analysis, manage partnerships, and spearhead acquisitions, signaling TikTok's ambition to orchestrate a more integrated music content strategy.
A job post by TikTok states:
“The TikTok Music Content Investment Team is a newly formed team that focuses on partnership or acquisition opportunities in the music content space on a global level. The team will work with TikTok music content strategy team and operations teams in evaluating market opportunities, executing partnership or acquisition projects, performing detailed financial analysis and valuations of music content and related assets that would help shape the future of TikTok music businesses. Together, the team works with higher management on setting overall strategic direction, and is responsible for the results of partnership and acquisitions.”
Not worried about the ban?
Despite this reported expansion, TikTok still faces potential setbacks from U.S. lawmakers. The Biden administration has issued an ultimatum requiring ByteDance to divest TikTok's U.S. operations or face a national ban, citing national security concerns.
TikTok responded by legally challenging the requirement for its Chinese parent company, ByteDance, to sell its U.S. operations, by filing court briefs arguing that the mandate infringes on Americans' First Amendment rights and sets a dangerous precedent for free speech. In its legal defense, TikTok presented internal documents from previous negotiations with the U.S. government but they were met with a lack of good faith in the discussions.
TikTok's recent announcement of its push in the music domain suggests a confident disregard for the political headwinds, which may eventually result in a favorable resolution or workaround to continue its American operations.
What this means for the music royalties industry
Industry experts are eyeing TikTok's move that could prompt other tech giants and social media platforms to review their approaches to music content. With its new investment team, this would raise competition in the marketplace in music investing. TikTok will be using its massive user base and financial resources to attract lucrative deals.
On the other hand, TikTok's involvement could expand the overall market for music royalties. We expect the value and interest in music royalties could increase and will attract more investors to the sector, which will impact the pricing dynamics in the overall music royalties market. By potentially increasing demand for music copyrights and assets, TikTok could drive up prices and influence the valuation models used by investors.
This could potentially benefit platforms like Royalty Exchange by increasing general awareness and interest in music royalty investments. On the other hand, if TikTok opts for exclusive licensing agreements or changes the terms of use for its content, it could alter the expected revenue from certain royalties.
The Royalty Exchange Advantage
Royalty Exchange can offer a diversified portfolio that includes a wide range of genres and artists, not limited to those popular on TikTok. This can appeal to investors that want exposure to different music sectors that may not be affected by TikTok's strategic changes.
Royalty Exchange also deals in various types of rights, including mechanical, performance, synchronization, and others. TikTok's focus might primarily be on specific types of rights that boost its platform's content and will likely leave other lucrative areas for Royalty Exchange to capitalize on.
Best of all, Royalty Exchange offers a transparent bidding process and clear terms of ownership, so investors can have control over their investment choices. This is needed by serious investors who desire to manage their portfolios actively.
Finally, Royalty Exchange has a history of handling music royalties that have demonstrated consistent earning potential over time. It will continue to attract investors who are looking for proven revenue streams rather than speculative or emerging assets.
New to Music Royalties Investing?
At Royalty Exchange, you can learn how to select the best music assets to invest in. We offer thousands of catalogs with different genres that are up for auction today, so sign up as an investor to get started.
If you’re new to royalty investing, we’ve prepared this guide on Royalty Investing Made Easy. Discover why so many investors today are actively searching for the next best music investment deals.
