Why Apple Music buying TikTok could be mutually beneficial

With TikTok caught in the undercurrent of China-America politics and bluster about illegal data sharing and “it’s spying on Americans!” (© Donald Trump), the company fought back with full page ads in Australian newspapers and not-so-social distancing from Beijing.

But it’s becoming obvious that preventing a ban in the US (and other countries) could benefit from a switch in ownership.

As in, from the Chinese to the Americans.

Some of its US investors have approached parent company ByteDance founder and CEO Zhang Yiming about a full or partial carve-up.

Venture capital firms General Atlantic and Sequoia Capital are in the talks. One name bandied about is Silver Lake, which now owns Australia’s entertainment company TEG.

ByteDance won’t come cheap, valued at US$75 billion in its last fundraise in 2018. It had 500 million users then. Current figures are put that total at 800 million, and in May Bloomberg estimated its value at $100 billion.

However a company which can afford to splash out is Apple, with $192.8 billion in cash reserve. Such a move would see Apple ward off growing competition from TikTok and catch up with Spotify.

ByteDance’s soon-to-be launched streaming service Resso will be a nightmare for Apple.

The Chinese have created and lead pop culture globally in a way Apple has failed to, and further utilised the full power of social media.

Last week, ByteDance weighed into the prickly topic of small returns for artists from streaming services by introducing a way for more creators to make money on the platform. The $200 million Creator Fund will “encourage those who dream of using their voices and creativity to spark inspirational careers.”

TikTok has also made it possible for its creatives to earn money from their livestreams, and ways to connect with brands.

It’s become on friendlier terms with the music biz, with licensing deals with major labels, global indies digital times association Merlin and the National Music Publishers’ Association (NMPA).

As for its rivalry with Spotify, acquiring Tik Tok would give Apple an edge in user acquisition and data.

At the start of 2020, Apple Music had 68 million subscribers  By end of March 2020, Spotify had 286 million monthly active users and 130 million premium subscribers.

Last year TikTok was the world’s second-most downloaded app. In April 2020, it hit 2 billion global downloads – 165 million in the US.

Music Business Worldwide further speculated that Apple’s interest in Tik Tok would be its advanced artificial intelligence capabilities and powerful recommendation algorithms.

It suggested, “TikTok’s global addictive appeal is no accident. 

“The app’s advanced artificial intelligence capabilities and powerful recommendation algorithms are key factors behind the 68 billion hours spent by its users in the app last year.”

MBW quoted from a piece by investor and tech industry commentator Connie Chan in which she called TikTok “the first mainstream consumer app where artificial intelligence is the product” and not a tool, as with other platforms.

The trade magazine warned, “In an increasingly competitive music streaming market, with Apple Music’s primary rival Spotify known for excelling in content recommendation, TikTok’s AI baked into the Apple Music ecosystem could be Spotify’s kryptonite.”