2023 is shaping up to be a fascinating year for TikTok, for reasons both positive and negative. And 2022 was eventful enough…
The short-video app is doing huge numbers, and its cultural clout has been spooking even the biggest beasts of the social media and online video world. In our industry, it’s a proven hitmaker for new music and old catalogue tracks alike.
However, it’s also facing growing pressure from regulators and politicians in various parts of the world over topics including privacy, safety and moderation. Meanwhile, music rightsholders are loudly rattling their sabres over its next set of licensing deals, and their desire for it to pay them much more.
What better time, then, to pick the brain of TikTok’s global head of music, Ole Obermann, on his company’s evolution? Although with NY:LON Connect being a music industry conference, the conversation – moderated by Artist Growth CEO Matt Urmy – focused on that side of things. Starting with current music trends.
“The barrier to entry is pretty much zero at this point,” said Obermann, who joined TikTok in 2019 after leaving his role as chief digital officer at Warner Music Group.
“Music is such a key part of he creation process on TikTok, and there’s really no barrier to entry at this point. Anybody can upload a video, put the right song to it, and maybe end up with 100m views in a short period of time.”
Obermann went on to bring up one of the recent controversies around TikTok: artists complaining that they feel burned out by expectations that they get onto the app alongside their existing social media platforms.
“Are we putting too much burden on artists when we’re asking them to be so active on social media? That’s a real topic. You can’t expect an artist to be making incredible music, touring, and then spending hours a day making great social media across multiple platforms,” he said.
“That’s something we all need to figure out as an industry… But I think one thing that gets lost in that a little bit is that most of the music that goes really viral on TikTok, it’s not necessarily the artist themselves that are posting that video.”
“They make a great song, which is really what they should be focusing their energy on, then somebody gets excited about that song, creates a video, and it goes viral from there… You’ve got a team of a million marketers and promoters working on your behalf.”
It’s an interesting dynamic, here. Artists’ complaints about TikTok were – in this case at least – not really aimed at TikTok itself. They were more often aimed at labels who they said were forcing them onto TikTok, or even in some cases refusing to release their music until it went viral on the app.
With that in mind, it’s notable that TikTok is steering clear of being seen as telling artists they should be on its platform.
“Some artists lend themselves to it very, very well. They’re masters at making a TikTok, and they know how to pair the song with the visual element, and maybe their brand that they’re building for themselves is a very visual brand,” said Obermann.
“Then they should spend tons of time making TikTok videos. But there are lots of songs that have had huge moments on TikTok, and the artist isn’t posting at all. It’s just the community that’s doing it on their behalf.”
Obermann was also keen to talk about evolving music formats, in a direct riposte to a recent comment by YouTube’s head of music Lyor Cohen.
In November, Cohen told MBW that “short-form video that doesn’t lead anywhere is the most dangerous thing I’ve seen the music business face in a long time”, and went on to describe the rise of standalone music consumption in these apps to be one of the music industry’s “biggest crises to date”.
“There was a great quote – well, a powerful quote and an aggressive quote – that short-form video is the biggest crisis that the music industry has seen in a few decades,” said Obermann.
“He [Cohen] is a good friend of mine. I don’t think he’d mind me poking a little bit of fun at him. Obviously, YouTube is extremely focused on Shorts, so where are you going with this? This [short video] seems to be your biggest priority of the year!”
In fact, Obermann went on to agree with Cohen’s line of argument. It’s the “that doesn’t lead anywhere” part of the latter’s quote that seems to be key to how both men see the world.
“I do think what he said came from a good and real place, because he’s a music guy and has been all his life. We do have to be careful that we don’t have a generation of music fans who grow up being satisfied with 30-second snippets of music,” said Obermann.
“We spend tons of time looking at the data, on TikTok and also elsewhere. We do not see cannibalisation. We see a complementary thing happening. People discover the song on TikTok, and they go to Apple, they go to Spotify, they go to YouTube, they go to Amazon, they go to Deezer, wherever they want to go – and they listen to the full song.”
Obermann said that TikTok is working on how it integrates those streaming services, including its own, Resso, which has launched in a few countries but is rumoured to be getting a big global push soon, licences willing.
“I think we’ll also see it happening more and more the other way. You might be in Spotify or in our service Resso, and love a song, and think ‘I want to make a video with this’ and tap through the other way,” he said.
“The song was always the instruments with the lyrics and the vocals. That’s the base definition of a song, and has been for a very long time. We just have to accept that young people are hyper-focused on two things,” he continued.
“One, they want the visual element of the song. I don’t think we can put that genie back in the bottle. And the other thing is that they want to put their fingerprints on the song… they want to create the derivative work. They want to slow it down, speed it up, remix it.”
“And then they want to pair it with an incredible visual to make something amazing that people want to watch and listen to. That’s great for the music business. I don’t see it as being a crisis – as long as we don’t lose the long-form listening as well.”
Obermann offered a good-natured (but perhaps also slightly spiky) insight into TikTok’s relationship with YouTube.
“We can probably make that even easier. I’ll call Lyor and ask him if he’ll let us integrate a TikTok video into the YouTube Music service. You should be able to click: one click and you go to listen to the full-length song.”
Obermann also talked about TikTok’s recent launch of StemDrop, a partnership with Simon Cowell and Universal Music Group that broke a song into stems and made it available for TikTokers to remix, rework and use in their videos.
“We had 20 billion views of the hashtag, one of the biggest we’ve ever had. We had thousands of submissions, and literally across the board [genre-wise]. My favourite version actually starts with a banjo… There’s Afrobeats versions, there’s Latin versions, there’s country versions.”
Obermann said that he sees a lot of potential in this kind of feature, and he was particularly enthusiastic about what that might mean for the music publishers who hold the underlying rights to the works that might be used for this.
“We work with all the labels, all the publishers, all the societies, independent artist, the whole crew. We love them all equally. But if I had 100 bucks in my pocket at the moment, I think publishing’s a good place to put that money,” he said.
“There’s so much potential for that composition or baseline work to get so much exploitation. Everybody wants to put their fingerprints on the song, and the publishers are the ones sitting on the core work.”
“We’re in this phase of speeding up, slowing down, remixing. But I think the next phase is you go much deeper into the core of the song, a la StemDrop, and the creator can do a lot more than just slow it down or speed it up.”
The licensing models for this are going to be very interesting (our preferred euphemism for complicated and possibly a big fight), although that’s not something Obermann went into, since the conversation moved on to TikTok’s thoughts on music and businesses. Specifically the small to medium businesses who are advertising on the app, and want to use music in their videos.
“It’s hard to get a number for what the size of the global sync or global use of music sector is. I think it’s 800 or 900 million [dollars]. Maybe a billion. It’s in that range,” he said.
“Our motto [for brands] is don’t make ads, make TikToks. All of the advertises are trying to make a TikTok that feels like a TikTok, not like a commercial. We have over a million advertisers, most of them small-to-medium businesses,” he continued.
“Literally a guy with a taco truck in east London, and he’s going to throw £500 at doing a little campaign. And they all want to use music that’s trending on TikTok in those videos, but they can’t, because you have to get a one-off [sync] licence to clear that.”
Note, there have been lawsuits about this, albeit for big brands rather than guys with taco trucks, and it’s the music rightsholders who have largely come out on top.
Obermann made a bold prediction: that if TikTok can persuade enough rightsholders to work with it in clearing music for those advertisers to use, “we could double, triple, quadruple that side of the business [sync revenues]”.
“Not just TikTok. If you look at the size that short-form video is going to be as a business in a few years [it’s] hundreds of billions of dollars of advertising. If you can get a small percentage of that to go to the music that is used in those videos, you’re talking a few billion dollars already.”
He also talked up the marketing and promotional aspect, citing the example of Nicky Youre’s track ‘Sunroof’ which was originally released via TikTok’s in-house distribution program for unsigned artists SoundOn.
Because Youre owned the rights, TikTok was able to feature it in the company’s commercial library for advertisers. Obermann said that initially TikTok creators weren’t going for it, but that the advertisers were all over it.
“There were two million creations of videos with this song that were commercial creations, and it really started to take off. If you get two million creations you’re going to get a couple of billion views off that,” he said.
“And then the creators noticed – another five million creations which were personal creations – and that resulted in another five to six billion views. He went on to get signed by Columbia Records…”
“This guy really got discovered because small businesses wanted to use that song in their commercials. I think there’s a lot of money there, and there’s a lot of marketing and promotional power and push that we can get from these advertisers if we can get it structured and set up in the right ways, and reduce the friction and barriers.”
SoundOn is still a relatively low-profile part of TikTok’s music activities, having launched in the US, UK, Brazil, Indonesia and most recently Mexico. Around 140,000 songs from 35-40,000 artists have so far been uploaded, said Obermann.
“We’re getting these artists really early, they’re able to get paid right away, and they’re finding success,” he said, before carefully stressing that TikTok is not positioning itself as a rival to or disrupter of labels with all this.
“Most of them go on to sign a record deal. The dream for a bedroom artist is to get a record label deal. I think that has always been the case. I think it still is the case,” he said.
“Maybe over time we see some more of them decide that is not the dream any more, that they do want to be independent… but right now, the dream is ‘I want to get signed to Columbia or to Interscope or to Warner Brothers’ or one of these other amazing labels.”
The panel was nearly over, and nobody had mentioned licensing deals with those labels. Thankfully, a question came from the audience, essentially asking (we’re paraphrasing) ‘do the labels’ licensing attitudes stifle innovation?’
Imagine the almighty rumpus that would have ensued if Obermann had taken the bait and let rip with criticism of the labels, at a time when they’re already ramping up the pressure on TikTok to rework its licensing setup and pay them a lot more.
As a veteran of such negotiations from the rightsholder side of the table, he went into careful deflection mode.
“With my label hat on, [when licensing] you have to think through all the scenarios. You have to be risk-averse, because you’re protecting areas that are big and healthy and growing. And so you have to be measured in what else you let out there,” he said.
“That totally makes sense. It’s incredibly rational, and the assets that a label or publishing licensing person is protecting are these amazing catalogues of music.”
“From the tech side, you literally come at it from the opposite point of view. Let’s just try everything, see what works, and we’ll figure it out afterwards. So the two are inherently opposed in terms of the mentality and how you come at things,” he continued.
“Sometimes stuff goes a little slower than I would like it to, because we have to work through and explain: if we do this, is it going to cannibalise that, and is it going to be a threat to some other revenue stream that is big and healthy and growing?”
But he made sure to finish on a positive note. “There’s a lot more open-mindedness probably on both sides. It’s healthy when people jump back and forth,” said Obermann, referring to moving between rightsholders and tech companies.
He and Lyor Cohen have both moved from labels to tech, while YouTube’s Robert Kyncl recently went the other way, to Warner Music Group. “Then you actually get the [positive] mindset on both sides, and hopefully you can build the bridge a little bit easier.”
He paused, possibly enjoying the fact that with the session ending, there was no time for any follow-up questions. “Was that diplomatic? Okay!”
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