Earlier this week, Spotify released its annual financial numbers for 2023, and as expected, they're all huge. Streaming platforms are one of the biggest revenue generators in the music industry, and they bring in more and more revenue every year. Much of that revenue goes directly back to rights holders, labels, musicians, etc.
Spotify is the way the world listens to music, but its role as a platform for music discovery has been usurped by TikTok in recent years, at least among younger listeners. Although TikTok is not marketed as a music site or an app created specifically to introduce users to new music, it has spawned countless new artists and made many songs huge. He has contributed to turning it into a hit. The platform is extremely important to the music industry, but the relationship between the two is fraught with problems.
Spotify and TikTok both occupy unique positions in the music ecosystem and do very different things. Apps appeal to different types of users and for different reasons. It's hard to compare because they're not really the same, but it's possible to compare how much money you're contributing to your business.
According to Spotify, the Swedish streamer paid $9 billion in 2023. That money was passed on to various rights holders, with most of it going to the musicians. Of course, there are still many who believe that the platform doesn't pay high enough fees, and some continue to argue that they simply don't have enough money. These are all fair comments, but the same can be said even louder on his TikTok.
It's unclear how much money TikTok specifically donates to music-related organizations, but music industry publications say world music business I did some calculations trying to figure out what that number was. TikTok is estimated to pay up to $400 million in royalties to a number of rights holders for the use of music on its platform, according to the outlet, which cited a recent statement from Universal Music Group as the basis for its calculations. .
For those who don't want the split, Spotify pays the music industry about 22 times more than TikTok. Of course, no one is demanding that TikTok match Spotify's numbers, and we shouldn't expect the company to do so for a number of reasons. But this comparison highlights both how important Spotify is to the music business and the fact that the amount TikTok is paying isn't its biggest contribution.
TikTok provides an invaluable promotional opportunity for countless musicians, and it's hard to put a price tag on it. We'll never know how much money this app generates in terms of revenue by introducing millions of people to new artists and new music, and encouraging them to buy or stream that music elsewhere. No, but the impact is certainly huge.
About a week ago, Universal Music Group, the world's largest record label, removed its entire catalog from TikTok. In an open letter, the company claimed that negotiations between the two companies have stalled, that it feels TikTok is not paying nearly enough in royalties, and that there are other issues. How this battle will play out in the coming days, weeks, and possibly months is anyone's guess, but financially, the majors are probably not that worried about losing this revenue stream for the foreseeable future. It's clear that you haven't – at least you're not worried about billions of dollars in losses. We get an influx from Spotify every year.
This contributor has reached out to a representative from TikTok for comment and will update this story with any meaningful comments.
