TikTok is now a driving force in the music industry.
How does the platform identify little snippets of music and turn those artists into the next generation of global music stars? That's the job of Ole Obermann, which makes him one of the most influential people in pop music today.
"There are emerging, undiscovered, unknown artists and there are literally 10 of them being signed to record labels every month because they get a start on TikTok," Obermann says.
"There are superstar artists who have new music. So we do huge things with them to market their new songs and their new releases."
Today, On Point: A conversation with Ole Obermann, and how TikTok is changing music.
Ole Obermann, global head of music business development at ByteDance, TikTok’s parent company.
Holly Minto, member of the British rock band Crawlers, whose song “Come Over” went viral on TikTok in 2021.
MEGHNA CHAKRABARTI: Songs like "Sunroof" by Nicky Youre and dazy, or "About Damn Time" by Lizzo, whether they're songs from major names in music or up-and-coming talent, the hit-maker behind them is TikTok. The social media app claims that TikTok virality was behind 13 out of 14 No. 1 records on the Billboard Hot 100 in 2022. Boosting new talent used to be the realm of the A&R manager. Now the algorithm is king.
Ole Obermann runs the music business at TikTok. He's global head of music business development at ByteDance, TikTok's parent company. And of the many fascinating things about Obermann, there's this: he was once a big name in the music business at a conventional record label, until he saw how TikTok was transforming how music is made and marketed. And he joins us today from London. Ole Obermann, welcome to On Point.
OLE OBERMANN: Thank you for having me. It's pleasure to be here.
CHAKRABARTI: So, I'd love to first hear the story of your journey into the business of music, right? Because you were at at least two major record labels before you moved to TikTok. What first pulled you into the business of music?
OBERMANN: I was always a big music fan. I played guitar. I was in bands in high school, like many of us were. I never believed that I would be able to make a career of being a professional musician, but I was just very passionate about music.
In undergrad, I went to Colgate University, upstate New York, and I was one of the programming managers at our student run radio stations. So I had my first interaction with record label people. Because they would send us promo CDs at the time of songs that they were pushing, in order to try to get us to play them, you know, on the radio.
And I just became fascinated by how the music business actually worked. I started reading about it. And I was lucky enough to get a job at BMG. At the time, there was still five major record labels. Now there are three. But I got this first job right out of college at BMG and then, you know, kind of the rest is history.
CHAKRABARTI: Mm hmm. The three now being Sony, Warner and Universal?
CHAKRABARTI: Okay. Let's keep those names in mind because we're going to come back to that in a second.
CHAKRABARTI: What kind of music did you listen to in your college years?
OBERMANN: The first passion was heavy metal.
OBERMANN: So my first concert I ever went to was AC/DC at Nassau Coliseum on Long Island.
And I was, you know, a pretty strait-laced sort of student. Good student, et cetera. But I just absolutely loved heavy metal. I had a black Gibson Flying V guitar, electric guitar. And a couple of guys that lived on the street with me were also heavy metal fans. So we would cover all these Iron Maiden, Judas Priest, Ozzy Osborne, Black Sabbath, AC/DC songs.
CHAKRABARTI:(LAUGHS) Did you see the recent, I think it was at Glastonbury? Rick Astley doing a cover of AC/DC.
OBERMANN: He did AC/DC, he did AC/DC. Yeah. I was not there this weekend, but I saw clips on TikTok of him doing that.
OBERMANN: He's a very versatile musician. Clearly. It's amazing.
CHAKRABARTI: He was absolutely killing it on the drums. I actually had to do a double take and be like, "That's Rick Astley?" It was amazing.
OBERMANN: (LAUGHS) Amazing.
CHAKRABARTI: Okay, so, how did this metal-loving thrash-master from college then end up going into the business of music? Where's the first place you actually worked on the business side of things?
OBERMANN: So, interestingly, the first role that I had, I was a product manager at BMG.
So, at the time, there were five majors. In the jazz and classical division. So I really, you know, 180-degree turn. And I was working all these releases that were classical music and jazz releases for that record label group, in my first job. Which I absolutely loved. And, to this day, I still listen to lots of jazz and classical as well.
CHAKRABARTI: Mm-hmm. So then tell me more about your early experience in what used to be the conventional world of finding new talent, developing it and marketing it.
OBERMANN: Yeah. I think that that's exactly the right description of how the record business used to work. You had these A&R people who would go out and mostly through live shows or occasionally through, you know, a demo that would be sent to them, they would hear about a buzzing upcoming artist and get to know that artist.
And then if they felt there was potential there, they would sign that artist to a record label deal. And we would then, as the label, we would develop that artist, work with that artist to sort of fine tune the craft, and then ultimately release music and then market and promote that music and distribute it through at the time it was traditional brick and mortar retail, selling CDs or other physical formats.
The one thing that really kind of was noted when I arrived, is how little we actually knew about our customers, right? Like, I mean, I was not a deeply experienced businessperson when I arrived in this first job. But I remember thinking, you know, "We're spending lots of money. Signing these artists, marketing these artists, promoting these artists, and we actually know absolutely nothing about who's buying the music and also what do they do with it once they take it home?" Right?
How often does the song get listened to? Which song on a 12 song CD is actually the favorite and gets put on repeat? All these things, there was no kind of feedback loop, at the time, in the kind of traditional music business, we really didn't know much.
CHAKRABARTI: Why does that matter though? Because once the record got sold, right, the transaction was made. Why do you think it was important to know which tracks people were actually playing and loving?
OBERMANN: Well, at the time, radio and MTV were really our two biggest promotional channels. And we would work a first single, the first song that we decided as the executives in the record label. We would work the first song. Because we hoped that that would capture the attention of a big audience, and then they would buy the whole CD. But then we would move on to a second and a third single. Right?
And so you actually, you really did want to know, is there another song on this album based on who's bought it and who's listening to it already, that it's gonna have the highest chance of getting additional new customers interested in buying that album?
CHAKRABARTI: I'm hearing you say that earlier in your career, you were already identifying places where there just was a lack of information. Right? On the sort of downstream aspects of the music business. And so that lack of information was making it difficult to, you know, shape new possible hits. But, you know, Ole, one of my absolute favorite quotes from the late Steve Jobs. He was asked in an interview once about like, you know, how did they come up with their new ideas at Apple and did they really care about things that users said they wanted?
And it was interesting to me because Jobs said, "It's not the customer's job to know what they want." And that stayed with me because it was jobs saying, you know, real innovation or real creativity isn't going to happen if we're totally responsive to what customers want. Because they only want what they know.
Does that apply to the music business?
OBERMANN: I think it does. And obviously there's a fine balancing act of, you figure out something that works well, and then you kind of do it again. But in a slightly variant way. But then you also do want a completely new genre of music to break through, or a sound that has never been heard before. Or maybe a sound that was popular 50 years ago, makes a massive resurgence.
Right? I think that's the beautiful thing about music. Is that the kind of, the derivatives that can be created based on what's out there already, they can be really narrow derivatives. And sound a lot like something you've heard already. And it's familiar. And so you love it, because you loved the predecessor.
Or we're going to go really left field derivative and something completely different. And that's gonna get you really excited, because it's so new. And, you know, it just taps into a different part of your emotion maybe, than what you felt when you heard that other song. So I think it's a balancing act, probably in most areas of business that's the case.
CHAKRABARTI: I'm curious to know what your first major epiphany was about the power of emerging platforms and how it was going to change music. Because it wasn't with TikTok, right? It was with Spotify.
OBERMANN: Yeah. So after I was at BMG, I did a few other things for a little while, and then I came back to the major record labels.
I worked at Sony for almost 12 years, and then I worked most recently at Warner Music as the chief digital officer. And I was in the strategy and global business development roles. So I had a really kind of fortunate seat, in that any company, any startup that wanted to work with our music, meaning Sony Music or Warner Music's artists, they had to come to me.
And the teams I worked with, in order to get rights to license that music and then put it into their platform. So, we were seeing hundreds and hundreds of startups from around the world who were trying all kinds of interesting things with music. And Spotify was the first one where I really thought to myself like, "This is an absolute game changer."
The format of streaming in and of itself, is obviously a game changer. Because now, you know, you pay one price. Or even if you're on an ad-supported tier, you have access to every single song that exists in the world. And you don't have to carry around a giant case of vinyl or CDs. And you don't have to put something into, you know, a piece of hardware and press play, or press rewind or whatever it is.
You just press play, and it works. So, streaming as a format was the first kind of 'A-ha' moment. But then Spotify was very clever in that they introduced what we called the freemium model, where they had a free to the user ad-supported tier of the service. And then they ultimately tried to upsell you into a paying subscription, which is where most music subscribers are now.
But their philosophy was, "We're trying to get the music fan to really change their behavior, because they haven't ever streamed music. And they haven't ever used a subscription service. So the on-ramp should be this free tier."
CHAKRABARTI: So, okay. Well, when we come back from the break, we're going to talk about what the epiphany was for you, when TikTok came along.
CHAKRABARTI: Today, Ole Obermann joins us. He's in London. And he's the global head of music business development at ByteDance, that's TikTok's parent company. And we're talking with him today about how TikTok is transforming the business and the making of music around the world.
Ole, I was really interested to hear what you were saying about how you recognized that Spotify was a game changer, in terms of creating new behaviors around listening to music and music consumption. So then when TikTok came along, what did you see there rather early? Because I know a lot of folks, all they initially saw were kids doing goofy dances.
OBERMANN: Mm-hmm. Yeah. The predecessor to TikTok was Musical.ly. And at the time, this was five, six years ago, lip syncing, and dance were really the big categories on Musical.ly. So younger music fans, late teens, early twenties was sort of the average age. Usually doing little dance, choreographed moves, or lip syncing.
But even then, when I would use Musical.ly, I was very sort of captured by how quickly a song could get stuck in your head. Right? Because, if you think about it, we talked about this earlier. The big promotional channels for music were always radio. And then when music video and MTV and VH1 happened, those were huge promotional outlets, as well.
So the music video and visual part of it, and then the repetitiveness of radio playing. You know, what it thought were the big hit songs to a target audience, Musical.ly, and then subsequently TikTok just took that to an entirely new level. Because you have over a billion people who are on TikTok, who are all getting accustomed For You feed, and the algorithm is putting the songs into that feed that it believes that you as a fan will end up enjoying, or want to discover or enjoy discovering.
And so it's targeted promotion, matching the song with the audience at a scale that no one in the music industry had ever even thought could be possible. Right? That's the power of TikTok.
CHAKRABARTI: You've called it the ultimate form of fandom.
OBERMANN: Yeah. Yeah. I think it, you know, everybody in the world loves music. Everybody has an emotional reaction to music. And I think we all have, we, you know, we almost get like butterflies when we find a new song that we love or that we fall in love with, right? We didn't know this existed.
It's a beautiful song. It's a song that touches us or moves us in some way, and there's a real joy in that discovery. And so that's what I am referring to when I talk about that fandom.
CHAKRABARTI: But I want also to note you were talking about, you know, users getting served music and bites of music, on a scale never before seen. But also, in return, they give ByteDance and TikTok data, those users. Based on like how long they're staying with each little bit of music that they're seeing. It fills in that blank that you were talking about earlier, that you weren't getting, when you were at, you know, Sony and Warner and people just walking out of the record store with a CD.
OBERMANN: Yeah, I think that's exactly right. And actually, to take that even a step further, some of the really creative and innovative artists who are posting music on TikTok, often pre-record deal, like Pink Pantheress is a great example, really amazing artist who came out of London last year. She would post snippets of her new songs, before the song was even final. And then ask for feedback from the fans, and she would get comments, she would get likes, shares, she would get people actually recreating her audio snippet with her own TikTok. And so it really became this kind of collaborative, creative process between artist and fan. And that's how she would end up producing the final songs that she then released commercially.
CHAKRABARTI: What is TikTok or ByteDance, in terms of music, the music business part of ByteDance, doing with the terabytes of data it's getting from its users every day?
OBERMANN: Mm-hmm. We share all the usage data for licensed music with our licensing partners. So, Sony, Warner, Universal, Believe, Merlin. All these companies who we work with, any of their artists, who they license into TikTok, when there are creations and views of their songs, they get that information.
And that is incredibly useful to them. You know, they can plot future releases. They can plot work with the artist on figuring out where that artist should be touring. They can discover that Ed Sheeran's got a massive fan base in Indonesia, and he was never aware of it, right? So, a lot of that data goes back.
All of the data that is relevant to the licensed music goes back to those partners, and then the data on the undiscovered, unsigned artists is obviously also really interesting to us. We do share that, in kind of slightly more anonymized ways. Because we have to, with the labels and even the music publishers in some cases, because they use TikTok as an A&R discovery platform, they want to find the next big artist on TikTok.
So we will work with them on that, as well. And we'll obviously keep an eye on it. Because we might be able to work with a certain artist who no one has heard of yet, and, you know, help them try to break through, or maybe even pair them up with a big brand or a sponsor who's looking for an exciting new artist who they can work with as a part of a campaign.
So there are lots of ways we can help that artist, and also the labels and publishers with the data that we're getting from the users.
CHAKRABARTI: We're going to hear from a band that's an example of what you're talking about in just a second. But Ole, I was noticing that in Music Business Worldwide just at the end of last month, they posted a Q&A that they had with you. And they asked you an interesting question about this transparency of data coming out of TikTok. And the question was that some music publishing executives were concerned about TikTok's lack of ability to say, "Song X was played so many times in so many user generated videos."
They called it the match rate for music usage. And they said it was only like 10% on TikTok, vs. 90% on YouTube. So are you really giving as much information to folks as you say you are?
OBERMANN: This is a complicated one. Music publishing data is a bit of a kind of black box, I would call it. So in many cases there are multiple songwriters who write a song. And the data that we get from the partners who are providing those copyrights to us isn't always fully up to date and accurate. And so what ends up happening is the platform has to build its own database of the publishing rights, which we're in the process of doing.
So I think, you know, I would not disagree that we're not 100% accurate there. But we will be. YouTube's 90% or so they say at this point, they've been at it for many years. We're going to do the same thing. We're going to try to do it even more quickly. So, you know, there are technical and data gaps in some cases. But the intention is — and we will achieve this — to be really transparent with the data. Cause we think that's great for the industry, it's great for us, it's great for artists. There's really no reason that we wouldn't want there to be complete transparency across all that data, because it's going to help everyone.
CHAKRABARTI: Okay. So, I'm going to keep that thought in mind. We'll come back to it, in terms of the future of the music business, a little bit later. But as promised, we actually reached out to a band who found quite a bit of success via TikTok, really changed the trajectory of this band's career. So vocalist Holly Minto definitely knows something about this. Her Liverpool, U.K.-based band Crawlers came together five years ago.
HOLLY MINTO: Crawlers formed in like 2018. Oh my God. So that's like what?
Five years ago.
Five years ago. Yeah. June, 2018, five years ago. Wow. Jeez. We're five years old, guys.
Oh my God, that's so old.
CHAKRABARTI: Well, Crawlers their teeth the way bands traditionally do – playing as many as three gigs a week at small local clubs and bars, gradually playing to larger and larger crowds.
MINTO: The first gigs that we did, we sold about 250 tickets in our hometown, and 150 in London. And we sold it out. It took like three months to sell out and we were so proud that we could, because we were used to playing to like eight people, one of which would be our photographer, and the other one would be my mum.
CHAKRABARTI: Shout out to supportive moms everywhere, by the way. Along the way, Crawlers used posted behind-the-scenes videos of themselves on TikTok — messing around at practice, jamming on their instruments, lip-syncing, and of course, doing silly dances. Holly loved the direct interaction she got with fans.
MINTO: You used to watch your favorite bands’ like, interviews on YouTube. Like I used to watch, like, you know, 1975 compilations or My Chemical Romance compilations all the time of their like, interviews. Whereas nowadays, it’s more short-form content. But it’s not like that it’s thought out and calculated in a way of being like “Oh, people are gonna see that we’re sooo funny.” You know? Like we just did it. The videos we did — we’re just funny, you know? (LAUGHS)
CHAKRABARTI: Then, in 2021, Holly Minto sat down at her friend’s kitchen table and, along with her bandmates, wrote the song that would make Crawlers famous. It’s called “Come Over (Again).” Here’s the part that went viral on TikTok.
(MUSIC) Take her name out of your mouth
You don't deserve to mourn
You just love the attention
Or do you get bored?
You like the power you have
Hope you get caught in the law
Do you think that you're happy?
Just wait 'til you're sure
CHAKRABARTI: So the TikTok virality then propelled the track on Spotify – where today, it has more than 47-million streams.
MINTO: I think it was done at just the right time. Like, there was lots of heavier music, or like, music that was less pop trending on TikTok, which was just by chance. The drums echoing the vocals. A lot of trans kids used it for deadnaming. A lot of people used it about their parents, or their children or something about changing.
CHAKRABARTI: Holly says because of TikTok, Crawlers sold out their 2021 U.K. tour in less than half an hour.
MINTO: And then we did an America tour and obviously we couldn't afford to go to America before. And we sold out Toronto, LA, New York and like Seattle. I think none of us had even been to America, like we'd never even been. We normally go on holiday to like Wales or something. So like being able to go to America and have people screaming our lyrics was a bit bizarre. And I think that's how we could tell we got loads more fans 'cuz they wanted to come see us.
CHAKRABARTI: But if TikTok was what propelled the band to the next level, Holly says that was just the fuel – their music and the effort they put into building the band are the real engines of their success.
And that’s why Holly also worries about what TikTok could do to music-making itself. She warns artists against over-focusing on what will do well on social media, instead of what really matters: making art that lasts.
MINTO: Adapting to the current climate of music is so important. But also ensuring the longevity of what you have. Like, the amount of people who just go, “So, how are we gonna make this trend on TikTok then? So what we’re gonna do is, we're gonna do this. We’re gonna do this.” And it's like, well, think about that after. Write the song first. Make sure you really like it. Get it to a standard where you are really, really happy with it. And then you can put a lot more love into promoting it, too.
CHAKRABARTI: That’s Holly Minto, lead vocalist with the British band Crawlers.
So, Ole Obermann, first of all, what Holly left us with there, I think is actually a major concern in the artistic side of the music business, that if TikTok has become such a powerful force for propelling music to new ears for sales, et cetera, how do you avoid just everything sounding similar? Because that's what the algorithm will then, you know, boost and make viral?
OBERMANN: First of all, I'll say, I completely agree. As we were listening to the song, I was thinking the reason this worked is because it's a great, great song. And because they worked for years on becoming a cohesive band and writing great music together. And, so I completely agree with the way that she summarized it.
I think, you know, that is a real concern. Anyone looking for sort of overnight stardom is going to think, "What do I do here in order to try to, you know, get myself into the feed and get in front of lots of people?" The music industry, and I would even argue to some extent all creative industries, have always had a bit of that, right?
Like there have always been those throwaway, sort of bubblegum songs that have 10 seconds of fame and then you never think of them again. And then there are, you know, Beatles and Rolling Stones and Led Zeppelin albums that were released 40, 50 years ago, even more. And people still listen to them because they're just timeless, incredible pieces of music.
I think TikTok is the same. We will find bands like Crawlers. We will find, you know, there's some others we can talk about, who are just incredible artists who are all about their music. And the spark and the ignition will happen on TikTok, and then the success will happen on lots of other places on the back of that.
And then there will be bands or creators, musical creators who will have 10 seconds of fame on TikTok and we won't think about them again. Because that was maybe even just the limit of their skill or, or their talent.
So I think TikTok is just a much bigger, and more transparent and visible version of what has always happened.
CHAKRABARTI: Is that already happening? In terms of the amount of bubblegum being overwhelming. Because Billboard magazine just had a story on TikTok looking at some numbers, in terms of the most popular songs on TikTok in 2022 and how many streams they translated to, and there seems to be some indication that TikTok's power to convert to streams, which then for the music industry means money, may be diminishing.
Because they found that they're looking at data saying that the top 10 TikTok songs in 2020 collectively amassed more than 4.9 billion streams in the U.S. But in 2022, the top 10 TikTok songs in the U.S. amassed just 1.9 billion streams in the U.S. A drop of 61% in two years. So is the power of TikTok to really propel music already diminishing?
OBERMANN: I think, I mean, that's one set of statistics that, you know, we can look at. And try to kind of pull apart why that happened. I think our power, TikTok's power to promote discovery of music is growing. We're building lots of new product features that are going to make it even more intuitive and easier for artists to do things that they would do in order to try to get their music heard and seen. We're linking into the traditional music streaming services with a one-click, right out of TikTok. So you can discover a song and then go listen to it on a Spotify or an Apple. So I think we're in the early days of what will continue to grow.
CHAKRABARTI: We're talking about how TikTok has transformed the music business and making music. And Ole, you know, you had mentioned earlier about how there's, what, more than a billion users on TikTok, now worldwide. And that provides this sort of unprecedented opportunity to both spread new music and new talent, and also get information from users in return.
But I wonder, if in that sense, TikTok is now becoming a victim of its own success. You know, thinking about that 61% drop in streams that we were talking about over the past two years. Because when a user base gets so big on a platform that is, you know, algorithmically driven, the algorithm's job is to serve you things that you would like.
And so I wonder, there's this like correlation with the growth of user base actually makes communities within that user base, more niche, smaller. Right? So then does it get harder to make something that has broad viral appeal if the communities are actually getting more tight-knit, as TikTok itself grows?
OBERMANN: Yeah, it's a great point. And it's obviously something that, you know, we keep a close eye on. There's a few really fun examples we could talk through that I think would counter that, right? Like we've noticed very recently, for a long time, a number of years, the music industry has been focused on Africa, right?
Because there's obviously huge population, incredibly rich sort of history of music and creative. But very diverse and very different from kind of the traditional Anglo Western markets where a lot of the popular music comes from. There are two songs that are absolutely blowing up on TikTok right now that come from Nigerian artists. Who I would argue they never would've had a chance to find a global audience until TikTok came along, right? They perhaps would've had success in Nigeria, maybe even more broadly in Africa. Maybe, you know, there's the one-off in a decade who ends up getting signed to a global record deal from that type of success. But we've had CKay with Love Nwantiti. Now we have this song, Calm Down by Rema.
We have this song, Ojapiano, these are songs that are coming from these Nigerian artists and they are getting into the billions of views. In weeks or months, because of TikTok. And so, you know, I would kind of respond to what you just said by saying what we're seeing is the power of these communities coming together and finding these incredibly diverse songs, and then maybe even taking them to a global audience.
I think that's getting more powerful and stronger. And, you know, we're seeing it kind of spread in ways that make the music that's bubbling up even more interesting and diverse.
CHAKRABARTI: Hmm. Point well taken. But then, given that, I'm still wondering how you explain that 60% drop in conversion to streams in just two years.
I mean, that's a huge number.
OBERMANN: Yeah. Yeah. The industry narrative on that, and I think this is right, and this is coming by the way, from the record labels. In that second year, that was looked at by Billboard, there just weren't as many massive sort of runaway hit songs as there were a couple of years earlier.
Some of that may have also had to do with COVID. You know, we had a bit of a quiet period for a few years where not as many sort of massive global superstar songs were released, produced, ended up having huge success. So I think we were a reflection of what the overall industry saw, which is a slightly more shallow distribution of hit songs.
But when you looked at it as just those top hits, it looks like we had less impact, but it was actually an industry-wide trend that we saw.
CHAKRABARTI: Well, you know, it's about time that we get down to essentially the bottom line in any industry, including the music industry, which is money. And to that point, we actually got a question from a listener.
This is what Dwayne from Rhode Island wants to know.
DWAYNE: It seems like, you know, musical talent are making less money these days, and I'm just concerned about the ability of independent musicians to make a living. And how are things like royalties being distributed?
CHAKRABARTI: So how do people get paid when their stuff appears on TikTok?
OBERMANN: Well, we don't pay artists directly. In a few cases we do, where some unsigned artists, we pay directly. But really the vast majority of the money that we pay out goes to record labels, music publishers, collecting societies. So the same way that any of the streaming platforms or even the retailers, back in the day, when physical products were being sold of music, would've paid out.
We have licensing agreements with them. And based on actual usage on a monthly basis, we calculate kind of the share of listening, creation and views slash listening that have happened for a particular label, publisher, et cetera. And then we pay them their share of the pool of money that has been allocated for music rights.
And then they collect that money, and they distribute it to the individual artists. I think the question that I think ... Dwayne asked, you know, this is a big debate or I would say kind of issue in the music industry more broadly right now. Streaming has resulted in growth for the industry.
It has resulted in much more engagement with music around the world. But we're very top heavy. There are few artists who are getting the lion's share of these streaming royalties. And to some extent that might include TikTok. And then there's, you know, what we would call kind of the long tail of lots of incredible musicians who are independent and smaller, and they're getting relatively small checks. Because compared to, you know, a superstar artist, the plays are small enough where the amount of money that they get as a share of that total pool is relatively small. So, you know, the industry has always worked this way.
The recorded music, or the music publishing royalties, that was a great way to get your fans, to get to be known. And then a lot of the revenue that the artist made was from live touring, merchandise sales, maybe sponsorship, brand deals, et cetera. I think we're continuing to see that same pattern here. Where, you know, there are billions of dollars being paid out through streaming, but for the hundreds of thousands or potentially millions of artists who are trying to make a living, by being professional musicians, many of them will have to have other revenue streams than just music royalties from streaming platforms to be able to make a living.
CHAKRABARTI: I actually think there would be probably some folks out there who would argue with you about the music industry has always worked this way. But let me ask you, Can you tell us how much ByteDance is paying out to those rights holders for, I mean, let's say the ad supported, the advertising content that their music is used in, on TikTok?
OBERMANN: I cannot because that is confidential information, you know, based on the deals that we have with all these rights holders.
But I can tell you that is a very substantial sum of money.
CHAKRABARTI: Well, because you know what some of the estimates are out there. I mean, again, you've been asked this before by other journalists, music journalists in particular. Goldman Sachs has put out a report that said in 2021, the amount paid out by TikTok was less than $180 million.
And they compare that to ByteDance's overall revenue of 80 billion. So the assumption, the implication there is that you may be paying out revenues, but it's a pittance in compared to how much this music is being consumed on TikTok.
OBERMANN: Yeah. I think I'm going to say the same thing as I said when I was asked the last time, which is, I know the analyst who wrote that report, and she's publishing another one soon, and I think she will have newer, much bigger numbers.
She doesn't know the number either. She's, you know, kind of backing into it. But she acknowledged when I talked to her that she may have been off a little on that number. And she said, well, soon enough we'll publish our next report. And it'll be a much bigger number. So, look, if I could disclose this, we could have an open book conversation, but I can't.
But what I can tell you is we're going to grow a lot, in terms of what music means to our platform. And we're going to grow a lot in terms of the money that we pay out on the back of that. We're going to open up, you know, live streaming. We're going to open up e-commerce stores that enable artists to sell merch or even physical recorded music products directly to their fans.
We're going to come up with a bunch of new ways for artists to make money on TikTok. So there's a huge commitment there, to work with artists. We don't take for granted that music is a big part of what is so special about TikTok, and we need to pay artists fairly in order to, to preserve that.
CHAKRABARTI: Well, I mean, as you well know, the major record labels, the three that we talked about earlier, two of whom are your former employers, Warner and Sony, and then also Universal. They're doing more than just grumbling about the revenues that they're getting from TikTok. I'm seeing reports that Warner, Sony, and Universal are currently negotiating deals with TikTok and pushing for a greater share of ad revenue from the platform.
Is that true?
OBERMANN: I can neither confirm nor deny these statements. But I talk to my good friends at the record labels on a very regular basis, so we can, you know, remain in a good place and make sure that it's working for everyone.
CHAKRABARTI: Neither confirm nor deny. Okay, I'll accept that for what I think it means.
CHAKRABARTI: Well, in addition then to the pressure that TikTok is getting from the labels, a lot of people are looking at, as you had hinted at earlier, the next steps for TikTok, right? I mean, we haven't yet talked about SoundOn. How would you describe what SoundOn is? Yeah, so sound, sound on is an initiative that we came up with a couple of years ago.
OBERMANN: So SoundOn is an initiative that we came up with a couple of years ago. We launched it initially in Brazil and Indonesia. Now it's also live in the U.S., U.K., and Mexico and Canada. What the objective there was, as we talked about earlier, we were seeing a lot of music being uploaded by unsigned, unknown artists. And when they would upload that music as user generated content into TikTok, we had no way of tracking that music.
You know, we couldn't kind of match it with a fingerprint and associate it with that artist or the name of the song. We just had no information on what was coming in. And so the first goal was, "Do we create kind of almost like a separate entrance into the stadium for these unsigned, unknown artists so that they can check a box and give us the right to fingerprint the music?" And then we'll be able to identify it and we can keep an eye on it.
We can generate reporting for them. We can tell them what's happening with their music on TikTok, and incredibly, importantly, we can start to pay them for the usage that happens. So, you know, I view this as being very in line with what a creator driven platform should be doing, which is working with the creators to make sure that there is recognition and attribution of the content, and that the creator's rewarded for it.
So, SoundOn is our music specific initiative in order to be able to do that. And it's working, you know, quite well. We've got sort of tens of thousands of songs and artists who've come in through SoundOn, many of them have gone on to be signed by record labels or music publishers. Because that's what a lot of them want, is they want to be discovered.
And this gives them, I think, a faster road to be discovered. Because you can actually identify them once they start to have success in TikTok.
CHAKRABARTI: Okay. I have to say, I still am a little confused and I think it's a point of confusion for many. Because earlier you had said that traditionally record labels find new acts, they fine tune them, promote them, sell their music. It sounds a lot like what SoundOn is meant to do. Except, you know, SoundOn, of course, benefits from just being incredibly juiced by the technology behind it. So why don't you call SoundOn a music label?
OBERMANN: Well, but music label would mean that we are, you know, working, we're sitting in the studio with that artist. Maybe even pairing them up with the right writer or producer, helping them actually write and develop their songs. That we are doing the marketing and promotion for them. Not just on TikTok, but on all other platforms. That we are collecting the royalties for them, and paying them out of a deal that we do with them.
We are doing, I would say, the front end of the kind of funnel piece of that, which is we are helping them get started. But we have a lot of people, myself included, obviously, who have come from the traditional record business. And there have been conversations about, you know, "How far do we want to go with this?" Being a record label, being in the traditional music business, it's complex, it's capital intensive.
And it just is. It doesn't make sense for us in terms of all the other things that we have going on at TikTok and ByteDance to do that right now. So we're happy that we're in a position where we can kind of handhold these young unknown artists, you know, into TikTok. We can start paying them right away, but we're also really happy when they end up getting a record label deal off the back of it.
CHAKRABARTI: Well, we've got about a minute left to go Ole, and I can't wrap up this conversation without asking you about the political climate that TikTok faces in the United States, which I'm sure you know well. Because you know the head of TikTok had to testify before Congress about concerns that, you know, the platform is a national security risk to the United States. Music is a big part of TikTok. I mean, how much does that political, those political tensions inform, you know, what you do on a daily basis?
OBERMANN: We decided, early on that we needed to be focused on what it is that we do at TikTok, which is work on music, work with artists, work with record labels. So the answer is, I do not get involved in that as well. I focus on making the music part of TikTok as good as it can be.
This program aired on June 27, 2023.