TikTok has refuted suggestions by France’s recorded music body SNEP that short-form video services ‘divert’ music fans from subscription streaming services.
Last week, SNEP, the recorded music industry body in France, reported its H1 revenue numbers for the world’s sixth-largest recorded music market.
SNEP, which reported that France generated recorded music revenues of €397 million in the first half of 2023, with the market growing 9.4% YoY, suggested in its report that short-form video platforms “prevent the … subscription model from developing”.
Within its H1 report, SNEP noted that with earnings of €232 million, subscription streaming was the market’s biggest revenue generator in H1 2023, accounting for 59% of total revenues (versus 58% in H1 2022 and 56% in H1 2021).
SNEP further opined, however, that subscription streaming’s 10% YoY growth in the French market “remains too slow… compared to the massive adoption of [subscription streaming] in other major historical markets for recorded music”.
SNEP then turned its attention to ad-supported platforms – in particular short-form video services like TikTok.
As you can see in the chart below, advertising money from ‘free’ streaming and video platforms combined accounted for 18% of total recorded music revenues in France in H1 2023 (with 9% generated by ad-funded video platforms and 9% generated by ad-funded audio platforms).
In a statement issued last week, SNEP General Manager Alexandre Lasch claimed that “the market share of these advertising-based segments model demonstrates the difficulty of developing a solid subscription market and hampers value creation” in France.
Later in its report, SNEP stated [translated] that “the French market is characterized by the… greater [market] weight than elsewhere of ad-supported streaming services, whether audio or video”.
It added: “These are the segments that make the smallest contribution to artists’ and producers’ remuneration, while capturing – especially for video services like TikTok – a maximum number of users and music listening time.”
“[Short-form video services] prevent the virtuous subscription model from developing, by diverting, from [subscription services] a public that is strongly committed to music, but which ultimately settles for excerpts lasting a few seconds without discovering and listening to the tracks in their entirety via paid streaming services.”
SNEP H1 2023 report
SNEP cited an IFPI Music Consumer Study from 2022 that showed “music is at the heart of 64% of videos consumed” via short-form video applications.
The trade body added that, as short-form services like TikTok spread “rapidly across the world” a lot of their appeal is based “on the music that floods the content they broadcast”.
According to SNEP, short-form video services like TikTok “thus prevent the virtuous subscription model from developing, by diverting from [subscription services] a public that is strongly committed to music, but which ultimately settles for excerpts lasting a few seconds without discovering and listening to the tracks in their entirety via paid streaming services.”
Responding to the suggestion that short-form streaming services, including TikTok, divert users from paid-for streaming in the French market, Ole Obermann, TikTok’s Global Head of Music Business Development has categorically denied that this is the case.
In a statement issued to MBW, Obermann said: “There is no evidence to suggest that TikTok is diverting music fans away from subscription streaming services.”
“Far from being a threat to streaming subscription uptake, TikTok is an essential part of the music ecosystem, where discovery on TikTok leads to greater consumption and value generation, both on- and off-platform.”
Ole Obermann, TikTok
Obermann added: “On the contrary, TikTok is the world’s leading platform for music discovery and promotion, where every day millions of people discover both new and catalogue tracks, which they then enjoy as full length tracks on DSPs – as clearly evidenced by the correlation between a track’s early success on TikTok and its subsequent success on streaming services.
“Far from being a threat to streaming subscription uptake, TikTok is an essential part of the music ecosystem, where discovery on TikTok leads to greater consumption and value generation, both on- and off-platform.
“And, with the goal of making the user journey from discovery on TikTok to full-track streaming even easier, we are currently trialling a product which will help users stream music discovered on TikTok directly on their preferred DSP.”
France’s overall recorded music growth outpaced that of some notable countries on IFPI’s list of the world’s biggest recorded music markets.
In Germany, for example, the world’s fourth-largest recorded music market, recorded music revenues grew 6.6% YoY in the first half of 2023.
The US recorded music industry, meanwhile, which generated USD $15.9 billion in 2022, grew 6.1% YoY in FY 2022 (H1 2023 results for the market aren’t available just yet).
Obermann was also keen to highlight recent examples of artists who saw streaming success alongside achieving virality on TikTok.
“I also want to highlight the huge worldwide success of Jain with Makeba – an incredible example of music discovery (and rediscovery) on TikTok which led to worldwide streaming success,” said Obermann.
“Makeba (which was originally released in 2015) has become a massive global hit on TikTok this year, where it was used in over 13m creations, and was TikTok’s No.1 Song of the Summer in the US.
“Jain’s success on TikTok drove hundreds of millions of streams across the DSPs, making her the No.1 French female artist on Spotify with 14.8m monthly listeners, and taking her to #1 on both the Global Viral Spotify Chart and the Global Shazam chart.
This is not the first time that SNEP has suggested TikTok is the reason behind France’s “struggling” subscription growth, and not the first time that TIkTok has denied the claim.
In March, SNEP published its annual recorded music revenue results, in which it reported that the market generated recorded music revenues of €920 million (USD $967m) in 2022.
SNEP’s MD, Alexandre Lasch suggested in a statement at the time that TikTok’s “massive use diverts consumers from subscription-based services, the drivers of today’s music business model”.
SNEP also noted in its report that TikTok and short-form videos “have re-shuffled the deck in relation to music streaming”.
SNEP reported that paid subscription-based streaming, which generated revenues of €426 million ($448m) in 2022, was France’s main driver of recorded music revenue last year, growing 11% YoY.
SNEP also reported that there were 11 million paying subscription accounts in France, up by +1.0 million YoY from 10 million in 2021. (Those accounts were shared by 16 million users, via family plans etc.)
This YoY growth in the number of subscription accounts in France actually slowed compared to 2021, when the number of paid subscription accounts grew by +1.3 million vs. 2020.
Music Business Worldwide