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For better or worse, TikTok is driving the music industry

Video-sharing app is becoming top method of artist discovery, will likely force labels to change business practices

Peter McPoland began 2020 as a virtually unknown singer-songwriter, only holding a small catalog and modest following to his name. The little recognition he did receive came from a few small gigs he played with his high school band, Peter McPoland & the Haps. But, in April 2020, McPoland began posting his music on TikTok.

Charmed by his rich folk vocals and boy-next-door demeanor, audiences quickly gravitated toward McPoland. The more he posted, the more fans he gained, and over the remaining six months of the year, he was able to rack up millions of views and likes on the platform

This growth wasn’t self-contained. As his social media following grew, so did his listener numbers. His track “Romeo & Juliet” made the number-three spot on Spotify’s U.S. Viral 50 chart in early 2021, and he’s since amassed more than 770,000 monthly listeners on the music streaming platform. 

With a fan base that grows by the day and a headline tour lined up for the fall, McPoland’s career shows no signs of slowing. And, while he did recently sign to Columbia Records, his early success was achieved independent of label support. Instead, the force driving these accomplishments was TikTok.

It is no secret that the video-sharing platform has turned the music industry on its head. TikTok reported that, in 2020, major labels such as Interscope, Republic Records, Columbia and many other affiliates of the “Big Three” signed at least 70 artists that broke on the app. Artists like Tai Verdes, 24kGoldn, ella jane, Ritt Momney, Claire Rosinkranz and Frances Forever all emerged as promising industry newcomers from viral songs on the platform. 

Perhaps no artist quite embodies the TikTok musical life cycle like Olivia Rodrigo, who went from a B-List Disney star to having the global number one record with her debut single “drivers license” all within a year. In the wake of success following “drivers license,” Rodrigo subsequently released her debut album “SOUR,” on which nearly every track generated its own viral trend. 

Still, it’s true that chasing a viral hit on TikTok poses its own problems for creative output. Can an algorithm really lead us to better art, or will it give rise to a generation of music devoid of meaning and solely designed for profit? Whatever the answer, it’s clear that a change is coming to the music business.

A recent study showed that 75% of TikTok users in the United States said that they used the platform to discover new artists, and 67% said they were more likely to seek out a song on a streaming platform if they heard it on the app. With artists and repertoires already scouring the platform for talent, numbers like these are likely to turn more than a few heads among industry executives.

The TikTok dynamic holds the potential to drastically change the music business model itself. After all, gone are the days when a label would pluck an unknown artist with no following out of obscurity and spend enormous amounts of time and money growing their career from the ground up. 

Rather, for an artist to get signed today, they must first prove to labels that they have been able to attract attention on their own, via social media or otherwise. What the artists gain from signing these full-package deals is financial support for the creation and distribution of their music; labels help to match artists with producers and collaborators as well as put marketing behind releases. That’s not to mention the perceived prestige that comes with signing a deal, long understood as the gateway milestone to a successful music career. 

 

Most listeners don’t fully grasp, though, that once an artist has been signed, the label is taking home the lion’s share of their royalties (which, in the age of streaming, are already miniscule). A recent report from Citigroup showed that musicians are only taking home 12% of the money made in the music industry. Instead of streaming, we instead find that the most lucrative sectors of the music industry for artists are ticket and merchandise sales — not the album and single rollout processes that labels are most involved in. 

This raises an interesting paradox. Artists are doing immense legwork to build a following large enough for label success just to have their profits slashed in the area that the label is supposed to help with most: marketing and music production.

The common counterargument to this view of record deals is that labels primarily help with exposure. While that’s true, TikTok provides an alternative narrative that suggests the exposure game has been completely changed. Algorithms are driving artist discovery even more than the A&Rs. Better still is that TikTok is free, and it’s giving independent artists the type of coverage they previously could only dream of, rivaling even the marketing machines of the Big Three labels. 

Compounding this phenomenon is the fact that music tech is cheaper than ever, allowing artists to become their own producers, videographers and graphic designers. In today’s music industry, self-sufficiency goes a long way.

This means that staying indie is an increasingly attractive option (look no further than Chance the Rapper). To meet this shift, record labels have no other choice but to reconsider how they do business. 

Rather than use the traditional model, labels should look to turn their firms into more agile, dynamic and artist-friendly enterprises. An example of this setup already exists in A World Artists Love, a British distribution company.

AWAL’s defining feature is that no matter what, artists get to keep their copyrights. AWAL operates on a tiered system, meaning that for smaller acts, the platform operates more as a distribution service that takes 15% of royalties. As artists get bigger, they may be scouted by the platform’s A&R team and move up the ranks until they hit ‘AWAL+,’ a service that operates much like a full label (complete with playlisting services, marketing, sync pitching and cash advances). Even at this highest tier, AWAL artists still own their masters and maintain a greater degree of flexibility in their artistic choices.

It seems like AWAL might just be onto something in allotting its artists with this level of control. Just recently, the company, previously owned by Kobalt, was purchased by Sony for $430 million. It also lends its services to big-name artists like FINNEAS, Tom Misch and girl in red.

It is undeniable that TikTok has ushered in an era of artist self-sufficiency and organic growth without labels. As a result, artist-friendly business models like AWAL’s are taking root as the new gold standard. To keep up, music’s major labels will have to learn to shift their practices and ride the wave. Otherwise, they might just get swallowed in the current.



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