Front Burner - TikTok is coming for books, music and e-commerce

Episode Date: July 31, 2023

TikTok is one of the biggest, most influential social media networks in the world — and its parent company ByteDance is making moves to capitalize on its enormous cultural influence. The company has announced plans to launch a music streaming service, a book publishing division and an e-commerce platform, all of which would allow people to connect directly to the music, books and products they see in the app's most viral videos. It's a move that puts them in direct competition with tech heavyweights like Spotify, Apple and Amazon. What will this kind of vertical integration mean for the musicians, authors and content creators who are garnering those billions of views in the first place? Insider senior media reporter Dan Whateley breaks down ByteDance's big plans, and whether TikTok could truly become the "everything app" of the Western world. For transcripts of this series, please visit: https://www.cbc.ca/radio/frontburner/transcripts

In the Dragon's Den, a simple pitch can lead to a life-changing connection. Watch new episodes of Dragon's Den free on CBC Gem. Brought to you in part by National Angel Capital Organization, empowering Canada's entrepreneurs through angel investment and industry connections. This is a CBC Podcast. Hey everyone, Tamara here. Before we begin, I just wanted to let you know that we've started putting the show on YouTube every day. A lot of people are listening to podcasts there, so it just made sense. And you'll still be able to find us on all of the podcast apps, but if you want to listen on YouTube,

you can find us on the CBC News channel under podcasts. All right, that's it. I hope you like today's episode. Hi, I'm Tamara Kandaker. So I spend a lot of time on TikTok, arguably way too much, but I get a lot of joy from it because I always feel like I'm discovering something new. Whether it's music that I then go on to add to my library or products that I then go on to buy, TikTok is really good at showing you things that you might like and then pushing you to go and get those things. Now, its parent company, ByteDance, is looking to capitalize on the growth that TikTok is already driving. They've just launched TikTok Music, a new streaming service to rival Spotify.

Check out shares of Spotify sliding on a report from the Wall Street Journal that TikTok's parent company, ByteDance, is looking to expand its music streaming service. According to the journal ByteDance... They're building a publishing business, which is making some people in the publishing industry pretty nervous. I do fully believe that if they can get this thing going and make it successful, that they would be very likely to suppress other authors' BookTok content in order to promote and push their authors' content. Now it looks like they're also coming for Shein and other fast fashion retailers

with a new e-commerce platform. Now TikTok might be able to take on trends of a different kind with a move into e-commerce. The Wall Street Journal reports that the social media giant plans to sell Chinese-made goods in the United States. Whether it's the music we listen to, the books we read, or the clothes we wear, TikTok already seems to drive so much of what sells. So what will all these new ventures by ByteDance mean for musicians, writers, creators, and consumers like us? I'm going to talk about all of that with Dan Waitley. He's a senior media reporter at Insider who's been covering TikTok and social media. So Dan, let's start with music. And before we get into TikTok's entry into streaming,

I wonder if we could set the stage a bit and give me a bit of an overview of how TikTok has already impacted the music industry. TikTok is a very important platform for discovering songs. And because of that, a lot of artists and record labels are dedicating a lot of their time to it. And, you know, artists are making their own videos to promote tracks. They're also hiring influencers on TikTok to include songs and videos. Sometimes they're even working with remix artists or producers to make mashups for TikTok. And so we see a ton of investment there. And they're doing this because songs that trend on TikTok often end

up charting on the Billboard 100 or the Spotify Viral 50. It leads to songs being streamed and eventually ticket sales for concerts. Right, so all of that is huge. And now TikTok has entered the streaming business. And what do we know so far about this new music streaming app? in closed beta, so only a subset of users have access. But what we know about it is that it's very well integrated into TikTok. And so it makes it really easy to connect the dots between someone hearing a snippet of a song on TikTok and then being able to click out and go stream the full thing on TikTok music. It also has some of the same social features that exist on TikTok, like commenting and being able to engage with other users. And that's a real differentiator from some of the other streaming platforms like Spotify, which arguably have struggled to integrate social elements in the past.

Right. And you mentioned that it's operating in five places. What are those places and why there? TikTok music is currently available in five countries, Brazil, Indonesia, Singapore, Australia, and Mexico. Part of the reason why it's in Brazil and Indonesia is that a different app that TikTok's owner ByteDance launched for music streaming a few years ago called Rezo started in those markets. And so they are able to transfer some of the Rezo users over to TikTok music. And ultimately, their plan is to phase out the Rezo brand in favor of TikTok music. Yeah. And these are huge markets, right? Brazil, India, Indonesia are some of the most populated countries in the world. How successful was Rezo in those markets?

world. How successful was Rezo in those markets? Rezo has been fairly successful as a newcomer. You know, those markets are all really different. And so you have to think about them on their own. India is very complicated. There's a lot of different, you know, individual regional markets and language differences and that kind of thing. But yeah, I think Rezo has done well as a newcomer and they've been able to compete with some of the bigger players like Spotify. And part of that is that they have actually used TikTok as a way to get people to sign up for Rezo. And a lot of the younger users in those countries who are big TikTok fans end up, you know, signed up for Rezzo. So TikTok can really push users towards certain songs and artists. Like we talked about earlier, there was a study of listeners across Europe that showed that TikTok was the most popular app for music discovery, especially for people between the ages of 18 and

24. Has that translated to streams on other platforms? If you look at the most popular songs streaming on platforms like Spotify or Apple Music, you can often tie those tracks back to trends on TikTok. And, you know, even though these are independent companies and they're not going to we're not going to see Spotify saying that TikTok is influential on their platform. You know, I think we can connect the dots there. Right. And I know labels are excited about this because it's another way for them to get paid. But most streaming apps don't really pay artists a lot. They pay artists fractions of a penny per stream. So how do artists benefit from something like TikTok music? want streams because streams can eventually lead to you know concert ticket sales and increased popularity and even if it's not necessarily the biggest driver of revenue for them they still benefit from a successful streaming platform and i think in particular given they're already

dedicating so much time and resources to doing well on tikt making content for TikTok, the more easily they can help users listen to the full versions of their tracks on a streaming platform, the better. And if TikTok and TikTok music are very closely integrated together, we can assume that it's hopefully going to boost streams for the artists themselves. So let's talk about publishing. There is a huge community on TikTok known as BookTok, and these are writers and readers and authors who just talk about books. And what do we know about how influential BookTok has been on publishing? on the app. And we know that authors who have large followings on TikTok have also achieved a lot of sales in books of late. And so as with music, maybe it's a little tough to say definitively that TikTok is driving those sales, but the correlation is there. And a lot of these authors are really talented at talking about their work in short snippets, even if the book itself is much

longer. And that's a unique kind of new skill in itself. I think it ties into this broader trend we're seeing in a lot of industries where everyone has to act a little bit like an influencer to promote their work. And so we're seeing authors who are charismatic and good at making short videos, you know, doing better in today's ecosystem. And it's not just a unique to the book world, you know, it's true in a lot of other industries as well. And if you scroll through the book talk hashtag, you realize after a while that the same books are coming up over and over again. And I wonder if you can give us a sense of what kind of books go viral on TikTok. We're seeing a lot of romance and mystery novels take off on the platform, arguably because those are just kind of juicy topics and they make for

good, you know, quick snippet videos. You know, as with any niche on TikTok, it's tough to say definitively that it's one thing. I mean, I think there's probably other communities within BookTok that are a little bit less popular, but still doing well. So, you know, but I think that's what we've seen from the beginning. And are we seeing that influence the publishing industry itself, like in terms of the kinds of books that are being published? Do we know much about that? Publishers are always going to be drawn to things that they view as marketable and things

that will sell. So I'm sure they're looking at that and taking that into account when they think about authors to sign. We've heard from authors who have even said it's a little bit in the back of their mind when they're writing how they might be able to promote a part of their book on TikTok. And that's driven them to think more about tropes and things that just are more accessible and do well on the app.

and do well on the app. And so now ByteDance is trying to enter the publishing game. What do we know about its plans for its new publishing arm, which is called Eighth Note Press? So Eighth Note Press, we don't know a ton about. We know that they filed a trademark application for it. They are being pretty quiet about what their plans are for it. And they're saying it's not going to exist within TikTok, which isn't surprising. We know that in the past, they have experimented with online publishing before. They run a couple platforms called Mytopia and Fizzo, which are sort of self-publishing apps with the opportunity for authors to get paid based on sort of incentive programs for how much they write. But we know also that they have approached authors to try to sign them and offer them

services like marketing. And I do not think that they are viewed as a real competitor in the publishing world. I do not think they're going to be taking over anytime soon. But I do think that there's some concerns that they might be able to influence what books do well on TikTok, given that they control the content recommendation algorithm, and they might be able to push viewers toward certain work. I can say as a writer and a book talker and a reader that I think it would be a very bad thing to have a publisher also be in charge of the social media platform where the world's biggest and most dynamic community of readers and writers interact with each other. And if they really do get into the publishing game, that's a powerful advantage for them.

Yeah, for sure. And in terms of the authors who've been approached so far by this publishing arm, I read that they're getting pretty low offers, like sometimes a few thousand dollars per book, but it's been hard for them to turn it down because the reality is that TikTok really does sell a lot of books. And they're probably not approaching authors who have existing connections in the industry. And this is speculative, but they may be targeting more up-and-coming authors who would benefit from having TikTok help them with marketing and get their name out there and get their videos in front of more people. So again, I really don't think they're going to be, at least in the short term, any kind of big disruptor in publishing. But it is fascinating that they're trying to at In the Dragon's Den, a simple pitch can lead to a life-changing connection.

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That's not a typo. 50%. That's because money is confusing. In my new book and podcast, Money for Couples, I help you and your partner create a financial vision together. To listen to this podcast, just search for Money for Couples. So we have music streaming and publishing, and now TikTok is launching an e-commerce platform in the U.S. as early as August. And I know you had a chance to look at it and tell me a bit about it. How is it going to work? What does it look like? What do we know so far? And it's first launched outside of the US in markets like Indonesia and the UK. And it rolled out first in the US in November of last year. And it looks basically like what you would expect an e-commerce platform to look like.

There's a shopping cart. What makes it different is that it's very well integrated into the traditional TikTok experience. So videos, live streams, and if you're watching a video, you'll see a product tagged. And when you click on that product, it's easy to learn a little bit more about it and then check out and purchase it. And this is really the thing that I believe TikTok and ByteDance are most excited about. that I believe TikTok and ByteDance are most excited about. They really hope that they can make e-commerce work on the app because they have another app that's very similar to TikTok called Douyin in China, and that generates billions in sales every year.

Right. And so this TikTok e-commerce platform is different from TikTok shop, right? That's something that people may already see on their feeds and that lets you buy directly from creators. But TikTok's plan is now to kind of build on that and be a retailer essentially for Chinese made goods, right? I think you're getting at some of the confusion that often crops up when it comes to TikTok's e-commerce strategy. That's absolutely right. The Wall Street Journal reported the company is planning to roll out a version of TikTok shop where it sells goods itself directly. It's already doing this in the UK. It has a brand called Trendy Beat where it sells and sort of manages the logistics and other elements of sales itself. And, you know, I think you can

compare what it's planning to launch in the US to something called sold by Amazon on the Amazon platform, where the company, the platform handles things like warehousing, and a lot of the more difficult parts of e commerce. And in exchange, you know, they get a bigger cut of sales and more control over the shopping experience. Right. And tell me a bit more about what TikTok gets out of this. Why are they getting into the e-commerce business? It's another way for them to make money that's not advertising. And if you think about a lot of what tech companies are trying to do is build powerful sets of data that allow them to monetize their audience. And e-commerce is one of the most valuable data opportunities because you actually understand

users' shopping behavior and their purchase intent. And that can also tie back to advertising, right? If you know that a particular TikTok user wants to buy hats, then you can start showing them ads for hats. And that's really a powerful combination. And it's the reason that all of the major social and entertainment platforms are trying to make social shopping happen. We see YouTube trying to do it. We see, you know, Facebook and Instagram working on it. And it's really a priority across the board. So the people who are pushing the trends, the creators and the influencers, how do they stand to gain from a TikTok e-commerce platform?

That's a big piece of this puzzle too, because I've spoken to content creators who have made thousands of dollars already from the TikTok shop platform. And the way that they get paid is they get a commission on sales that they help drive with their videos or their live streams. that they help drive with their videos or their live streams. So if you're an influencer and you're trying to sell, you know, a suitcase or something, you'll if that suitcase actually ends up being purchased, you get a cut of that sale. It's it's a, you know, TikTok for years has struggled to find a good way to share some of its revenue with its users. And this is a really clean cut way for the company to do that. And you did a bit of reporting on this. How is TikTok luring people to work on TikTok shop?

Since it launched in the US, they're offering bonuses, bonus payments for performing certain tasks. Like a task could be doing a live stream and including a certain number of products in that live stream. Or it could be posting a video that generates a certain amount of sales. And if you achieve those tasks or goals, you get a cash bonus. They're also facilitating creators getting products for free, so that they can review them and post them in videos. And that's a big part of it. And then they're doing a lot of what I would describe as hand-holding where they're setting up messaging groups with creators that are in these TikTok shop programs to make sure that they're understanding what's happening and doing a good job in their posting cadence and that kind of stuff. So when these creators are promoting TikTok shop products,

are they disclosing that? Are they being transparent about the fact that they're promoting TikTok products? There is a disclosure on those videos. In the corner, there's a little label that says eligible for commission. I think you can decide whether that's clear enough to the user, but that's how TikTok's labeling it right now. And so what do you think are the advantages that TikTok would have over

an Amazon or a Shein when it comes to e-commerce? TikTok is very good at recommending things to people. And when it started out, that was mostly videos, you know, funny videos, dance videos, whatever, you name it. But that same technology, that same algorithmic advantage can also be applied to making recommendations in shopping. You know, if I am a user lingering on videos that feature certain products, they have that data, they can make a determination that I might be interested in buying that product. And that's really powerful. You know, I think Amazon wants to introduce more of that type of behavior into its platform, it launched its own video feed, Amazon Inspire. And the other advantage

I would say is that TikTok has this whole community of influencers and creators that have audiences that really trust what they say and think. And so if TikTok can convince those people to start selling products, that could be really powerful. Do you think that might work against them, though? Because part of TikTok's appeal has been things organically going viral and the authenticity of its creators. I'm wondering, what are the challenges you think TikTok might run into when it comes to launching this business? I love this question. I think it's such an unknown at this point, because particularly in the West and markets like the US, people are not particularly keen on being sold to, or at least they view that as inauthentic often. And that's different in other parts of the world. I mean, China, where

Bykinson is headquartered, has this massive influencer community of folks who really just focus on selling products. And they're called like key opinion leaders. And it's a whole market there. And, you know, I think a lot of tech companies are seeing how much money is being made in China and other parts of Asia. And they really want to introduce that same kind of behavior to the US and other markets. But it's a big unknown. And I do think it requires shifting consumer behavior, because a lot of folks are not used to buying through a social app, they're used to buying through something like Amazon or Shein or, you know, a traditional shopping platform.

Why do you think it's been so successful for a doyen in China? Why has shopping via live stream and shopping through apps been more successful than it's been in the U.S. or in North America so far? That's the billion or trillion dollar question that I think everyone's trying to answer. That's what I think everyone's trying to answer. One difference, I think, when you're looking at the tech ecosystem in China is there are more of what's referred to as super apps. And these are platforms where people are used to doing a lot of things in one place. WeChat is the most famous example of that. It's an app where you can, you know, hail a car from a rideshare service. And you can also buy a movie ticket. And you can also watch, you know, content and message your friends. And so I

think that might be one difference that in other markets like the US or Canada, you name it, people are just more accustomed to going to different places to get different tasks done. Yeah, I've seen these videos from China of live streamers standing in a row in front of a bunch of ring lights and selling products. And it's just kind of wild. It feels very Black Mirror-esque, but I realize that this is a huge thing that's happening there. But just to kind of summarize a bit, that puts into focus for me how each of these ventures is leveraging the things that make TikTok uniquely powerful, which are its vast and highly engaged user base, its AI-powered recommendation engine, and its capacity to create viral content, right? Exactly. At the end of the day, all of these

tech companies are really competing for our attention time. And once they have us using their apps, they can find ways to make money off of that. And whether it's looking at getting into the music streaming world or publishing or e-commerce, I think it all comes back to how good are they at keeping us in their app ecosystem and, you know, stopping us from going elsewhere to spend our time. So last week, the same day that Elon Musk rebranded Twitter to X, TikTok released a feature that now lets users create text-based content. And Elon says that he's trying to turn X into a quote-unquote everything app. But it seems like TikTok is also kind of heading in the same direction with the integration of TikTok music and the e-commerce platform. So do you think that is where TikTok's headed? It's definitely the question of the moment.

That cropped up in China, and it's been enormously profitable. As I mentioned earlier, WeChat is sort of the best known version of it. And if you are a tech entrepreneur in the US, you think, man, I really want to do this. Like, I really want to make my platform this because, you know, they're seeing how much money can actually be generated and how much attention time they can really grab from their user base if they do more than just one thing. And so, yes, it does seem like that's Elon Musk's priority with X. It's also what, you know, the executive that Snapchat want to do. And it's what Meta is interested in doing with WhatsApp. And whether they can actually pull that off is a big question because the tech ecosystem differs depending on which part of the world you're operating in.

And I think that folks in the U.S. are very used to, you know, going to different apps to get different services. And they don't feel like they need to do it all in one place. just to kind of wrap up here. I spend a disgusting amount of time on TikTok and I've been influenced to buy more products on there than I'd like to admit, you know, whether it's makeup or skincare products that come up on my feed or recommendations for products that I seek out. Like, for example, recently I bought a backpack for an upcoming trip because every travel content creator was talking about this one backpack and it's kind of become my go-to resource for what to buy. And I think that's true for a lot of people. And it's often hard to tell what is and isn't a genuine review. And it seems like that's only going to get harder as TikTok itself tries to get a piece of the profit that they're generating,

like you said, and it's going to get even less organic, right? How worried are you about that? And, you know, how worried are the people that the experts that you've been talking to about that? It's a big risk for TikTok. I think they have done so well, because it's been this fun and serendipitous place to find new content. And if it feels like everything is an infomercial and it becomes the home shopping network, I think that's going to turn off a lot of users, maybe yourself included. Even the question of trust, you know, getting users to actually add a credit card to your platform,

that's a big barrier for a lot of companies. And even more so for a company that's under so much scrutiny around how it manages user data. And so I think that's a big obstacle ahead. And if they don't strike that balance between monetizing their platform and making sure it's still entertaining and feels authentic, and, you know, not just an infomercial. You know, I think that's very tricky to pull off. And we're going to see how they approach it in the coming weeks. It seems like a big gamble for them. But also, this just made me think of this one video that I saw recently that came up on my feed about this trend called blueberry milk nails.

Blueberry milk nails are not a thing. They're like blue nails. We do not need women to model that for us. We need to regain some individuality. This girl compiled all these videos of people saying this is the latest trend. And she was kind of like, guys, we are having a crisis of individuality in America. Like, this is a problem. And that's kind of what I've been thinking about as I've been reading about this. It almost feels like TikTok is closing the loop and trapping us in this vicious cycle of influence and consumption. And it's only going further and further in that direction. It does feel like we're at an inflection point when it comes to the internet in a lot of

ways. And as TikTok has become so successful, we've seen most other platforms imitate them or offer similar, you know, recommendation features, content recommendation features. And it's starting to feel a little bit repetitive. You're seeing the same trends and videos show up on Instagram that are on YouTube and that are also on TikTok and Snapchat. So what does that say about our culture and our society and this idea of kind of the loss of individuality? And, you know, I think it's definitely the right question to be asking. And I think from a user standpoint, we're going to be valuing folks who can break

through and do something different or new. But to actually get noticed doing that might become harder as trends really take over on all of these major platforms. Dan, thank you so much. This was really interesting. I appreciate it. Yeah, thanks so much for having me. All right. That's all for today. Thanks so much for listening. I'm Tamara Kandaker, and I will talk to you tomorrow.