Hey! Here's my essay on TikTok. It was ready to send earlier this week, but I waited given Wednesday's disgraceful events at the U.S. Capitol. It's a lot to process, but hopefully you found time for yourself during all of this.

The essay is below. Have a great weekend! I'll be back on Monday with the weekly memo.

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How More TikTok Stars Can Succeed in the Music Industry

The social media app is a launchpad for music superstardom, but the record label pipeline won't work for every breakout star.

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2020 was a wild year for TikTok. The company's rapid rise came with geopolitical pressure, CEO turnover, record label disputes, and censorship complaints. TikTok had more drama than James Harden and Daryl Morey in a Houston Rockets offseason! But the Chinese-based social network prevailed with 75% annual growth and nearly 1 billion monthly active users. It left the year stronger than it started.

In the music industry, executives have mined TikTok data to find the next superstars. A growing ecosystem wants to maximize the ByteDace app's potential, especially in hip-hop—its most-popular genre. But that energy needs more paths to success. Otherwise, there may be a generation of artists who won't reach their full potential.

TikTok is modern-day MTV

In 1981, MTV's launch changed the music industry forever. Music videos turned stars like Madonna and Michael Jackson into superstars. MTV became the music industry's marketing channel to sell more albums. It was a commercial and cultural phenomenon. "I Want My MTV" was a lifestyle.

TikTok has that similar influence on today's culture. It's not the home for traditional music videos that YouTube currently is. But YouTube didn't change how artists make music. It just made music videos on-demand. TikTok learned from Vine (RIP!) and built a platform that rewards user-generated content focused on music. As a result, artists are encouraged to make catchy tunes and dances that fans can easily replicate. It's a two-sided relationship that led to Drake's "Toosie Slide," 24KGoldn's "Mood," and brought back Southern anthems like Ying Yang Twins "Say I Yi Yi." If TikTok expands to three-minute videos, it will be the perfect length to include full songs, not just sound clips.

The TikTok wave has been called out for its gimmicky nature. But critics said the same about MTV! Here's music attorney Michael Guido in a 2004 interview with PBS:

"I think MTV was the beginning of the end for the recorded music business, in that it solidified a mindset that exalted marketing over substance. It made the record industry a one-trick pony. It became only about a three-minute single and a visual image, and if you didn't have the three minutes you were over...Once that corner was turned, we started on the path that has led us to this moment here, where kids are treating music as disposable."

MTV helped the music industry more than it hurt it, and the same will be true about TikTok. Disruption always attracts both critics and enthusiasts. It's part of the game.

Rising stars need more than established stars

TikTok's 2020 music report said that over 70 artists who broke out on the platform that year had signed major record label deals. It's an impressive stat since record labels signed 658 artists total in 2017. In 2020, the platform helped push 90 of the songs that charted on the Billboard Hot 100. It's why UnitedMasters and other distribution services have partnered with TikTok.

Most of TikTok's biggest users became stars on the app itself, but it's a different case in music. Eight of the top ten most viewed artists of 2020 were stars before TikTok. The trend is not uncommon. Established clients often bring in the most money and get the most support. This trend has played out in several areas. Music distribution services often champion their safest bets. YouTube's top clients are major media production companies. Venture capital firms have shifted more money to the safest bets to exit. Even WeWork, a company that's branded as a solo entrepreneur's haven, is much more focused on serving large companies with long leases.

Similarly, record labels are in the business of superstars. Yet most artists on their roster won't become superstars. The model is built to take on the risks. The risk is high for the 70+ recently signed TikTokers. It's even harder to predict lasting potential in this microwave era of music, especially if the predictor of success is user-generated content growth (i.e. the number of people making TikTok videos using a song).

For most aspiring artists, TikTok growth alone won't cut it. Here's TikTok's director of music content and artist partnerships for North America, Mary Rahmani, in an interview with Billboard:

“When a song is having a moment in the app, the first thing we always recommend is to share TikTok content on their socials. Just stay consistent and engaged. We really try to encourage artists to stay active between spikes to maintain their growth and connection.”

Cross-promotion helps, but there's still some disconnect between TikTok and other platforms. Jason Derulo and Iggy Azalea peaked years ago as major label artists, but they've won on TikTok. They highlight the optionality (and comeback potential) that the platform offers. But they also show the need to segment artists and match them with the best opportunities. The TikTok to major label pipeline should not be a one size fits all goal.

The TikTok pipeline needs to be segmented

There are three broad groups of TikTok success stories. The first group is for artists like Drake. He breaks records on TikTok, but he also breaks records in streaming, Billboard charts, and concert tours. His success subsidizes other artists on Universal Music Group. The only place Drake can't win is at Tyler The Creator's Camp Flog Gnaw Carnival when they booed him off stage. Otherwise, the Toronto rapper is platform-agnostic.

The second group is for artists like Megan Thee Stallion. She's TikTok's top artist of 2020, but her power is platform-dependent. Hot Girl Meg gets tons of coverage. But her November 2020 debut album Good News sold just over 100,000 units in its first week. It sold less than Drip Season, the debut album from Gunna, her 300 Entertainment labelmate. Gunna's got talent, but he's not out here on the cover of TIME like Meg! If Gunna makes the record label more money than Meg Thee Stallion, but Meg is #1 on TikTok, then the strategy for "Megan The Stallion, Inc." has to be different from the Young Thug protégé. Her primary metric of success shouldn't be album sales.

The third group is for TikTok artists who have the potential to be like Drake or Meg, but the verdict is still out. The TikTok-to-record label track is imperfect since most labels are built to groom artists like Drake. That means that Meg, and artists on her path, may leave money on the table.

Here's a visual I drew to show how the current TikTok to record label pipeline looks:

It's pretty standard, but some of those stars who wind up in the "everyone else" bucket could become the next Meg Thee Stallion with a bit more support.

There's an opportunity for new TikTok-focused indie record labels and distributors to meet artists where they're at. These companies would be specifically built for artists who gain early traction on TikTok, Triller, or other short-form video user-generated content platforms. The new companies can hone their strategy, monetize their songs that pop on TikTok. They can still sell albums, EPs, and mixtapes, but it's one piece of the pie.

Over time, if an artist on their roster shows the potential to sell tons of albums, they can level up to a major record label. But if the artist wants to stay on the indie label, use music as their loss leader, and focus on other areas, that works too. This farm system would offer more development and help de-risk the talent from TikTok, and more artist succeed.

The concept is not new. Companies like Human Re Sources and EMPIRE have partnered with major record labels to serve rising artists where they're at. But it's time for more companies like that to emerge that focus on rising TikTok stars.

Every artist's ideal mix is different, especially today. But for each mix to be maximized, the "next step" for TikTok stars has to open up. Some of these lanes already exist, but some of them don't.

Music culture is as multi-hyphenate as ever, especially in hip-hop. TikTok's not going anywhere, so it's time to make moves. If the company survived 2020, it's gonna be here for a while.

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