TikTok’s Music Flop Just Handed Spotify $77 Billion

In today's episode of “What’s TikTok Up To Now?"—spoiler alert, it’s not a new dance challenge, and no, the app hasn’t been banned (yet). But apparently, they’ve finally woken up and smelled the algorithm: their whole TikTok Music thing? Yeah, turns out, it’s a dud. TikTok is pulling the plug on its music streaming service on November 28th and Spotify is swooping in to take advantage as their shares hit a record high on the day of the TikTok’s announcement. 

In case you missed the memo, TikTok Music was supposed to be the next big thing—the "Spotify slayer" everyone was hyping up. But instead of being the David to Spotify’s Goliath, it’s looking more like the MySpace of music streaming. Launched in mid-2023, with a rollout focused on Asia and South America, it hit more roadblocks than a road trip through rush hour traffic. Licensing disputes? Check. Artist compensation meltdowns? Double check. It didn’t take long to see this service was more of a dying TikTok trend than a serious contender.

Ole Obermann, TikTok’s global head of music, dropped the news: “We will be closing TikTok Music at the end of November to focus on our goal of driving even greater music listening and value on music streaming services.” Translation? He’s waving the white flag and probably looking for a job.

As TikTok Music limps into the sunset, Spotify’s stock is flexing harder than The Rock in whatever his last movie was. It’s surged over 10% since early September, boasting a crazy 101% year-to-date gain. The stock recently hit a record close of $383.96, giving Spotify a market cap of $77.10 billion. Not bad for a company that started in a garage.

Let me take a moment to appreciate Spotify’s epic journey. It all started back in 2006 in Stockholm, Sweden, when founders Daniel Ek and Martin Lorentzon were on a mission to create a legal alternative to music piracy. With illegal file-sharing platforms like Napster and Kazaa causing chaos in the music industry, they had a vision for an on-demand streaming platform. Spotify launched in 2008 and revolutionized music listening and has since expanded into podcasts, audiobooks, and so much more.

And speaking of podcasts, let’s talk about the staggering deals Spotify has made with some big names. Joe Rogan, the king of the podcasting jungle, signed a $250 million deal to keep The Joe Rogan Experience exclusive to Spotify. But he’s not alone. Bill Simmons, the sports and pop-culture guru, is also raking in the dough with a multi-million-dollar deal for his podcast network, The Ringer. These partnerships are pushing growth through the roof—way beyond what many ever thought possible. 

In fact, Spotify currently has over 600 million monthly active users. Analysts predict that number will take a huge jump once TikTok Music shuts down as they aim to reach their goal of 1 Billion users by 2030. They also can’t ignore Apple Music, Amazon Music, and Pandora biting at their ankles to get their share of the market. 

Investors were biting their nails over Spotify’s price hikes, thinking users might jump ship. They’ve raised the rates on individual and family plans, but guess what? No mass exodus. People are sticking around like their playlists depend on it—because, let’s be real, they do. Even with the monthly cost creeping up, Spotify still added over 20 million new users last quarter.

Looking ahead, analysts are more hyped about Spotify than the NFL is about Taylor Swift showing up to a Chiefs game. CFRA Research just upped its price target from $375 to $425—comparing it to Netflix's wild rise. Plus, with Spotify diving headfirst into AI tools and shiny new audio features, the future’s looking like it's about to pop off. 

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Stocks.News has positions in Spotify and Netflix.