TikTok inks licensing deal with Merlin to use music from independent labels in videos and new Resso streaming service

TikTok, the fast-growing user-generated video app from China’s Bytedance, has been building a new music streaming service to compete against the likes of Spotify, Apple Music and Amazon Music. And today it’s announcing a deal that helps pave the way for a global launch of it. It has inked a licensing deal with Merlin, the global agency that represents tens of thousands of independent music labels and hundreds of thousands of artists, for music from those labels to be used legally on the TikTok platform anywhere that the app is available.

The news is significant because this is the first major music licensing deal signed by TikTok as part of its wider efforts in the music industry. That includes both its mainstay short-form videos — where music plays a key role (the app, before it was acquired by Bytedance, was even called ‘Musically’) — as well as new music streaming services.

Specifically, a source close to TikTok has confirmed to TechCrunch that this Merlin deal covers its upcoming music subscription service Resso.

Resso was long rumoured and eventually spotted in the wild at the end of last year when Bytedance tested the app in India and Indonesia. Bytedance owns the Resso trademark, so it’s a good bet that it will make its way to more markets soon. (Possibly with features that differentiate this later entrant from others in the market? Recall Bytedance acquired an AI-based music startup called Jukedeck last year.)

“Independent artists and labels are such a crucial part of music creation and consumption on TikTok,” said Ole Obermann, global head of music for Bytedance and TikTok, in a statement. “We’re excited to partner with Merlin to bring their family of labels to the TikTok community. The breadth and diversity of the catalogue presents our users with an even larger canvas from which to create, while giving independent artists the opportunity to connect with TikTok’s diverse community.”

Music is a fundamental part of the TikTok experience, and this deal covers everything that’s there today — videos created by TikTok users, sponsored videos created for marketing — as well as whatever is coming up around the corner.

A music streaming app, which TikTok has reportedly been gearing up to launch for some time, is one way that the company could help generate revenue. Despite being one of the most popular apps of 2019, monetisation has largely eluded the company up to now.

One reason why monetising can’t happen is because of the lack of deals at the other end of the chain. As of December, TikTok had yet to sign any deals with the “majors” — Sony Music, Warner Music and Universal Music — and from what we understand Merlin is the first big deal of its kind of the company. However, there are signs that more such agreements may be coming soon. Obermann, who was hired away from Warner Music last year, in turn hired another former Warner colleague, Tracy Gardner, who now leads label licensing for the company. And just yesterday, the company opened an office in Los Angeles, the heart of the music industry.

The move to bring more licensed music usage to TikTok (and other Bytedance apps) is significant for other reasons, too.

On one hand, it’s about labels trying to evolve with the times, collecting revenues wherever audiences happen to be, whether that is in short-form user-generated video, in advertising that runs alongside that, or in a new music service capitalising on the new vogue for streamed media.

“This partnership with TikTok is very significant for us,” said Jeremy Sirota, CEO, Merlin, in a statement. “We are seeing a new generation of music services and a new era of music-related consumption, much of it driven by the global demand for independent music. Merlin members are increasingly using TikTok for their marketing campaigns, and today’s partnership ensures that they and their artists can also build new and incremental revenue streams.”

One the other hand, the deal is significant also because it underscores how TikTok is increasingly working to legitimise itself in the wider tech and media marketplace.

While Bytedance’s acquisition of TikTok continues to face regulatory scrutiny, the company has been working on ways to assert its independence from China’s control, which has included many clarifications about where its content is hosted (not China! it says) and even a search for a new US-based CEO. On another front, more licensing deals should also help the company with the many legal and PR issues that have been hanging over it concerning how it pays out when music is used in its popular app.

Spotify’s new test lets influencers post Stories to introduce their own playlists

Spotify is testing a new Stories feature that will allow select influencers to incorporate video elements into their public playlists, TechCrunch has learned and Spotify confirmed. The first influencer to test the feature is makeup and fashion YouTube star Summer Mckeen, who currently has a social media fan base that includes 2.33 million YouTube subscribers, 2.1 million Instagram followers, and 126,455 Spotify followers. Mckeen is using the new feature to introduce a playlist of her all-time favorite songs, which she’s titled her “all time besties.”

Like other Stories’ products found on social media apps, the Spotify version offers a similar experience that includes short video clips that users can tap on to advance to the next screen. There are also horizontal lines at the top that indicate how many screens still await them ahead.

Above: where Stories are found on playlists

Meanwhile, the entry point for the Spotify Story is a circular icon right found above the playlist’s title. This has also been designed to catch your attention with an animated preview of the video you’ll see if you tap through.

Above: Mckeen introduces her playlist of favorite songs

Once in the Story, the clips will play and advance automatically and the playlist where you found the Story is featured at the top. You can also tap the “X” to exit at any time.

Spotify’s unique take on the Stories format involves its use of music, of course.

In the new Stories feature, the influencer can also share video clips that contain small song snippets and the album art as a way of previewing the songs in the playlist. In Mckeen’s case, a few of these follow her introduction of the new playlist.

Above: Song clips in Stories

Mckeen is the first influencer to go live on Spotify Stories, but we understand the company is also planning to roll this out to other notable names across the entertainment, lifestyle and music industries in the near future. This initial group of testers is being determined by a variety of factors — including follower count, how engaged their followers are, and how active the influencer in question is on Spotify. Mckeen was selected because she’s someone who likes to make playlists on her own and has many user-generated playlists she shares with fans.

Spotify isn’t rolling out the feature to its artists, however, as it’s meant to be more a tool for music discovery, rather than one for promotional purposes. Artists, instead, can reach fans creatively using Canvas — the recently launched looping videos product that can take the place of album art when a song plays.

Despite the similarity with other Stories found on apps like Instagram, Facebook, Snapchat and YouTube, Spotify’s goal isn’t to turn its app into another social media platform. Instead, it will rely on the influencers to get the word out to fans themselves using their existing accounts found elsewhere. Mckeen, for example, posted to her Instagram Stories with a deep link directly to the playlist in question.

Above: Mckeen’s IG Story

Currently, the Spotify Stories product can only be seen on iOS and Android, not desktop. (Mckeen’s is here.) And it’s available to all Spotify users — free and paid — although that could one day change. Spotify considers the product just a test for now, but is open to considering a broader rollout in the future.

Spotify confirmed the test to TechCrunch and offered a short statement.

“At Spotify, we routinely conduct a number of tests in an effort to improve our user experience. Some of those tests end up paving the path for our broader user experience and others serve only as an important learning,” a Spotify spokesperson said. “We have no further news to share on future plans at this time,” they added.

This is not the first time Spotify has dabbled with a Stories format, however. Last year, Spotify was spotted testing a Stories-like product called Storyline that was similar to “Behind the Lyrics,” but instead allowed artists to share their own insights, inspiration, and other details more directly. This can still be found on Spotify on select songs, but hasn’t become broadly available.

LocalGlobe partner Julia Hawkins discusses femtech’s risks and rewards

London-based seed fund LocalGlobe is incredibly active at the early-stage end of the startup pipeline with a broad focus across multiple sectors and areas, including health.

We interviewed partner Julia Hawkins about the opportunities and risks related to femtech investing in light of the fund’s early backing for Ferly, a female-founded startup with a subscription app that describes itself as an audio guide to “mindful sex.”

The startup says its mission is to open up conversations around female sexual pleasure and create a place for self-discovery and empowering community — touting “sex-positive” content that it says is “backed by research, written by experts, and personalized to you.”

The interview has been edited for length and clarity.

Dear Spotify, add rabbits to your pet playlists

I there’s one thing I know, it’s that music is the best thing our species has every created. If there are two things I know, it’s the music thing and also that that rabbits aren’t hamsters.

Listen, Spotify, I get the whole pet playlists thing. A curated playlist based on your listening preferences and a few sliders to determine an animal’s mood. It’s cute. But as one of millions of rabbit owners in the U.S. alone, someone needs to speak out for this grave oversight.

This is Lucy:

She enjoys classical piano and jazz greats like Thelonious Monk and Bill Evans. She contains multitudes. I’m sorry to speak for her, but she’s napping right now. She’s crepuscular, which means she’s primarily awake during the morning and evening, at which point she like a little Lucinda Williams and the guitar work of John Fahey. Most days, however, it’s John Cage’s 4’33 on repeat. 

Cats and dogs. Sure, totally. Birds and hamsters, check. Iguanas as a catchall for reptiles and amphibians — not great, but points for trying, I guess. No fish on here, but I don’t know, maybe that’s difficult without some sort of underwater speaker.

But no rabbits? Perhaps we’ll see what the fine folks at Apple Music have to say about this oversight.

We’ve reached out to Spotify to inquire whether the service intends to add lagomorphs to the list.

Spotify and Warner Chappell end dispute in India, sign global licensing deal

Spotify is ending its year-long dispute with Warner Music’s publishing firm.

The world’s largest music streaming service said on Tuesday that it has inked a global licensing agreement with Warner Chappell.

The announcement today marks the end of their litigation before the Bombay High Court, where Warner Music was seeking an injunction against Spotify to prevent it from including Warner’s music in India.

A Warner Chappell spokesperson said the new deal “appropriately values our songwriters’ music and expands our licensed partnership with Spotify to include India.” A Spotify spokesperson said the music streaming business was “pleased” with the outcome.

“In less than a year, millions of Indian listeners have joined Spotify, listening to their favorite artists and songwriters from across the globe. We’re pleased with this agreement, and together with Warner Chappell Music, we look forward to helping songwriters and artists connect with more fans, and for more fans to enjoy and be inspired by their music,” the spokesperson said.

Warner Music had sued Spotify days before the music streaming service launched in India, one of the world’s biggest entertainment markets. In India, Spotify introduced a new free tier and unveiled a premium version that cost just $1.4 a month. Last month, it started a campaign for new and existing users as part of which anyone could sign up for a year-long subscription of Spotify for 699 Indian rupees (~$9.9 — a figure that Spotify incidentally charges each month in many markets including the U.S. ). According to a Bloomberg report in December, Spotify has fewer than 800,000 subscribers in India.

Warner Music Group had asked an Indian court to block Spotify from offering songs by its roster of songwriters, including Katy Perry, in the country. Spotify had argued that it was using an Indian rule that permits radio stations to offer songs from Chappell Music.

Spotify is involved in another similar lawsuit in India with local music label Saregama, which is seeking the music streaming service to remove 100,000 songs. A Spotify spokesperson in India declined to comment on the lawsuit.

More to follow…

Lucky coffee, unicorn stumbles and Sam Altman’s YC wager

Hello and welcome back to Equity, TechCrunch’s venture capital-focused podcast, where we unpack the numbers behind the headlines.

This week we had TechCrunch’s Alex Wilhelm and Danny Crichton on hand to dig into the news, with Chris Gates on the dials and more news than we could possibly cram into 30 minutes. So we went a bit over; sorry about that.

We kicked off by running through a few short-forms to get things going, including:

  • Alex wanted to talk about his recent story on Lily AI’s $12.5 million Series A. Canaan led the round into the e-commerce-focused recommendation engine that has a cool take on what people care about.
  • Danny talked about the acquisition of Armis Security by Insight for $1.1 billion, the VC round for self-driving forklift startup Vecna and an outside-the-Valley round for Houston-based HighRadius.

Turning to longer cuts, the team dug into the latest from SoftBank, its Vision Fund and the successes and struggles of its enormous startup bets. Leading the news cycle this week were layoffs at Zume, a robotic pizza delivery venture that is no longer pursuing robotic pizza delivery. Now it’s working on sustainable packaging. Cool, but it’s going to be hard for the company to grow into its valuation while pivoting.

Other issues have come up — more here — that paint some cracks onto the Vision Fund’s sunny exterior. Don’t be too beguiled by the bad news, Danny says; venture funds run like J-Curves, and there are still winners in that particular portfolio.

After that, we turned to China, in particular its venture slowdown. The bubble, in Danny’s view, has burst. The story discussed is here, if you want to read it. The short version for the lazy is that not only has China’s venture scene slowed down dramatically, but startups — even those with ample capital raised — are dying by the hundred. But one highly caffeinated Chinese startup continues to find growth in the world’s greatest tea market.

Finally we hit on the Sam Altman wager and the latest from Sisense, which is now a unicorn. All that and we had some fun.

Equity drops every Friday at 6:00 am PT, so subscribe to us on Apple PodcastsOvercastSpotify and all the casts.

Sisense nabs $100m at a $1B+ valuation for accessible big data business analytics

Sisense, an enterprise startup that that has built a business analytics business out of the premise of making big data as accessible as possible to users — whether it be through graphics on mobile or desktop apps, or spoken through Alexa — is announcing a big round of funding today and a large jump in valuation to underscore its traction. The company has picked up $100 million in a growth round of funding that catapults Sisense’s valuation to over $1 billion, funding that it plans to use to continue building out its tech, as well as for sales, marketing and development efforts.

For context, this is a huge jump: the company was valued at only around $325 million in 2016 when it raised a Series E, according to PitchBook. (It did not disclose valuation in 2018, when it raised a venture round of $80 million.) It now has some 2,000 customers, including Tinder, Philips, Nasdaq, and the Salvation Army.

This latest round is being led by the high-profile enterprise investor Insight Venture Partners, with Access Industries, Bessemer Venture Partners, Battery Ventures, DFJ Growth, and others also participating. The Access investment was made via Claltech in Israel and it seems that this led to some details of this getting leaked out as rumors in recent days. Insight is in the news today for another big deal: wearing its private equity hat, the firm acquired Veeam for $5 billion. (And that speaks to a particular kind of trajectory for enterprise companies that the firm backs: Veeam had already been a part of Insight’s venture portfolio.)

Mature enterprise startups proven their business cases are going to be an ongoing theme this year fundraising stories, and Sisense is part of that theme, with annual recurring revenues of over $100 million speaking to its stability and current strength. The company has also made some key acquisitions to boost its business, such as the acquisition of Periscope Data last year (coincidentally also for $100 million, I understand).

Its rise also speaks to a different kind of trend in the market: in the wider world of business intelligence, there is an increasing demand for more digestible data in order to better tap advances in data analytics to use it across organizations. This was also one of the big reasons why Salesforce gobbled up Tableau last year for a slightly higher price: $15.7 billion.

Sisense, bringing in both sleek end user products but also a strong theme of harnessing the latest developments in areas like machine learning and AI to crunch the data and order it in the first place, represents a smaller and more fleet of foot alternative for its customers. “We found a way to make accessing data extremely simple, mashing it together in a logical way and embedding it in every logical place,” explained CEO Amir Orad to us in 2018.

“We have enjoyed watching the Sisense momentum in the past 12 months, the traction from its customers as well as from industry leading analysts for the company’s cloud native platform and new AI capabilities. That coupled with seeing more traction and success with leading companies in our portfolio and outside, led us to want to continue and grow our relationship with the company and lead this funding round,” said Jeff Horing, Managing Director at Insight Venture Partners, in a statement.

To note, Access Industries is an interesting backer who might also potentially shape up to be strategic, given its ownership of Warner Music Group, Alibaba, Facebook, Square, Spotify, Deezer, Snap and Zalando.

“Given our investments in market leading companies across diverse industries, we realize the value in analytics and machine learning and we could not be more excited about Sisense’s trajectory and traction in the market,” added Claltech’s Daniel Shinar in a statement.

Spotify brings streaming ad insertion technology to podcasts

2019 was a breakout year for Spotify’s podcasting efforts, and now the company is turning up the dial on its ability to monetize this popular form of audio programming. Today, at the Consumer Electronics Show in Las Vegas, Spotify is announcing Streaming Ad Insertion (SAI), its new, proprietary podcast ad technology for Spotify Podcast Ads.

The technology makes key data — like actual ad impressions, frequency, reach, plus anonymized age, gender and device type — available to podcasters and advertisers for the first time.

In previous years, podcasts have been delivered by way of downloads from RSS feeds, which would make this sort of data collection difficult if not impossible. The shift to streaming changes that, as Spotify can tap into its suite of planning, reporting and measurement capabilities, as it does for streaming music.

At launch, Spotify’s SAI technology will only be made available to its original and exclusive shows. That’s because Spotify can control this content and knows what its backend looks like, making the new technology easier to implement.

Podcast listeners are already more engaged with advertising often because the ads included in a podcast are read by the host or hosts themselves, making them feel less like an unwelcome interruption and more like a form of influencer marketing. SAI aims to improve the ad experience even more because the ads will be better-targeted and data-driven, like other modern-day digital marketing.

Early adopter Puma was the first partner to try out SAI by running host-read ads during the Spotify Original podcast, “Jemele Hill is Unbothered.” The ads resulted in ad recall lift of over 180%, Spotify says.

Today, Spotify has hundreds of originals and exclusives where it can leverage this technology at a time when podcast listening on its platform is growing. Podcast hours streamed jumped up 39% quarter-over-quarter in Q3 2019, and Spotify now touts over 500,000 podcasts on its platform.

“The problem we’re solving with Spotify podcast ads is really on the advertiser’s side — advertisers have no idea how they’re ads are working. They don’t even know whether or not an ad they purchase is being consumed by a listener,” said Jay Richman, VP, Head of Global Advertising Business & Platform, speaking about the new ad technology at a press event during CES this week. The new technology, he continued, was a “first of its kind.”

“It introduces new targeting measurements and interactivity, which is a big step change for the industry,” he said.

Streaming ad insertion technology will give Spotify a way to better compete with the default podcast apps from Apple and Google. The former, Apple Podcasts, still claims the majority of podcast app market share — but that’s been slipping as Spotify gains. While Apple is rumored to be working on its own podcast originals, Spotify is speeding ahead to the next step of turning its shows into new revenue drivers.

Spotify’s new ad tech launch also comes at a time when the podcast industry itself is changing. Many podcasts today are really just audio programs, as they’re only accessible to a streaming service’s users — not the wider web.

General interest in podcasts is climbing, too. The number of people who are monthly podcast listeners in the U.S. is expected to climb to 106 million by 2023, Spotify notes. Meanwhile, ad revenue for podcasts is projected to reach over $1 billion in 2021. Spotify doesn’t disclose its revenue from podcasts, specifically but in Q3 2019 its ad revenue grew 29% year-over-year to $189 million — a boost many attributed to podcasts.  

Spotify to ‘pause’ running political ads, citing lack of proper review

Ever since the run up to the 2016 U.S. Presidential Election (and, arguably, well before that), political ads have become a major sticking point on social media sites looking to crack down on misinformation. Facebook has grappled with the issue to the satisfaction of virtually no one, while Twitter has shut them down altogether.

Ad Age noted this week that Spotify is going to follow in the footsteps of the latter — for the time being. The world’s premier music streaming service is pumping the breaks on political amid the 2020 presidential rate.

The company confirmed the (in)decision in a statement provided to TechCrunch.

Beginning in early 2020, Spotify will pause the selling of political advertising. This will include political advertising content in our ad-supported tier and in Spotify original and exclusive podcasts. At this point in time, we do not yet have the necessary level of robustness in our processes, systems and tools to responsibly validate and review this content. We will reassess this decision as we continue to evolve our capabilities.

There’s certainly something to be said for knowing one’s limitations. And since so much of the company’s revenue arrives from ads run on its free offering, Spotify should be commended for opting to pull the plug on a solid revenue stream, as the campaign is entering the primary season. Spotify wouldn’t comment on how much money is being left on the table, but as Ad Age notes, political organizations ranging from the Bernie Sanders campaign to the RNC use to platform to get the word out. 

No, Spotify, you shouldn’t have sent mysterious USB drives to journalists

Last week, Spotify sent out a number of USB drives to reporters with a note: “Play me.”

It’s not uncommon for reporters to to receive USB drives in the post. Companies distribute USB drives all the time, including at tech conferences, often containing promotional materials or large files, such as videos that would otherwise be difficult to get into as many hands as possible.

But anyone with basic security training under their hat — which here at TechCrunch we do — will know to never plug in a USB drive without taking some precautions first.

Concerned but undeterred, we safely examined the contents of the drive using a disposable version of Ubuntu Linux (using a live CD) on a spare computer. We examined the drive and found it was benign.

On the drive was a single audio file. “This is Alex Goldman, and you’ve just been hacked,” the file played.

The drive was just a promotion for a new Spotify podcast. Because of course it was.

The USB drive that Spotify sent journalists. (Image: TechCrunch)

Jake Williams, a former NSA hacker and founder of Rendition Infosec, called the move “amazingly tone deaf” to encourage reporters into plugging in the drives to their computers.

USB drives are not inherently malicious, but are known to be used in hacking campaigns — like power plants and nuclear enrichment plants — which are typically not connected to the internet. USB drives can harbor malware that can open and install backdoors on a victim’s computer, Williams said.

“The files on the USB itself may contain active content,” he said, which when opened can exploit a bug on an affected device.

A spokesperson for Spotify did not comment. Instead, it passed our request to Sunshine Sachs, a public relations firm that works for Spotify, which would not comment on the record beyond that “all reporters received an email stating this was on the way.”

Plugging in random USB drives is a bigger problem than you might think. Elie Bursztein, a Google security researcher, found in his own research that about half of all people will plug in random USB drives into their computer.

John Deere earlier this year caused a ruckus after it distributed a promotion drive that actively hijacked the computer’s keyboard. The drive contained code which when plugged in ran a script, opened the browser, and automatically typed in the company’s website. Even though the drive was not inherently malicious, the move was highly criticized as malware often acts in an automated, scripted way.

Given the threats that USB drives can pose, Homeland Security’s cybersecurity division CISA last month updated its guidance about USB drive security. Journalists are among those who are frequent targets by some governments, including targeted cyberattacks.

Remember: always take precautions when handling USB drives. And never plug one in unless you trust it.