Many readers may have forgotten Luciano Pavarotti’s visit to the Singapore Indoor Stadium in 1993. Tickets were sold out long before the event. The hotels were packed with visitors from as far as Japan.
It is not just Pavarotti’s voice that should linger in the memory. It was his ability to scale. Scalability is a vital factor in any singer’s (or company’s) success.
Pavarotti made US$472 million ($617.8 million) in his career. This included record sales of US$100 million. His wealth was magnified by endorsements and live events like the one at the Indoor Stadium.
Though his father was a baker, Pavarotti hailed from a family of musicians. His ancestors in Northern Italy were said to be even more talented than him.
They never had Pavarotti’s success, though. Until the 1890s, it was not possible to record sound. Pavarotti’s ancestors were like day labourers. They were wondering about minstrels that eked out an existence.
For them to reach 30 million people who heard Pavarotti’s records, they would have had to sign that many times. They had to travel from town to town. Their revenue was directly proportional to the number of times that they performed.
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Pavarotti’s success is not just because of his commanding voice and presence. The CDs, music clips and Spotify downloads enriched him. He may have been a minor figure that a few Italian towns had listened to. Recorded sound scaled him to great heights.
A whole new world
A new technology is about to create a new set of Pavarottis. A vast new world has emerged due to TikTok and its rivals. There is now a creator economy of singers and dancers jostling to be the next Taylor Swift.
The scalability factor is even higher than with music records. People of my generation may remember cassette tapes; you had to buy the tapes from shops and play them on your Walkman. There was even a thriving pirate market for fake tapes.
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Producing music was even harder than listening to it. The record label companies received 10,000 applications for every new record. There were millions of Michael Jacksons and Taylor Swifts that were rejected.
The world has changed with the smartphone and the creator economy. The size of the creator economy is said to be US$300 billion. It has provided immense scale to performers.
TikTok is at the epicentre of the creator economy. This platform has 1.7 billion users, which is more than the population of China and Russia put together. About a third of its users are in the US, Indonesia and Brazil. These are markets where video apps are growing rapidly.
Its secret sauce is its algorithm. The algorithm prompts users who have searched for a holiday in Langkawi and then directs them to performers who cater to that destination. The algorithm feeds the addiction.
Gamechanger
TikTok dominates short video in the same way that Pavarotti dominated opera. Over two-thirds of the short video users are on TikTok. Its users are twice as likely to be discovered as those on any other platform, such as Facebook or Snapchat. TikTok has completely changed the way labels scout talent, becoming the first port of call for aspiring performers.
But TikTok is now under the gun. Its algorithm has earned the wrath of the US and India. India banned the app in 2021 due to national security concerns. Both the House of Congress and the White House tied a noose around TikTok’s neck.
Though TikTok is open to creators, it is shut to public investors. Bytedance has a private market valuation of between US$200 billion to US$250 billion. Public investors may need to find another app.
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The wait may not be long. Triller, an American creator platform, is set to be listed on the New York Stock Exchange (NYSE) at a discount to TikTok’s valuation. Mike Tyson, the boxer, has backed Triller, which has signed an exclusive arrangement to feature in Triller’s events.
Triller has 450 million users, which is about a third of TikTok’s user base. Triller may knock out its famous opponent. Its algorithm is welcomed by the US and India. Its interface is simpler to use. It has AI features that TikTok has been averse to adding.
It also allows the creators to retain 76% of its royalties. This is 10 times the ratio for TikTok. This month, Triller finalised a US$4 billion backdoor listing on the NYSE. It will list through a reverse merger with AGBA, an HK-based financial services firm.
There are 300 million creators generating content. Not all of them will have Pavarotti’s success. However, investors on the NYSE may now sing with them.
Nirgunan Tiruchelvam is head of consumer and internet at Aletheia Capital and author of Investing in the Covid Era. He does not hold any position in the stocks mentioned in this column. This column does not constitute investment advice of any kind.
