Why Musical.ly Sold for $1 Billion Dollars

Raise your hand if you know what Musical.ly is?

Most people over 16 years old have little idea what Musical.ly is…unless you have a kid that old. But even then maybe you don’t.

Because Musical.ly is a fun, little lip syncing app that grew quietly and virally with an audience that is passionately devoted to having fun singing along with their friends.

Let’s catch up:

Last week, Musical.ly was acquired for around $1B by Bytedance in China (a big news outfit, who also acquired Flipogram).

That may not mean much other than it’s becoming more of a thing for Chinese orgs to pick up startups with a young US audience.

Musical.ly wasn’t very original. People sing other people’s stuff on YouTube. People lip sync or karaoke on Instagram or Snapchat with the dog face on. It’s derivative — make a video up to 15 seconds of lip syncing to popular songs. But it’s tight to a niche and that’s what works. It’s just that.

Claiming over 200 million registered users, WSJ puts their monthly active users likely more around 60 million. Pretty good run for a 3 year project, but definitely nowhere never Facebook’s billions of actives or Instagram’s 1 billion active users.

So why buy Musically?

  • Only 14% of teens use Musical.ly.

  • 95% of teens use YouTube; Instagram at 69% usage.

  • And just 6% of total mobile users are on Musical.ly.

  • Growth has been stagnant for a bit now, and their user acquisition has leveled off.

Was it their ad model that started to kill the growth velocity? Not really. Musical.ly sports vertical ads, sponsored posts…just like Snapchat’s. Plus they have some custom challenges that brands can build out (I tried to buy one of these last year, but shied away when I found out they were over $100k). Overall super pricey and haven’t taken off in the platform = in other words, it’s not ‘ad-crowded.’

So why buy Musically?

Engagement: Quality and quantity. Not a sheer volume of users, but a total engagement of users with each other.

Musical.ly has a super engaged audience that makes content frequently. And they have a higher percentage of audience that makes content because the barrier to creation is low. And because it’s a niche offering, it’s not complicated to deliver user generated content — you pick your favorite song and lip sync it. And who doesn’t love music? Everyone does. It’s passion + ease of use + the promise of 15 seconds of fame.

If we are looking at this ‘why Musical.ly works’ for any brand, thinking about what you can do to make your audience sticker, I think Musical.ly teaches us these three things:

  1. Stay focused on your core value proposition. Musical.ly was built for a specific effort — music performance from users. It’s niche, it works. Musical.ly focused their entire effort on a single direction that makes it very clear to participants why they are there.

  2. Encourage easy engagement. Unlike karaoke, you don’t sound terrible on Musical.ly. It’s to music everyone knows and (most) people love. Creative performance is free to be in a safe environment that makes it less scary to share. And it’s so easy to share, you should. You don’t have to think. Just do it.

  3. Make your user the star. The familiarity and popularity of the music mixed with the individual performances gives users their 15 seconds of fame while encouraging them to be themselves. There’s no shame. It’s fun. You can be silly. And in the age of self-love, it’s a platform to allow those passionate about music or performance to be themselves, even if they can’t sing or play. They are the celebrity in the moment.

In closing, Bytedance bought an audience, not an app. A dedicated mobile-only teen audience that is passionate, dedicated and hyper-engaged in Musical.ly. Social media are content publishing platforms; they need content to survive, to grow. User-generated content has been declining on Facebook, so they bought Instagram which is content-first. Snapchat is even more so, which is why Instagram copied Snapchat. Musical.ly jumped in the scene right when short, fun social videos started taking off and pushing text and photo updates aside, hitting the social video trend at the right moment to enable fun, safe creation with a low barrier to entry. 

Stay focused, create easy engagement with your brand, and make your user the star. Dedicated users become fans. High-focus platforms can create a stronger sense community, and deep engagement retains customers longer to provide a more powerful brand than those with a larger group of passive users.

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