Musical.ly, the lip-synching social network popular with U.S. and European teens, was sold for between $800 million and $1 billion to Beijing Bytedance Technology, the company that controls the Chinese news aggregator Toutiao, The Wall Street Journal reported. The deal combines Musical.ly’s 60 million users with Toutiao’s 120 million users in China.
Bytedance is a rising star in China’s technology industry with a market value of $20 billion, based on its fundraising this year, per the Journal. Bytedance’s sizeable audience and ability to offer targeted advertising by breaking down user segments by demographics and location are appealing to investors.
The Musical.ly transaction may give Bytedance access to original content from the video platform’s media partners, such as MTV, NBCUniversal and Hearst. It also expands Bytedance’s reach in North America and Europe, although the company also wants to expand in Japan, Korea, India and Brazil.
The social media industry has consolidated around popular apps like Facebook, Instagram, Twitter and Snapchat, making Musical.ly’s sudden rise in popularity remarkable. But the lip-synching app has faced difficulty finding sponsors because of its comparably limited reach and expensive ad rates, Digiday reported in September.
At that time, Musical.ly offered three ad formats: vertical video ads, custom challenges that asked users to create videos around a brand and influencer video posts. But the app is mostly unproven as a marketing platform, and social influencers on Musical.ly are allowed to seek sponsors directly, cutting out the app as a middleman.
Still, the platform has started to gain some traction beyond its core audience. This summer, it added songs from Apple Music for the first time and added original programming from NBC, Viacom and Hearst.
Musical.ly’s challenge will be to branch out from its bread and butter — music videos that are popular with a young teenage girl audience. The app has branched out into other kinds of videos, such as live streaming and has sought to attract short-form programming, The New York Times reported.
Musical.ly also gives Toutiao, which means “headlines” in Chinese, an entry into U.S. and European markets with its Facebook-like newsfeed. Parent company Bytedance also acquired social video app Flipagram and has invested in news apps in India and Indonesia, per Journal.