By Gary Symons
TLL Editor in Chief
Universal Music Group just dropped a bomb on TikTok, saying it will back out of its music licensing agreement with the social media giant.
The music publisher, one of the global ‘Big Three’ that dominates the industry, says it will remove all songs from TikTok, accusing the company of trying to bully them into taking a bad deal over music rights fees.
The trendsetting agreement expired Jan. 31 after the two companies failed to reach agreement on key issues like artist compensation, and TikTok’s use of AI to generate music.
UMG issued on Tuesday a blistering open letter that was practically a declaration of war, titled “Why we must call Time Out on TikTok.”
“As our negotiations continued, TikTok attempted to bully us into accepting a deal worth less than the previous deal, far less than fair market value and not reflective of their exponential growth,” the letter states. “How did it try to intimidate us? By selectively removing the music of certain of our developing artists, while keeping on the platform our audience-driving global stars.
“TikTok’s tactics are obvious,” UMG adds. “Use its platform power to hurt vulnerable artists and try to intimidate us into conceding to a bad deal that undervalues music and shortchanges artists and songwriters as well as their fans.
“We will never do that.”
TikTok, owned by Chinese company ByteDance, is a social media app that allows users to make short-form videos, the majority of which are soundtracked with sound effects and licensed music.
It has furiously denied UMG’s allegations in its own short statement on the current status of negotiations which, from the tone of the letter, would appear to be done and dusted at this point.
“It is sad and disappointing that Universal Music Group has put their own greed above the interests of their artists and songwriters,” the TikTok statement says. “Despite Universal’s false narrative and rhetoric, the fact is they have chosen to walk away from the powerful support of a platform with well over a billion users that serves as a free promotional and discovery vehicle for their talent.
“TikTok has been able to reach ‘artist-first’ agreements with every other label and publisher,” the company adds. “Clearly, Universal’s self-serving actions are not in the best interests of artists, songwriters and fans.”
UMG and TikTok entered into their current, now-expired deal in early 2021, an expanded version of the partners’ original music sharing agreement. The idea was to create a global agreement that delivers equitable compensation for recording artists and songwriters and significantly expands and enhances the companies’ existing relationship. The two companies said in a joint statement that the agreement was key to “promoting the development of new innovative experiences and the ability to forge deeper bonds between fans and the artists and music they love.”
“UMG and TikTok will now work more closely than ever to promote ambitious experimentation, innovation and collaboration—with the shared objective of developing new music experiences and features,” said Michael Nash, Executive Vice President of Digital Strategy at UMG. “Driving new and deeper connections with fans, this agreement delivers equitable compensation to our recording artists and songwriters, as well as a commitment to develop industry-leading tools, A&R insights and models necessary to advance their careers.”
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The agreement covers all recorded music from artists at UMG’s labels and songwriters with Universal Music Publishing Group (UMPG). TikTok users were given an ironclad right to express themselves through music, to soundtrack their video creations with their favorite songs, and perhaps even to build communities around their favorite artists or musical genres. The companies have additionally pledged to experiment with exciting new features. For example, TikTok users will now be able to incorporate clips from UMG’s full catalog of music, spanning the company’s iconic labels, songwriters and global territories.
“We are excited to enter this new era with UMG and UMPG to continue supporting artists and songwriters, by working together to help reach music fans on TikTok,” said Ole Obermann, Global Head of Music for TikTok. “Our platform has been a driver in creating chart hits and licensing the world’s biggest catalog of tracks will continue to inspire our community. In turn, we are proud to partner with UMG and UMPG to be a source to help new talent emerge and to re-introduce legacy acts to a new audience.”
However, UMG says the reality of its interaction with TikTok did not live up to the intent of its agreement.
“With respect to the issue of artist and songwriter compensation, TikTok proposed paying our artists and songwriters at a rate that is a fraction of the rate that similarly situated major social platforms pay,” Universal complained. “Today, as an indication of how little TikTok compensates artists and songwriters, despite its massive and growing user base, rapidly rising advertising revenue and increasing reliance on music-based content, TikTok accounts for only about 1% of our total revenue.
“Ultimately TikTok is trying to build a music-based business, without paying fair value for the music,” Universal charged.
But money was not the only issue for UMG, which says TikTok has indulged in business practices that is damaging their artists, particularly its use of generative AI to create and promote music on the site, which in turn would massively dilute the royalty payments for human artists.
“On AI, TikTok is allowing the platform to be flooded with AI-generated recordings—as well as developing tools to enable, promote and encourage AI music creation on the platform itself —and then demanding a contractual right which would allow this content to massively dilute the royalty pool for human artists, in a move that is nothing short of sponsoring artist replacement by AI,” UMG said. “Further, TikTok makes little effort to deal with the vast amounts of content on its platform that infringe our artists’ music and it has offered no meaningful solutions to the rising tide of content adjacency issues, let alone the tidal wave of hate speech, bigotry, bullying and harassment on the platform.
“The only means available to seek the removal of infringing or problematic content (such as pornographic deepfakes of artists) is through the monumentally cumbersome and inefficient process which equates to the digital equivalent of “Whack-a-Mole.”
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While TikTok has immense influence over what music fans engage with, there’s no doubt losing the agreement with Universal Music is a serious blow to a social media network whose DNA is so intertwined with music that its logo is a stylized musical note.
TikTok relies on music licenses to allow its billion-plus users to create videos with their favorite songs in the background, and UMG represents many of the world’s most popular musicians, including the Beatles, Bob Dylan, Elton John, Drake, Sting, the Weeknd, Kendrick Lamar, SZA, Ariana Grande, Justin Bieber, Adele, U2, Coldplay, Post Malone and more. It is the only music company to ever hold nine of the top 10 albums in the Billboard 200 music chart at once, and has achieved that four times.
If UMG fails to reach an agreement with TikTok, all of its songs will be removed from the service once the deal expires on Wednesday, a UMG spokesperson confirmed to Reuters.
On the other side of the coin, Universal is obviously very aware that killing its deal with TikTok will have negative consequences for its artists and for the company itself, particularly as TikTok holds similar agreements with other music companies, including the other members of the Big Three—Sony and Warner Music. It is not known whether those companies have similar concerns or not, but Universal is sticking to its guns, and says it will not sign a deal with TikTok that is not in the best interests of its clients.
“We will always fight for our artists and songwriters and stand up for the creative and commercial value of music,” said UMG. “We recognize the challenges that TikTok’s actions will cause, and do not underestimate what this will mean to our artists and their fans who, unfortunately, will be among those subjected to the near-term consequences of TikTok’s unwillingness to strike anything close to a market-rate deal and meaningfully address its obligations as a social platform. But we have an overriding responsibility to our artists to fight for a new agreement under which they are appropriately compensated for their work, on a platform that respects human creativity, in an environment that is safe for all, and effectively moderated.
“We honor our responsibilities with the utmost seriousness,” UMG concluded. “Intimidation and threats will never cause us to shirk those responsibilities.”
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