Songs by the world’s hottest artists—suppose Taylor Swift, Harry Kinds and Drake—began to go silent on TikTok over the previous couple of weeks.
The explanation? A licensing deal between the most important music label Common Music Group and TikTok that went awry final month.
Almost one month on, the 2 firms, that are essential to the broader leisure trade, proceed to be in a impasse. And on Wednesday, TikTok mentioned it might begin pulling music off its platform as the 2 did not reach an agreement on funds, AI and extra.
“Their actions not only affect the songwriters and artists that they represent, but now also impact many artists and songwriters not signed to Universal,” TikTok mentioned in a statement, including that it was nonetheless trying to make an “equitable agreement” with UMG.
However UMG, then again, hasn’t agreed to those efforts as they don’t see TikTok’s provide as compelling sufficient, sources instructed the Financial Times.
To place the dimensions of this drawback in context—UMG controls a 3rd of the music on the earth, with only one% of its revenues coming from the Chinese language-owned TikTok (as UMG CEO Lucian Grainge mentioned yesterday, the social media app wasn’t a “material part” in international music promotion). The short-video snippet app has over 1 billion users globally, with about 20-30% of the highest music on its platform coming from UMG and its publishing arm (although analysts estimate double that quantity).
However that simply pertains to among the greatest artists—TikTok can be a critical marketing and promotion device for creators who lean on the platform to present them visibility on social media. The promise it presents for artists—large and small—is immense, because the app has catapulted singers and songs to viral fame up to now—consider Olivia Rodrigo’s Drivers License.
The stalemate may result in higher compensation of artists within the long-run—by way of a richer licensing deal—which UMG-backed singer Kim Petras mentioned might be well worth the present problem.
“Of course, right now, all of us Universal artists are facing challenges, but you’ve gotta take one for the team,” Petras instructed the Wall Street Journal. “The intentions behind this initiative are noble, aiming to ensure that musicians are fairly compensated for their art. This extends not only to the chart topping performers but also to the songwriters and individuals working tirelessly behind the scenes.”
A confrontation over music
Again in 2021, UMG and TikTok signed a licensing deal that didn’t give the label any share of the social media platform’s income—partly as a result of its advert enterprise hadn’t actually taken off on the time. However TikTok has since begun making some $20 billion in annual advert income, Fortune’s David Meyer wrote final month. That pandemic-era deal expired on the finish of January, following which the businesses haven’t been in a position to attain a brand new settlement.
So, on that day, UMG wrote an open letter the place it mentioned that TikTok’s success hinged on that of the music made by artists and songwriters, who weren’t being paid pretty. The music group additionally highlighted different considerations like the shortage of safety for artists in opposition to AI-generated tracks.
“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,” UMG mentioned on the time.
In response, TikTok wrote a fiery response that accused UMG of placing its “own green above the interests of their artists and songwriters” and pushing a false rhetoric.
Whereas the UMG-TikTok problem is barely a couple of month outdated, the broader debate on music, copyrights and truthful worth have been part of the leisure trade for lengthy. As an example, when Spotify made its debut with a subscription mannequin for music, it modified the dynamics within the music trade. If something, the battle between the 2 giants reveals how brief video codecs, the place customers can pluck out components of an audio and switch these into their very own snippet, continues to function in murky waters.
“We’re friendly people… my phone is open, unfortunately, 24 hours a day, and we hope that we will be able to find solutions,” UMG CEO Grainge mentioned throughout the firm’s earnings call Wednesday. “We negotiate and deal with platforms that combined are worth trillions and we’ve been able, with all of them, to create win-win solutions.”
It’s unclear how lengthy the tussle between UMG and TikTok will proceed, leaving the remnants of soundless movies behind. However within the meantime, it’s the artists and creators who stand to lose essentially the most from a restricted TikTok.
TikTok pointed Fortune to its public assertion from Wednesday when approached for remark. UMG didn’t instantly return Fortune‘s request for remark.
