Music licensing talks are heating up between TikTok and Universal Music Group as negotiations have left the conference room and entered the public sphere.
TikTok began to remove music from UMG artists like Taylor Swift and Niall Horan on Thursday. The company is muting existing TikTok videos that feature UMG-licensed songs.
So what’s going on?
UMG, the label behind many major acts, published an “open letter” on Tuesday, claiming a range of grievances against TikTok. It accused the app of being “flooded with AI-generated recordings,” allowing a “tidal wave of hate speech, bigotry, bullying and harassment,” and “selectively removing the music of certain of our developing artists.”
A TikTok spokesperson shot back in a statement to Business Insider, describing the letter as presenting a “false narrative and rhetoric” and claiming that UMG “has 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.”
One of the top-line points in UMG’s letter centered on how generative artificial intelligence could impact artists. The company isn’t interested in moving forward with an agreement that doesn’t address AI’s impact on its music, according to a person familiar with the negotiations. AI was also a sticking point in negotiations between Hollywood studios and writers and actors last year.
But at the end of the day, corporate jabs aside, this fight is about money.
UMG and its peers want TikTok and its parent ByteDance to pay more to license music. It’s an increasingly important platform for music-rights holders as TikTok gobbles up hours of daily attention from millions of fans, with aims to build a business in music streaming. TikTok forged a licensing deal with Warner Music Group in July and previously announced an agreement with Sony Music Entertainment in November 2020.
“Their core mission is to generate as much money as they can from their recordings for their shareholders,” David Herlihy, a copyright lawyer and music industry professor at Northeastern University, told BI.
TikTok’s ability to settle its dispute with UMG is critical for the company. Music is the core of the app, which grew in popularity in 2018 after merging with lip-synching platform Musical.ly. The company is in the process of launching a dedicated streaming app, TikTok Music, and has worked closely with artists on influencer listening parties, livestreams, and in-person events. The loss of UMG’s catalog and the support of its artists would hamper the momentum for many of its projects in music.
The companies’ licensing agreement expired Wednesday, the same day TikTok’s CEO testified before Congress and ByteDance sunset its music-streaming app Resso in India after hitting government roadblocks.
Two music giants face off
TikTok versus UMG is not a David versus Goliath battle, but rather, a Goliath versus Goliath cage fight.
UMG is the largest record label in the world by market share, per Billboard. TikTok has become the most important social platform for music discovery.
The two parties have sparred in the past over licensing, maintaining a complicated relationship where both have sought to work together on marketing and content while guarding their bottom lines.
“Whenever these negotiations take place, it boils down to a debate over which side needs the other more,” Tatiana Cirisano, a senior music industry analyst and consultant at MIDiA Research, told BI. “Social platforms will argue they are an indispensable marketing tool that labels can’t afford to lose, and labels will argue that the platforms couldn’t function without music. With the latest news, UMG seems keen on proving the latter.”
Withholding music isn’t an uncommon tactic in licensing negotiations. In 2008, Warner Music Group removed its music from YouTube during payment negotiations. Sony Music Entertainment in late 2022 pulled its song catalog from ByteDance’s Resso. And, TikTok, in early 2023, tested removing access to songs from major labels for some users in Australia.
But TikTok, as a global social giant, is an important product for music artists and labels. While UMG’s catalog is now absent from the app, it’s unlikely to be gone for long, music industry professionals told BI.
In its letter, UMG called for a TikTok “time out,” not a divorce.
“Sometimes you have to take a dramatic measure to get someone back to the negotiating table, which is what I feel like this is,” Jonny Kaps, cofounder and CEO of the independent label +1 Records, told BI. “TikTok can move on without Universal better than Universal can move on without TikTok long term.”
Still, UMG and its publishing group work with some of the most important artists on TikTok, including four of the app’s top five most popular artists in the US in 2023.
And TikTok is no longer the only player in town when it comes to short-video music marketing, as Instagram reels and YouTube shorts have emerged as viable alternatives.
TikTok’s rising influence in music
Over the last few years, TikTok has been building a business around music.
TikTok threw in December a sold-out music event showcasing performers who had made their mark on the app. The company also offers artist services via its SoundOn division and partners with SiriusXM on a “TikTok Radio” station.
Some industry insiders have wondered whether the company’s push into artist services encroached on record labels’ territory.
“It’s pretty clear to me that TikTok is no longer just about marketing,” MIDiA’s Cirisano said. “The platform is becoming a form of consumption in its own right, especially for younger generations. This is why the music industry is seeking to capture more value.”
This story has been updated with new information.
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