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January 31

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Universal Music Group Pulls Its Music From TikTok Amid Licensing Fight

Finance, Musicians, TikTok

Universal Music Group and TikTok are officially breaking up. But like your favorite on-again, off-again couple from high school, nobody really expects it to last. But the theoretical implications are still quite hefty. 

The biggest record label on the planet, Universal Music Group issued an open letter to artists and songwriters saying they must call "time out" on TikTok. In the letter, UMG listed three primary reasons (we'll get into these in a second). 

For their part, TikTok issued a terse but scathing retort to UMG. In it, the company says, "It is sad and disappointing that Universal Music Group has put their own greed above the interests of their artists and songwriters. 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. Clearly, Universal's self-serving actions are not in the best interests of artists, songwriters and fans."

So what went wrong, and what is Universal Music Group saying?

How Universal Music Group And TikTok Got To This Point

All of the major content platforms essentially have to ink individual deals with music rights holders. This includes both record labels and publishing companies. Once they agree to a deal, it means users can create videos using famous recordings and songs from the people on that label's roster. Without a licensing agreement, any use would be illegal and grounds for removing content.

Eventually, those initial deals expire and the two parties must again come to an agreement. In this case, the initial agreement between Universal Music Group and TikTok began February 2021 and officially expired after January 31, 2024. If another deal isn't in place after that date, then TikTok officially no longer has the rights to allow users to create videos using those sounds. This includes artists like Taylor Swift (well, at least whichever part of her catalog is controlled by UMG), Drake, Bad Bunny, Elton John, Bob Dylan — you get it. Tons and tons of huge artists and more than 4 million songs.

Universal Music Group and TikTok have been having back-and-forth conversations about renewing the licensing agreement for some time now. The tensions between the two were no surprise. But after failing to agree to come to a rate that TikTok would pay UMG, it appears the massive label is going to pull all of the recordings it owns and songs it publishes from the platform. 

Why Universal Music Group Says They Want To "Time Out" TikTok

While the core of the dispute comes down to money, UMG listed three main reasons it says it hasn't come to an agreement with TikTok. How much of them are true and how much is PR posturing remains to be seen, but here's what they said. 

1. TikTok wouldn't agree to pay them what they asked.

This is what UMG said in its letter: "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." The company then went on to say that despite its massive size, TikTok's fees to UMG account for only 1 percent of its revenue. This, of course, is not actually indicative of how much TikTok pays and whether it's a fair rate, but it does allow UMG to present its argument as a, "You need us more than we need you" kind of deal.

2. Universal Music Group says TikTok isn't taking AI seriously.

The company makes some pretty significant accusations, saying 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."

3. The platform has moderation issues

This last point certainly isn't exclusively to TikTok, but UMG says "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 company also goes on to make some pretty pointed accusations, but still mostly returns to the money conversation. You can read the full thing here

So Who Is Right And Who Is Wrong?

Isn't it fun when two massively influential companies get into a heated argument that spills over into "open letters" to the public? The thing is, because we don't actually get to see what UMG was proposing in the agreement and what TikTok countered with, it's just going to be a bunch of they-said, they-said. 

For anybody who has paid attention to licensing agreements and things of this sort since the advent of social media, there's a bit of a compulsive guffaw at these types of things. Universal's open letter was certainly passionate. But the idea of the world's largest record label as the "champion" of the recording artist and songwriter is pretty dubious. You have to remember, these are the companies that orchestrated some of the most unfavorable agreements in the entertainment industry.

Also not for nothing, UMG has routinely partnered with AI companies and found itself right in the middle of plenty of scandals. From hiding the fact that it lost a bunch of artist assets in a fire to being forced to pay up in a payola case to effectively banning an artist's ability to release music how they want. The open letter's sanctimonious tone probably elicited more than one eye roll across the rest of the industry.

At the end of the day, they could simply say that TikTok wasn't willing to pay them as much as they wanted and they'd probably get more brownie points for the honesty. Unless they wanted to share their actual proposals outlining the clauses that guaranteed AI protections for all musicians and increased security and moderation against bad content...

But that doesn't necessarily mean Universal Music Group is in the wrong here, either. They're allowed to make these kinds of deals — or not make them — whenever they want. But in the end, the people who will probably suffer the most? You guessed it: artists and fans.

Who Really Gets Hurt Here?

The worst part about these disputes is that ultimately they affect artists, songwriters, creators, and fans the most. Universal Music Group says that direct revenue from licensing on TikTok only amounts to 1 percent of their revenue. But it could be much more significant for individual artists on their roster. Not to mention UMG discounts the revenue they make from streaming as a result of a viral TikTok hit. In other words, the money matters a lot more than they lead on.

Artists on UMG's roster now won't even be able to promote their own sounds and music via the app, despite their marketing department and manager almost certainly imploring them to have a presence on the app. And let's not forget all the songwriters who aren't with UMG but who happened to have a song co-written with somebody who is. Now those artists lose out on that revenue and exposure, even if UMG Publishing is a minority rights holder on the song.

Meanwhile, creators and fans lose out on the opportunity to use more than 4 million songs in their content. It's a significant blow to the users of an app where audio is as important as video (sometimes even more). 

Hopefully these two massive companies will put their egos aside and do what's right for artists and fans — and not handcuff their ability to use music even more than they already have.


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