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What Will Happen to TikTok Without Universal Music Group?
Big news hit the music and social media world recently. Universal Music Group (UMG), which represents major music artists like Taylor Swift, Bad Bunny, Billie Eilish, Drake, The Weeknd, and more, has announced that it is pulling its music from TikTok. The reason? The music company couldn’t agree on a deal regarding royalties with ByteDance, the company that owns TikTok.
Universal’s contract with TikTok was due to end on Wednesday, and no new deal was established. As a result, the label declared that it would withdraw its licenses, which are the legal authorizations to utilize its music. Shortly after, TikTok confirmed that it commenced the removal of Universal’s extensive collection of songs from its platform.
According to Universal Music Group’s open letter, TikTok has grown into a substantial social platform largely thanks to the music supplied by Universal’s artists and songwriters. Music is a crucial aspect of the TikTok experience, with a majority of its content being music-based, surpassing any other leading social platform. Universal’s contract with TikTok ended on Jan. 31, but the renewal discussions originally centered around three key issues: fair pay, protection from AI harm, and user safety.
“Ultimately TikTok is trying to build a music-based business, without paying fair value for the music.”
Universal Music Group via open letter
Here’s a bit of context: According to Fortune, “TikTok has upped its rates and is reportedly pulling in somewhere in the region of $20 billion in annual ad revenue — around 10 times as much as it was in early 2021 when UMG signed its TikTok deal.”
UMG believes that TikTok is trying to build a business that heavily relies on music without paying a fair price for the music it uses from artists. Additionally, UMG claims that TikTok tried to pay its artists and songwriters considerably less than major social platforms usually pay. Per UMG, 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 also highlighted how TikTok, despite its vast user base and soaring ad revenue, contributes a mere 1% to the music company’s total revenue.
After UMG released its open letter, TikTok fired back with its own statement, which noted that Universal Music Group appears to be prioritizing its own financial interests over the needs of its artists and songwriters. Countering Universal’s narrative, TikTok claims that Universal has chosen to distance itself from the robust support offered by a platform with over a billion users, which “serves as a free promotional and discovery vehicle for their talent.”
TikTok also claims to have successfully established “artist-first” agreements with every other music label and publisher. “Clearly, Universal’s self-serving actions are not in the best interests of artists, songwriters and fans,” the social media company stated.
In response to Universal’s pullouts, TikTok was forced to delete the company’s songs from its music library of over 1 million songs, rendering them inaccessible for new videos. Regarding the older videos that already included Universal’s music, TikTok started to “mute” these clips on Thursday, essentially erasing all audio, and leaving users with silent videos. This was the case with videos from famous personalities like Kylie Jenner and Dwayne Johnson (known as The Rock), among countless others. Many of these muted videos now feature messages such as “This sound isn’t available.”
In the official profile pages for artists like Taylor Swift, the sections once teeming with a multitude of songs for users to feature became largely empty. However, some clips or user-generated mixes might remain in some instances.
The complete removal process is predicted to last for several days at the very least. TikTok did not specify the exact number of videos that would be impacted by Universal’s withdrawal. However, given the vast reach of the platform, it could feasibly be in the millions. Not surprisingly, many TikTok content creators have voiced their anger and frustration on social media.
In UMG’s version of the story, the disagreement was primarily about payments for AI-generated recordings using UMG’s music. The company suggests that TikTok was not doing enough to promptly remove content that breached UMG’s copyright rules.
So, what does this mean for TikTok and its future? The platform is synonymous with short, snappy music clips. The loss of UMG’s catalog could be a substantial blow. However, some users, including Swift fan and TikTok creator Madeleine Macrae, see a potential positive impact. “I feel like a silver lining to this is that smaller or independent artists can have their chance to go viral,” Macrae said.
What remains to be seen is whether one party will back down. Will TikTok agree to pay more, will UMG realize it’s not worth losing the exposure from one of the largest social platforms in the world, or will they both stand firm?
Discussion Questions
Reflecting upon the dynamic between Universal Music Group and TikTok, to what extent does the traditional music industry need to re-evaluate its approach toward music licensing in the context of the burgeoning social media landscape?
How can tech CEOs navigate the complexities of intellectual property rights in the digital era, especially concerning fair compensation for artists while maintaining an engaging user experience?
How might the retail industry leverage such opportunities when large content providers withdraw, and could this disruption lead to innovative marketing strategies or partnerships?
Poll
Loading …BrainTrust
David Biernbaum
Founder & President, David Biernbaum & Associates LLC
Michael La Kier
Vice President, Brand Development - IGA, Inc.
Failure to reach an agreement with Universal would deteriorate the experience on TikTok somewhat, mainly because it would deprive creators of a big catalog of music and songs. It could also be disruptive as, presumably, TikTok would need to remove historic content that used Universal owned music; this would also be disappointing for some creators. That said, it would not spell the end for TikTok as it has other agreements in place with firms like Warner Music. I also think not striking a deal would be detrimental for Universal as TikTok has helped propel the popularity of a large number of songs, so the business and its artists would lose out on this exposure. Basically, both sides need to strike a balance. Universal needs to appreciate that TikTok is rarely playing full songs and is helping to create exposure. And TikTok needs to understand that those who generate the music need some payment and protection.
There are so many ways in which TikTok is used, by so many people, that it can withstand a short period of time without Universal Music Group.
As in the case when streaming services and television channels so silent on each other, the consumer always pressures the two sides to work it out, and they do.
In the meantime, and at least in the short term, neither party wins the battle, nor the war. The economics will get worked out by Summer. Count on it. – Db
The music industry has been fighting with the online world since 1999 when Napster unleashed the first ever peer-to-peer music sharing site that was eventually shut down over copyright issues. Universal Music Group (and the other labels for that matter), have every right to fight for their licensing rights and the protection of their artists work. It may be self serving, but it’s their right. The difference in this case is that TikTok happens to be a powerful social platform that delivers mind-boggling exposure for artists. This appears to be a game of ‘chicken’ and no one seems to be backing down. Removing UMG’s library and scrubbing sound from previously posted clips will be a monumental and imperfect task. While TikTok is the bigger fish terms of revenue and eyeballs, UMG has some leverage and they’re clearly not afraid to use it. With so much scrutiny on TikTok – including some politicians who want it banded – I’m not sure what calculation they’re making to go into battle with UMG when the truth is, a little more money would have made the issue go away. And I bet that’s what will happen.
TikTok users will resent the lack of access to Drake and Taylor Swift hits as the soundtrack to their short videos.
Some consumers may take their user-generated content to Instagram Reels to access their favorite Universal artists. The longer the Universal and TikTok deadlock continues, the more brand advertisers will follow the digital traffic flowing to Meta properties.
This tension among Universal, TikTok, artists and consumers may inspire business model restructuring to be fair and accommodate different stakeholder needs.
Tik Tok influencers will just move to music that is available. The bigger issue is how long will people continue to waste their time on the platform. Sadly I think that trend will definitely not go away-at least until something better comes out.
Creators can still make plenty of content without UMG, so this won’t be something that “breaks” TikTok. However, this is an important conversation to be had that we saw happening in movies, TV, and magazines. Like most other technologies, innovation rolled out without an idea of what regulation would look like. I believe this will get re-negotiated and smoothed out like it did in other creative arenas.
In the short term, users of the platform will migrate to other music, perhaps unhappily, but this isn’t going to kill the platform. In all likelihood, there will be a negotiated agreement at some point, as is so typical of these types of situations.
Music and third-party content is part of the TikTok experience. No one wants to go back to silent movies… While this spat will likely be resolved sooner rather than later, it highlights that no platform can exist in a silo.
The clash between Universal Music Group (UMG) and TikTok shows the music industry needs to rethink how it licenses music on social media. It’s tough to balance fair pay, AI concerns, and user safety. UMG accuses TikTok of not paying enough, highlighting the challenge of adapting to new platforms while treating artists fairly. Tech CEOs need to focus on fair pay, transparent negoatiation and use innovative ideas, like Artist-Centric initiative, to change how artists are paid.
When big content providers like UMG leave platforms like TikTok, the retail industry can benefit by teaming up with independent artists. Using content created by users and supporting new talents can lead to creative marketing ideas. Partnerships with upcoming musicians can make genuine connections with customers, increasing engagement and offering a unique shopping experience, especially during disruptions in content availability.
In the attention economy, TikTok has vaulted to the top of the minds of GenZ and GenAlpha. With the rise of immersive commerce, TikTok has cultivated the magic formula of building a community focusing on content creation and storytelling backed by a significant library of music and songs. This has led to artists having another platform to connect with their fans and independent artists having access to a global community they otherwise would not have.
However, the fact that TikTok did not reach an agreement with the Universal Music Group (UMG) throws a wrench into the momentum this platform has achieved. In some ways, this will disrupt the overall experience on the platform and limit access to top artists. It must be considered that the TikTok operating model is far different than Spotify and other music streaming platforms.
While TikTok is expected to pay full value for the songs, most of the TikTok content is under 30 seconds. TikTok and the artists have benefited significantly due to the viral nature of the content and access it provides to consumers. Hopefully, an agreement could be implemented to provide value to UMG and TikTok.