The standoff between music publishing giant Universal Music Group and TikTok, the in-vogue social media juggernaut, persists nearly a month after the licensing agreement between the two expired.
It’s not clear where the two companies – UMG maintains operational headquarters at a Santa Monica campus, while TikTok counts its Culver City office as part of its headquarters – are regarding working out a new deal, and most industry players are being quiet for now, presumably waiting to see what develops. UMG has publicly demanded better pay for its artists – names such as Taylor Swift, SZA, Elton John and Kendrick Lamar – whose music often plays a key role in successful TikTok videos. Meanwhile, TikTok accused the publisher of being greedy and willing to sacrifice the exposure provided to musicians as their songs go viral on cellphones around the world.
Some experts think TikTok should pony up and offer money comparable to the payouts from Meta, which owns Facebook and Instagram, or Alphabet, which owns YouTube, to those labels and their artists.
“For a long time, TikTok has said they’re helping artists by promoting their business,” said Karen North, a professor at USC’s Annenberg School for Communication and Journalism who studies digital and social media. “If they were a nonprofit, that’s fine, but they make tremendous amounts of money. And the creators, TikTok shells out enormous amounts of money for them, and they are making their livings by using other peoples’ music.
“While they’re paying the creators,” she added, “they should be paying the people making the music.”
As the fight drags on, one question to ask is what UMG has to gain – or to lose – from drawing its line and sticking to it. On one hand, that’s money that UMG’s artists have for the moment stopped collecting; on the other, the label can at least position itself as fighting on behalf of its artists.
“I don’t know that it’s that bad for Universal. Ultimately, I think their artists are going to stand with them,” said Elizabeth Moody, a senior partner with Beverly Hills entertainment law firm Granderson Des Rochers LLP. “You could imagine some fragmentation, but I don’t know how likely that is because it sounds easier than it is. If this were to continue on for a long time, you could see repercussions for Universal in the long term for signing artists, but I find it hard to believe that this won’t be resolved in time.”
Taking the fight public
Frustrated by the pace of the negotiations, UMG elected to vent its frustrations with TikTok in January, ahead of the date after which it would pull its music from the platform.
The company posted a lengthy open letter to its website on Jan. 30 to “call time out on TikTok.” The letter acknowledged TikTok’s growing influence and that music played a role in its content creation. It also cited a quote from a TikTok executive claiming music is “at the heart” of the platform’s experience.
Elsewhere in the letter, UMG said TikTok under the since-expired contract accounted for just 1% of the publisher’s revenue, criticized the platform’s embrace of AI and response to toxic content and accused TikTok of axing lesser-known UMG artists from its library.
No stranger to public scrutiny, TikTok – which is owned by a Chinese tech company – fired back that same day, accusing UMG of “putting their own greed” above the interests of its artists.
“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’s statement read. “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.”
Neither company responded to an inquiries about their negotiations.
Who will cave?
As North, the USC professor, sees it, TikTok is vulnerable because of its greatest strength: its data collection.
Music-streaming platforms like Spotify and Pandora were similarly criticized in the past for their payouts-per-stream to artists. However, North said that has improved in recent years as data collection has become more robust. For example, Spotify announced a swath of changes in November intended to weed out “bad actors” who manipulate audio tracks and streams to hog royalty payouts.
“TikTok is a data-collecting machine. We’ve never imagined that anybody or anything can collect as much data as they collect,” North added. “It should be easier for them to identify this than anyone else out there. I believe that they know exactly who is doing what at any second. Everybody else has figured out how to quantify it.”
Moody, who before joining Granderson was in-house counsel for a variety of entertainment and tech companies including Pandora and YouTube, said she doesn’t know whose side she is on, having worked on both sides of the table. While she was with YouTube, she recalled, Warner Music Group removed its music from that site during a contract spat, a move she said the label ultimately regretted. She also noted that TikTok does pay in the form of exposure for artists, in what amounts to free publicity for them.
“There’s certainly going to be a lot of artists who are not as focused on getting paid by TikTok and more focused on their promotion with TikTok,” Moody said.
What could complicate things for TikTok is UMG’s reach with music outside of its direct control. Moody observed, as an example, that Beyoncé’s “Lemonade” had more than a dozen producers attached to it, each with their own label relationships. This could result in even more music being yanked from TikTok, she said.
“They probably have a small percentage interest in almost all of the hip-hop music out there. This isn’t going to just affect Universal’s music. It’s going to impact all popular music out there,” Moody said. “Publishing can get quite complicated, because on most of the pop music these days there are multiple producers and songwriters and lyricists, and many are signed to different publishers.
“If Universal controls even 1% of a composition, TikTok won’t be able to play that recording,” she added.
Other considerations are in play
North speculated that, depending on how long UMG holds out, other artists still on TikTok’s platform could benefit from the impasse.
“The people who haven’t made it big yet, their music is still there, and there’s a real opportunity to promote the music that is being less used,” she said.
TikTok’s use of music has evolved, with songs ranging from being simply a background to driving entire trends on their own. Last year, for example, metal band Slipknot’s 2014 single “Custer” became the basis of TikTok’s “#girlypop” trend in which female users do feminine dances to the song’s booming, vulgar chorus as an ironic crossover. Though that particular song has remained in the band’s touring set list, North said sudden popularity surges in other songs could influence the artists’ performances and marketing tactics – usurping something labels have traditionally had a strong say in.
“The labels have had a lot of strategic control over music decisions. They can decide when to drop or promote something or when artists go on tour,” she said. “Now, with TikTok, there are decisions being made by influencers and the labels have to be reactive. ”
AI is also a factor in negotiations
As AI becomes a larger part of social media and internet use, Moody said UMG’s handling of AI issues with TikTok is likely to set the basis for future negotiation with other platforms.
“I think it’s more complicated by the AI stuff. I could see a scenario where they agree on the same rate they had before and move on,” Moody said, “but if TikTok is going to insist on a few things like training content or distributing AI tools, that’s going to be a harder point for Universal to cave on.”
Echoed North: “The entire entertainment industry usually waits for music to figure out how to deal with the next step of technology. It’s not surprising at all that the digital platforms are going to wait to see how things are litigated with TikTok. It’s going to be the bellwether for the intellectual property ownership and direction on social media.”