Fans of long-simmering-then-suddenly-explosive drama are waking up to a treat this morning. Plenty of salt and no little burn – although thankfully what’s being bared are teeth rather than… anything else.
Universal Music Group and TikTok have fallen out spectacularly over their licence-renewal talks, and with their existing deal expiring today, that means the major label (and its publishing arm UMPG) will cease licensing content to TikTok immediately.
It’s more than just sword-waggling in public (not another Saltburn reference) over hardball negotiations, too.
UMG published an open letter on “why we must call time out on TikTok” claiming that the latter “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”.
In its response, TikTok countered by claiming that Universal Music Group has put their own greed above the interests of their artists and songwriters” before criticising its “false narrative and rhetoric… Clearly, Universal’s self-serving actions are not in the best interests of artists, songwriters and fans.”
UMG’s open letter set out three key reasons that the companies’ talks have broken down. First, money. “TikTok proposed paying our artists and songwriters at a rate that is a fraction of the rate that similarly situated major social platforms pay,” it claimed, adding that despite TikTok’s growth it currently “accounts for only about 1% of our total revenue”.
UMG’s total revenue in the first nine months of 2023 was €7.9bn ($8.54bn at current exchange rates). 1% of that is thus $85.4m in that nine-month period. UMG’s financial results for the full-year 2023 will be published in late February.
The second bone of contention is AI, with the major label throwing some particularly hard punches on this point.
“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,” claimed UMG.
Finally, UMG criticised “the rising tide of content adjacency issues, let alone the tidal wave of hate speech, bigotry, bullying and harassment on the platform” and suggested TikTok “makes little effort” to deal with it.
This one may sting extra hard, as today TikTok’s CEO Shou Chew will be testifying at a Senate Judiciary Committee hearing in the US on ‘Big Tech and the Online Child Sexual Exploitation Crisis’. It’s not just a TikTok thing: the CEOs of Meta, X, Discord and Snap will also be appearing. But UMG calling out safety issues on the eve of the hearing is extremely unfortunate for TikTok.
So what now? TikTok has prepared for a moment like this: a dispute and catalogue removal by a major label. Early last year it tested removing certain labels’ catalogues for certain users in Australia to gather data on the impact that had on usage.
Labels were unimpressed at the time, and UMG’s open letter suggests that there may have been follow-ups to this. “How did it try to intimidate us? By selectively removing the music of certain of our developing artists, while keeping on the platform our audience-driving global stars,” it claimed.
Can TikTok cope without UMG’s catalogue? Yes? Should it want to? Absolutely not. The list of recording artists whose music will in theory become unavailable tomorrow (and also on streaming service TikTok Music) is long and lustrous. The loss of UMPG throws in an extra layer of publishing complications.
Can UMG cope without TikTok? Yes – the other 99% of its revenues will keep the business ticking along. Should it want to? Absolutely not.
TikTok said in its statement that this is a decision 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”.
UMG will bristle at that, but in its open letter it too admitted that it does not “underestimate what this will mean to our artists and their fans” – while pinning the blame firmly on “TikTok’s unwillingness to strike anything close to a market-rate deal and meaningfully address its obligations as a social platform”.
It’s in everyone’s interests to reach a deal, ultimately, but the rhetoric from both sides reveals just how far apart they are right now, and how much bad blood has already built up. UMG has drawn a firm line in the sand over its licensing expectations, and TikTok is flexing its growing muscle in response.
They better not kill the groove, right? But both seem prepared to – in the short term at least – making this the most serious dispute over music licensing (and the value of music itself) since the peak of the ‘value gap’ rows with YouTube.
You can read UMG’s full open letter here, and TikTok’s response statement here.
