Universal Music Group, the world's largest music company, has declared its intention to cease licensing content to TikTok if a new contract is not reached by the expiration of the current agreement on Wednesday.
Universal accuses TikTok of high prices
In an open letter to the artist and songwriter community, Universal emphasized its concerns regarding TikTok's proposed payment rates, which it claims are significantly lower than those offered by major social platforms. The current contract, which includes renowned artists such as Taylor Swift and Drake, is set to expire, and Universal has expressed dissatisfaction with TikTok's proposed deal, alleging it to be less favorable than the previous one.
Universal represents a plethora of music stars, spanning from established names like Swift, Drake, Olivia Rodrigo, the Weeknd, and Eminem to emerging artists. The music giant accused TikTok of attempting to strong-arm them by selectively removing the music of some emerging artists while retaining that of more prominent figures on the platform. In response, a TikTok spokeswoman disputed Universal's narrative, asserting that the music company has opted to withdraw from a platform with over a billion users, serving as a valuable promotional tool for talent.
While TikTok has become a significant force in the music industry, facilitating music discovery and virality, the revenue contribution directly from TikTok has been relatively modest, accounting for about 1% of Universal's revenue, according to the music company. Universal contends that TikTok is seeking to build a music-based business without adequately compensating for the value of the music it utilizes.'
‘False narrative and rhetoric’ by Universal, claims TikTok
{{/usCountry}}While TikTok has become a significant force in the music industry, facilitating music discovery and virality, the revenue contribution directly from TikTok has been relatively modest, accounting for about 1% of Universal's revenue, according to the music company. Universal contends that TikTok is seeking to build a music-based business without adequately compensating for the value of the music it utilizes.'
‘False narrative and rhetoric’ by Universal, claims TikTok
{{/usCountry}}“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,” a TikTok spokeswoman said in a statement. The company said Universal’s actions are not in the best interest of artists, songwriters and fans.
If a new contract is not agreed upon, TikTok would be required to remove billions of videos containing music from Universal's catalog, encompassing both recorded music and publishing. Universal highlighted three key issues in its letter: fair compensation for artists and songwriters, protecting artists from the negative impacts of artificial intelligence, and ensuring online safety for TikTok users. The music industry views securing lucrative licensing deals with platforms like TikTok as crucial for sustained growth, especially as streaming revenue growth begins to plateau, and licensing opportunities across various digital platforms become increasingly important.