World’s largest record label threatens to pull music from TikTok
In a move that will harm its own artists, revenue stream, and promotional efforts, Universal Music Group — the world’s largest record label — has indicated it will pull all its music from TikTok, after failing to reach contractual terms on a number of key contractual issues.
In an open letter addressed to “the artist and songwriter community” titled Why We Must Call Time Out on TikTok, the company explained its core mission: “to help our artists and songwriters attain their greatest creative and commercial potential.”
With this front of mind, UMG outlined three causes of concern it is attempting to address before its contract with TikTok expires today: “appropriate compensation for our artists and songwriters, protecting human artists from the harmful effects of AI, and online safety for TikTok’s users.”
Sounds sane enough. However, as UMG relates, “when we proposed that TikTok takes similar steps as our other platform partners to try to address these issues, it responded first with indifference, and then with intimidation”.
Universal continues: “As our negotiations continued, 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. 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.
“TikTok’s tactics are obvious: use its platform power to hurt vulnerable artists and try to intimidate us into conceding to a bad deal that undervalues music and shortchanges artists and songwriters as well as their fans.”
Universal’s solution is to remove all UMG music from TikTok. Given the label controls well over 50% of all major label product, and ‘major label product’ makes up the majority of the musical soundscape available to TikTokers, this is no mere threat.
Universal points out “the challenges that TikTok’s actions will cause”, saying it does “not underestimate what this will mean to our artists and their fans who, unfortunately, will be among those subjected to the near-term consequences of TikTok’s unwillingness to strike anything close to a market-rate deal and meaningfully address its obligations as a social platform.”
Universal goes on to say it has “an overriding responsibility to our artists to fight for a new agreement under which they are appropriately compensated for their work, on a platform that respects human creativity, in an environment that is safe for all, and effectively moderated.”
It looks like its hands are tied. This seems, on the surface, like a fight worth fighting.
Muddying the ideological waters somewhat is Universal being completely okay with the current Spotify royalty rate, which sees artists compensated to the not-so-sunny tune of $0.003 – $0.005 per stream – and this is before the record label, management, distribution company, lawyers, ex-parents, and everyone else takes their slice. Why aren’t they going as hard against Spotify and they are against TikTok?
As usual, it helps to follow the money. Universal Music Group owns 3.3% of Spotify. It benefits them to undercut their artists’ royalty rates and take their cut from the other end. They earn more from taking their cut of the subscriber fees than by taking shavings from thousands of piddling royalty streams.
But TikTok is the easy target here – Universal doesn’t own a slice, so it can afford to go hard.
“We have been working to address these and related issues with our other platform partners,” the open letter claims. “For example, our Artist-Centric initiative is designed to update streaming’s remuneration model and better reward artists for the value they deliver to platforms.”
Updated remuneration would be great.
Nowhere in the letter, however, does it explain that Universal owns both the rights to these artists’ recordings, and a percentage of the largest music streaming platform in the world.
“Ultimately TikTok is trying to build a music-based business, without paying fair value for the music,” Universal writes, conveniently forgetting this is the exact business model it has relying upon for 90 years.
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Nathan Jolly is the Deputy Editor of Mumbrella. He joined the team in July, 2023.
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I enjoy hearing a record label say that they are not earning enough money while they systematically perform rectum cavity checks on all of their artists.
Enjoy the time in the light UMG, independent artists are earning more, getting discovered faster, and owning their content which in turn means they are getting paid directly from streaming services.
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