2024-02-05 10:09:10
In the end, it’s a question of who is more powerful. The Chinese video platform TikTok, which has become one of the most important distribution channels for current music in recent years and has a significant influence on the charts, even if the songs are not played in full length. Or the Dutch-American one Universal Music Group, one of the largest music and entertainment labels in the world, signing stars such as Taylor Swift, Billie Eilish, Dua Lipa and Eminem; the complete list would be very long.
Universal now has in an open letter – the communication medium of choice when things get fundamental and therefore complicated – declared that it would withdraw its music catalog from TikTok and order the artists a “time out” in their interests (This does not seem to have been completed yet). Universal believes it is being more or less ripped off by TikTok. Because it is the case that platforms such as YouTube, Spotify and others on which copyrighted music can be played have to pay license fees for the use of the songs. After all, the platforms make a lot of money from advertising.
A corresponding contract between the two companies expired on January 31st. Universal has now announced that TikTok’s new offer does not represent “fair value” for the music. The offer was only “a fraction” of what other major platforms pay for music licenses, the statement said. TikTok points out that it is not a music streaming provider at all. Which probably means that the comparison standards don’t fit.
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Universal, for its part, cites as evidence that sales via income from TikTok (i.e. via license payments) are around one percent of total sales – which most recently amounted to 8.5 billion euros. On the one hand, this probably means that TikTok pays too little to the label, musicians and creators given the importance of the video platform. On the other hand, it also means that Universal can afford to forego these millions, at least temporarily, in order to negotiate a better contract. The question arises whether the artists also see it that way.
This is the card TikTok is playing – when asked, the company said that Universal Music Group “puts its own greed above the interests of artists and songwriters”. This is “unfortunate and disappointing”. The music label decided “to forego supporting a platform with well over a billion users that serves to promote and discover their talents for free.” The decision is therefore not in the interests of the artists they represent.
TikTok is now the engine behind the success of new music
What is opening up here is the chasm between the interests of a major entertainment industry corporation that represents the rights of artists and creators. And the interests of a digital platform that relies on content – but at the same time has built up such a large global reach that it is much more than a mundane distribution channel. But a gigantic entertainment machine that is able to make stars through its algorithms – and also has a direct relationship with the fans who not only consume but also post videos themselves and thus generate an endless stream of music.
On the surface it’s about money, but beyond that it’s about the future of the entertainment industry itself. This dispute also points to this – TikTok lets Universal know that although the music label sends talent into the race, the actual discovery of this talent is only possible via TikTok.
Just as radio shows and television shows used to make stars out of talent, today TikTok in particular is the engine for the success of new music. Songs are used hundreds and thousands of times by users who dance or sing to the music in their own videos. These videos must now also be muted for the time being.
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What is to be pursued is an arm wrestling match for a new market price. Because, contrary to what TikTok says, it is not really a “free” promotion of songs. This can be seen as analogous to the claim of search engines, which repeatedly emphasize that the search results bring attention to newspaper articles that would otherwise have been ignored.
While this is true, releasing copyrighted content to digital platforms also comes at a price that is difficult to determine. It is difficult to calculate what a publisher or music label can earn from this additional attention.
That is why it is difficult to find a price that is perceived as “fair” by both sides. It could be that many young music fans are content with watching short music videos. Sure, they might try to get tickets to Taylor Swift’s next concert, in which case being on TikTok will do some monetization. Or they listen to Swift songs excessively via streaming services that offer complete songs – which are then paid for.
Flood of AI songs
However, it is unlikely that fans will buy classic recordings. In this respect, Universal, like every other label, must try to get as much out of digital exploitation chains as possible. And TikTok must try to keep the price as low as possible, always with reference to the “free” promotion. The interests fundamentally complement each other, but the financial expectations obviously differ widely.
An important side aspect is also mentioned in Universal’s letter – that TikTok is not doing anything to prevent the platform from being “flooded” with music generated by artificial intelligence. The share of this music dilutes the amount of money that is available for licensing payments to authors. Universal goes so far as to claim that TikTok is working to replace real artists with AI. Of course, it depends on whether the users themselves accept AI-generated music in order to be entertained by it (i.e. outside of elevators, department stores and dentist’s offices).
But this reference actually opens the door to the next big debate about the future of entertainment. TikTok and Universal will ultimately come to an agreement on this matter, that is very likely. There will be nothing concrete about the conditions; both sides will assure each other that they have acted responsibly towards artists and authors. But this will only be a temporary solution until the next contract expires.
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