Universal Music Group’s Post

Sorry, but the debate must go on. By far - many artists have made their way through TikTok and distributing music direct-to-fans. Also, TikTok isn’t a music streaming platform - it is used for music marketing. This don’t entitle them to pay as much as music streaming platforms. As a label - you job is to not negotiate with TikTok but also work with them to find a sweet spot to market your music effectively with TikTok. TikTok is by-far one of the most innovative companies that has disrupted the monopoly economy within social media and content space. Within #music they have not only provided enough space for new artists but also showed a direction to the entire music industry outside their brains filled with Spotify and streaming music. Calling out on TikTok when you feel threatened and sitting idle doing nothing to solve problems for the artists; just finding a way to live on their paycheck on the deal you signed 20 years back doesn’t give you any rights to stop the development within the music space - this goes with all the labels who try to gatekeep music rather than make an open space for development.

I see this as a valid point by Universal if the playing field isn't fully level in on the platform that you want everyone of your artists to have and then can't fulfill on having that basic platform for every artist you failed the creators of the content that you are bringing to the platform. This makes sense of the full pull back that Universal is doing so that other labels follow the lead to get Tik Tok to have the playing field fair for everyone wither you are creating off the platform bringing it in via music or creating it in app.

A few datapoints on this debate: 🎤 For every million hours of music content consumed on the platform, TikTok pays music rights owners around $800. On the same basis, YouTube pays over $9,000. It’s not an apples-to-apples comparison, but TikTok’s current payment looks crazy low, with YouTube paying >11x their number. 🎤 If you look at consumer surveys of TikTok users, roughly 70% of consumption on the platform includes music. TikTok generated $30bn of ad revenue last year, driven by this consumption, yet only paid around $250m to music rights owners. Again, crazy low and makes it look entirely sensible for UMG to say “hang on, you need to pay our artists more for their content”. 🎤 It’s worth remembering that UMG and TikTok are negotiating about two things: 1) a bigger payment for the free app; and 2) a global licence for TikTok’s Spotify-like subscription service, TikTok Music. This is currently available in Brazil and Indonesia but TikTok wants to roll it out globally. 🎤 TikTok Music (the subscription service) is great for both sides: ➡️ For TikTok, for every user of the free app in developed markets that converts to the paid subscription service, $10 pa of gross profit from advertising turns into $36 pa of gross profit from subscription revenue. ➡️ For UMG, a new subscription service creates some incremental revenue but — more importantly — creates another competitor to Spotify, Apple, Amazon and YouTube. With competition comes greater long term pricing power for music content. 🎤 So over the last year during the negotiations, UMG has had a carrot (a global licence for TikTok Music) to dangle while it prods with a stick (pay more for the free app or we “go dark”). 🎤 The next few weeks will be crucial in determining how this will play out — and will be driven by TikTok users. If engagement drops materially because one third of the most popular music in the world is not available, UMG will have the upper hand. But if it turns out that UMG artists are substitutable by independent and other major label artists, TikTok may be able to come out on top. 🎤 The bottom line? It’s in both sides’ interest to come to an agreement here. And once that happens, people will start to focus on the upside to long term music industry revenues from TikTok: ➡️ Assuming payments per unit of engagement for the free TikTok app converge with YouTube, the payment to the music industry could reach at least $2bn pa. in 10 years. ➡️ Assuming 10% conversion of TikTok free users to TikTok’s paid subscription service; global ARPU in-line with Spotify today; and a 70% payout to music rights owners, the payment to the music industry for the paid subscription service could reach close to $6bn pa. ➡️ So, in total, TikTok’s $250m pa current payment could go to $8bn pa. in 10 years. That’s what UMG is really playing for here.

Interesting read. As an independent artist, I built my following, and fan base on tiktok. It really is a platform unlike any other in that it is an “entertainment” app instead of a “social” app, and it is outreach driven. It is currently the only outreach driven platform available for liberating that pushes your livestreams out to new crowds. Everywhere else you can stream from only pushes it to your followers and fans and you rely on them to share it with their friends. That being said, I can’t see musicians/songwriters being able to build such an organic fss as based on a music specific app like it appears Universal has come up with. Musicians supporting musicians is not a fan base. If we step back from tiktok, where do we reach our potential fans? I feel their argument is weak. When people go to tiktok they are there for entertainment. Whether it’s humor, diy, viral videos, or music, they are there for it. A music specific app can’t replace that.

The decision that everyone in the music world has been talking about... Is this a smart step or is it ultimately going to hurt their smaller artists more than anything? It’s no surprise that TikTok has become a big platform for music discovery and growth opportunity for artists. However, we know the streaming age has dramatically changed the way revenue is generated for artists and not in a necessarily positive way. Universal Music Group’s decision will not impact any of their global artists but what about those that rely on these platforms to build a following? There are certainly pros and cons to both sides but isn’t it better long term? What do you think? #musicbusiness #universalmusicgroup #socialemediamarketing

Ode to Originality and Fair Compensation in Music I recently came across Universal Music Group's (UMG) bold and necessary stance articulated in their open letter regarding TikTok. UMG has decided to renew its licensing agreement with TikTok once it ensures that artists and songwriters are appropriately compensated for their work. This move resonates deeply with me and is a critical wake-up call for our industry. Music is an art form that thrives on creativity, dedication, and respect for the creators. While offering unprecedented opportunities for exposure, the digital age has also presented significant challenges in how music is consumed and valued. The advent of AI-generated remixes on platforms like TikTok has been a double-edged sword. While these remixes can drive attention to the original tracks, they often overshadow the hard work and creativity of artists, their teams, and record labels. It's demoralizing to see an AI-generated version of a song become more popular than the piece crafted by the original artist, diluting the essence of their creativity and effort. UMG's stance is not just about a contract renewal; it's a statement on behalf of artists everywhere about the value of their work and the need for fair compensation. The music we love, the tracks that become the soundtrack of our lives resulting from countless hours of labor, passion, and investment. As we advance into the era of AI and digital platforms, we must keep sight of the human element at the heart of music. Every stream, share, and remix should contribute to a song's popularity and the livelihood of those who brought it to life. By supporting UMG's decision, I support a future where artists are rewarded for their creativity, music retains value, and the industry evolves to ensure fairness and respect for the craft. Let's champion a model that uplifts creators, honors their contributions, and paves the way for sustainable artistic expression in the digital age. To my fellow musicians, industry professionals, and music lovers, let's reflect on the impact of our choices and advocate for a world where music thrives, not just in popularity but in the respect and compensation it commands. #musicindustry #universalmusicgroup #tiktok #musicbusiness #musicnews

Interesting perspective on this one.

Shots. Fired.  (1 of 2) Contract negotiations 2024-style, what a time to be alive!! LOL. Universal Music Group (UMG) yesterday released the attached "Open Letter to the Artist and Songwriter Community. Why we must call time out on TikTok". The timing, not coincidental. "𝘛𝘩𝘦 𝘵𝘦𝘳𝘮𝘴 𝘰𝘧 𝘰𝘶𝘳 𝘳𝘦𝘭𝘢𝘵𝘪𝘰𝘯𝘴𝘩𝘪𝘱 𝘸𝘪𝘵𝘩 𝘛𝘪𝘬𝘛𝘰𝘬 𝘢𝘳𝘦 𝘴𝘦𝘵 𝘣𝘺 𝘤𝘰𝘯𝘵𝘳𝘢𝘤𝘵, 𝘸𝘩𝘪𝘤𝘩 𝘦𝘹𝘱𝘪𝘳𝘦𝘴 𝙅𝙖𝙣𝙪𝙖𝙧𝙮 𝟯𝟭, 𝟮𝟬𝟮𝟰" So, basically, the day before the contract expired/expires. The letter claims, that as part of the "contract renewal discussions" UMG have been "pressing" TikTok on 3 critical issues: 1. appropriate compensation for our artists and songwriters, 2. protecting human artists from the harmful effects of AI, and 3. online safety for TikTok’s users UMG says that in response: (1) With respect to the issue of artist and songwriter compensation, TikTok proposed paying our artists and songwriters at a rate that is a fraction of the rate that similarly situated major social platforms pay.  Today, as an indication of how little TikTok compensates artists and songwriters, despite its massive and growing user base, rapidly rising advertising revenue and increasing reliance on music-based content, TikTok accounts for only about 1% of our total revenue. (2) On AI, 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. (3) Further, TikTok makes little effort to deal with the vast amounts of content on its platform that infringe our artists’ music and it has offered no meaningful solutions to the rising tide of content adjacency issues, let alone the tidal wave of hate speech, bigotry, bullying and harassment on the platform. The only means available to seek the removal of infringing or problematic content (such as pornographic deepfakes of artists) is through the monumentally cumbersome and inefficient process which equates to the digital equivalent of “Whack-a-Mole.” But worse still: • 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. SO MANY QUESTIONS!! See part 2 of this post!

Rock not tiktok. There was a time when rock was bigger than Hollywood and pro sports. Not coincidentally, consumers had a choice of formats: Vinyl, cassette, 8 track, & reel to reel. More importantly, they had a choice of great music and record sales exploded (real record sales). It all started to wane 20 years ago. The music industry needs to "call time out" (banal corporate speak) on bubblegum as well. And maybe coerce MTV to start showing videos again. If streaming is the future, the music industry has no future. Because the current "business" model of hoping to make money on the back end with overpriced concert tickets is idiotic. https://lnkd.in/djfbndxQ

If you “go public” do you have to go fully public? (2 of 2) In my view, if you take your contract negotiations public like this, you have to be willing to go FULLY public. What the open letter doesn’t say is as important as what it does, and I think the royal “we” (maybe TikTok, and certainly the Artist and Songwriter Community to which the letter is addressed) are entitled to ask (and get answers to , publicly) at least the following questions: 1. Let us see the current contract that expires today so we know what you ‘settled for’ / ‘achieved for your artist and songwriter community’ the last time; 2. Share the current working draft contract and your latest mark-up that contains what you consider fair; 3. Tell us what compensation model you have proposed ask for as part of the contract renewal? 4. What % of your total revenue do the other social platforms account for? 5. What % of your total revenue does spotify and other streaming platforms account for 6. How is the other 99% of total revenue generated? 7. What music from developing artists was removed? 8. When the dust settles and the money is sorted, confirm that you’ll share what was agreed regarding AI and harmful content to allay any fears that this is really all just about money Now OF COURSE UMG would not, will not and should not do any of that. I’m just saying, it’s arguably a bit hypocritical to bring part (that makes the other side look bad) of the contractual negotiations public, but then (presumably)want to keep the rest private. It’s quite extraordinary for one company to openly accuse another of bullying tactics in contract negotiations the day before a contract expires and as contract negotiations have (clearly) stalled. It’s something I think I’m going to incorporate into my arsenal of legal weapons, when people won’t agree to my contractual demands and positions. Consider yourselves warned counterparties. Who said law is boring! Not if you are on the contracting teams for UMG and TikTok it’s not. Also, I’m sure the line “Our core mission is simple: to help our artists and songwriters attain their greatest creative and commercial potential” will rankle with any artists that have ever clashed with their UMG-affiliated labels. Thoughts??