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News January 31, 2024

Universal Shuts Out TikTok, Claims ‘Bully’ Tactics Used In Negotiations

Senior Journalist, B2B
Universal Shuts Out TikTok, Claims ‘Bully’ Tactics Used In Negotiations

Universal Music Group won’t be licensing content to TikTok after negotiations reportedly turned ugly and hit a wall.

When the existing agreement expires today, Jan. 31, content from UMG, including Universal Music Publishing Group, will no longer be available to TikTok or TikTok Music, its premium-only music streaming service, that rolled out last year in Australia, Singapore and Mexico.

It’s a whammy for users of the short-video app, which will be stripped of legitimate content from the world’s biggest music major.

The blame lays squarely on the shoulders of TikTok and its licensing team. That’s according to UMG, which issued a carefully-worded statement to explain its stance.

UMG stops just short of describing TikTok’s offer as insultory, claims that the platform does little to maintain hygiene on its networks, and its negotiators used “bully” tactics and “intimidation.”

“Ultimately,” reads a statement from UMG, “TikTok is trying to build a music-based business, without paying fair value for the music.”

On 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,” UMG reps argue.

To underscore 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,” the message continues, “TikTok accounts for only about 1% of our total revenue.”

But when the music giant “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 Music Michael Taylor

With regards to AI, an issue UMG has addressed as a priority in the past year, TikTok “is allowing the platform to be flooded with AI-generated recordings,” the music company claims, and “TikTok makes little effort to deal with the vast amounts” of bogus content on its networks.

UMG then throws a haymaker, by accusing its tech partner of standover behaviour.

“As our negotiations continued,” the message continues, “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,” reads the message.

Soon after, TikTok issued its own statement. “It is sad and disappointing that Universal Music Group has put their own greed above the interests of their artists and songwriters,” reads the message, seen by The Music Network. 

“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.  TikTok has been able to reach ‘artist-first’ agreements with every other label and publisher. Clearly, Universal’s self-serving actions are not in the best interests of artists, songwriters and fans.”

ByteDance-owned TikTok has long had a frosty relationship with the music industry, though the latest accusations, particularly coming from UMG, the global superpower of music, are unprecedented.

It’s difficult to see how both sides return to the table.

When the video and music streaming app last year revealed it was running a “test which would limit and remove access to music to to some users in Australia, ARIA stepped in.

The labels trade body, which counts Universal Music among its members, had demanded the brand immediately restore access to all music, for all Australians.

“After exploiting artists’ content and relationships with fans to build the platform,” ARIA CEO Annabelle Herd said at the time, “TikTok now seeks to rationalize cutting artists’ compensation by staging a ‘test’ of music’s role in content discovery.”

Leaning on data captured by research firm Data.ai, Bloomberg reported the number of TikTok users in Australia declined for three consecutive weeks after the test was initiated, and the “stickiness” – the amount of time spent on the app – also diminished.

British MP Damian Collins MP added his voice to the chorus of criticism, with an op-ed in the U.K. daily The Telegraph in which he fired away at TikTok and warned of its “iron grip” on the global creator community.

The TikTok app is never far from the fingertips of Gen Z in Australia, and is already a more popular social platform than X (formerly Twitter) among all Internet users in these parts, according to data published in the Digital 2022 Australia report.

Read the full UMG statement here

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