Photo Credit: Eyestetix Studio
On January 30 Universal Music Group announced it would not renew its global licensing deal with TikTok. The spat over UMG music now has most videos featuring UMG/UMPG music muted on the platform, but the blowback from artists hasn’t phased UMG executives.
Universal Music Group makes clear in its latest Q4 2023 earnings call that revenue earned from TikTok accounts for only 1% of the company’s total revenue. Here’s UMG’s CFO Boyd Muir confirming that data on the call. “With regard to TikTok we’ve disclosed that our former deal generated about 1% of total UMG annual revenue,” Muir says.
Taking that into account, with UMG’s full-year revenues reported at $12 billion means the TikTok deal was only worth about $120 million. Muir seems to confirm that as he admits UMG is focusing on other social platforms.
“Because other platforms in the social video category achieved much greater monetization, we’re focused on accelerating our partnerships with YouTube, Meta, Snap, and others. And we look forward to updating you in the coming weeks ahead about exciting competitive developments and incremental opportunities emerging within the category.”
CEO Sir Lucian Grainge reiterates that Universal Music doesn’t like the direction TikTok is headed with its suite of AI tools, either. “Relating to a key concern we have with TikTok, our responsible AI initiative was launched last year to place the protection of artists and the advancement of their interest at the very core of how we think about AI,” Grainge says.
“It includes things like ensuring that human artists are not economically disadvantaged, protections against deep fakes and transparency requirements for AI companies regarding how they train their models on our IP and the artists work and their creativity.”
“It is critical that as an industry we advocate for the public policies that put appropriate guardrails in place, so that the market can best deliver win-win outcomes,” Grainge says of AI regulation. “That’s exactly at the core of who and what we are. And that’s why we’re forging innovative private sector partnerships with AI tech companies.”
He also reiterates that TikTok was deriving more value from the UMG catalog than it was repaying the major label by saying ‘free doesn’t work for us.”
“Let me be clear—free doesn’t work for us. We have spent years creating a path to digital monetization in every single category,” Grainge told investors.
“The monetization is so poor that a minimal transfer into other platforms will have a better financial outcome for us. And I’m also not prepared to compromise the future of the social category, by doing something that completely undermines the economics for us and for everybody else about that.”
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