UMG’s Grainge (l) vs. WMG’s Kyncl (r): A Tale of Two TikTok Deals
While Universal Music Group is rallying plenty of music industry support following its TikTok pullout, that love isn’t spilling into a mass pullout. Even more telling are those that aren’t even thinking about it.
Check out our recent DMN Pro Weekly report for a complete breakdown of the recent UMG-TikTok standoff and what we know about TikTok’s music deal structures. We dive deeper into what this standoff means, what led to the breakdown, TikTok’s royalty contributions to the music industry compared to other UGC platforms, and an eye-opening comparison between the revenues of UMG versus TikTok owner ByteDance.
In seemingly every corner of the music industry, Universal Music Group is getting love for sticking it to TikTok. The chutzpah is real and getting respect, and this is a riskier gambit than it appears — even for a hefty mega-label like UMG.
In the days following the pullout, supportive statements emerged from the NMPA, Downtown Music Holdings, and A2IM. That’s a healthy chunk of the music publishing and indie label community rallying to UMG’s cause. But so far, none of this is going past a supportive bro-hug..
Perhaps even more telling is who isn’t threatening a pullout: fellow major label Warner Music Group.
During WMG’s recent quarterly earnings call, CEO Robert Kyncl expressed empathy but not solidarity. It turns out that Warner Music Group is in a good place with TikTok — though they feel UMG’s pain. “Our deal was very difficult too,” Kyncl relayed in the analyst q&a session. “But we got there, and for us it was fair.”
Kyncl himself is a YouTube alum who has previously battered through similar stare-downs with powerful content owners. “I have a pretty unique experience in this obviously having been on the other side and having gone through these types of disputes where content has come down,” the tech-turned-content CEO continued.
“I know exactly what both Lucian [Grainge] and Shou [Zi Chew] are feeling, because I have gone through all of those feelings, multiple times. It is not great for either side, obviously, because I think everybody wants to consummate the deal.”
Volumes, spoken. And what about Sony Music Entertainment, the other mega-major? So far, it’s been crickets.
A percentage breakdown of the approximately $1.6 billion in global recorded music revenue attributed to UGC and ancillary licensing sources for 2022 in Goldman Sachs’ “Music in the Air” report.
But back to those who are publicly backing UMG. Why aren’t those approving statements shifting into action?
Part of this boils down to contractual realities. TikTok has many deals with many rights owners, and they don’t all expire on the same date. Some are months or years away from renewal. Simply stated: some of these IP owners may be getting the proverbial s—t sandwich, but simply can’t renegotiate right now.
But even if the stars align on a contractual renewal date, pulling an entire catalog from TikTok is risky, especially for companies lacking UMG’s weight. TikTok has a lot of leverage, particularly on the ground level with music fans and artists themselves.
For starters, plenty of musicians want to remain on TikTok, have few issues with royalty payments or AI, and would hate the label or publisher that forcibly removed their content.
That dynamic quickly became evident following UMG’s pullout. Universal Music hates their TikTok terms, that we know. But Noah Kahan, a TikTok-bred artist signed to UMG/Republic, couldn’t care less.
“So, like you, I’ve read the news about the UMG catalog being taken off TikTok,” Kahan began in a short video posted to the platform immediately after the UMG pullout. “Some of my songs aren’t gonna be on there anymore; I won’t be able to promote my music on TikTok anymore, but luckily, I’m not a TikTok artist, right?” he concludes facetiously.
Suddenly, the TikTok-to-signed-artist pathway has been strangely disrupted. If you’re an artist who’s blowing up on TikTok, do you want to sign with Republic/UMG, which will quickly remove that content?
The Universal Music-TikTok Licensing Battle Is in Full Swing — But What Do We Actually Know About TikTok’s Licensing Agreements?
But even artists who didn’t emerge from TikTok or rely on the platform have an issue, because a powerful marketing platform is suddenly unavailable. By contrast, it’s also entirely available for any non-UMG artist.
But this gets even worse: in the days following the UMG takedown, DMN uncovered some evidence that TikTok’s algorithms were responding to shift users away from muted videos. Not only were songs getting silenced, but artists signed to other labels might be getting more attention.
We can’t prove that. But TikTok had been a surprisingly sonified platform, considering it just lost up to 40% of its synched music content, according to our upper-end estimates.
Indeed, UMG’s chairman and CEO, Lucian Grainge, had to think through these issues the night before he pulled the trigger on the TikTok takedown. This wasn’t an easy call, and if the stalemate goes on too long, some artists might demand exemptions or simply walk. Given ByteDance’s relatively monstrous revenues, perhaps TikTok can afford a prolonged stare-down.
Graph: Digital Music News
Incidentally, WMG’s Kyncl also predicted that the UMG vs. TikTok battle would quickly resolve itself, like so many licensing standoffs before. But what if it doesn’t?
History says this will end soon. But if it doesn’t, both sides would suffer considerable damage. Most of the music industry would simply watch the carnage.
That hesitation could make a big difference in the UMG/TikTok standoff. Losing up to 40% of the music played on TikTok videos is a shocking blow, but this isn’t moving to a crippling level of 50%, 60%, or higher — because nobody else is joining ranks.
At least not yet.
>>> Read full article>>>
Copyright for syndicated content belongs to the linked Source : DigitalMusicNews – https://www.digitalmusicnews.com/2024/02/09/warner-music-group-tiktok-not-removing-music/