Universal Music Group Says “No More” to Low Payouts; Removes Catalog from TikTok
Universal Music Group (“UMG”) recently announced that it would require TikTok to remove any music it owns from the platform by the end of February of this year. Following years of contentious talks between the social media giant and music rights holders over the low payouts offered by the platform, UMG became the first major record company to take a hard line for change.
Following UMG’s notice, TikTok will need to remove any music in which UMG or Universal Music Publishing Group (“UMPG”) control any rights. This includes not just music recorded by UMG’s artists themselves, but also songs that sample works by UMPG songwriters. Depending on the region, this could add up to over half of the total songs used on the platform.
During the time that UMG’s music is off the platform, artists signed to UMG such as Harry Styles, SZA, and Bad Bunny cannot earn money from TikTok, nor can they promote their music on the platform. Though this presents certain short-term drawbacks, the end result could be a net-positive for all rights holders, with TikTok offering more money for its music licenses. TikTok’s relatively small payouts have historically been a major problem that recording companies have had with the platform. Other music labels, including Downtown, Hipgnosis, and Primary Wave, have announced their support for UMG.
The long-term impact of UMG’s actions have yet to be fully realized. The model contract that many members of the National Music Publishers’ Association (“NMPA”) – the trade association for indie music publishers in the United States – use with TikTok is set to expire in April of this year. NMPA members may be able to use the UMG boycott to leverage more favorable conditions for themselves during renegotiations.
Overall, the scope of the UMG/TikTok situation symbolizes a significant moment in the music industry in the age of social media. Due to the sheer volume of content to which it was able to block access, UMG has created significant leverage for itself and others to use in negotiating future licenses.
If you have questions about these developments or how this situation might impact your content, please contact our firm.
