YouTube has been the main target of artists, songwriters, labels and publishers for a long time over the small royalties it pays as compared to other streaming music services. But what if you discovered that TikTok payouts were even worse, and I mean way worse, than YouTube? That is indeed the case, according to an article on Music Business Worldwide.
It’s 3 Times As Bad
Last year TikTok’s revenue was around $4 billion globally, yet it only paid the music industry $179 million. That amounts to 4.5% of total revenue.
YouTube, on the other hand, generated almost $28.9 billion during that period. It paid the music industry around $4 billion, which comes out to almost 14% of its revenue.
That means that if all things were equal, YouTube pays artists and songwriters almost 3 times more than TikTok!
Now if you get into the weeds of the data you can find things like YouTube only included advertising revenue and not subscriptions, and the TikTok number didn’t include fees to songwriters, but none of that changes the conclusion that the music industry is not getting its fair share from TikTok.
An Example That Hurts To Read
Case in point, Kate Bush’s massive re-hit, “Running Up That Hill.” The song is being used on 2.4 million videos and has been played more than 5 billion times on TikTok. According to MBW, “Due to there being no revenue share / royalty-based agreement between her distributor (Warner Music Group) and TikTok, Kate Bush is not getting paid for any of those plays.“
There’s the spillover effect to Spotify, which is well documented and is what artists hope for, but in this case the song was boosted by its exposure on Netflix and not on TikTok, as so many current viral hits are.
More Doesn’t Mean More
Now the scary part is that TikTok is expected to triple its revenue for 2022 to $12 billion. Doesn’t that mean that artists and songwriters will be paid more as a result? Not necessarily.
That’s because TikTok doesn’t pay out a share of advertising based on plays like all other streaming services. What happens is “it licenses music from major record companies via individual “blind check” payments, each of which covers a certain period of grace. In these grace periods, TikTok (and its users) can incorporate copyrighted music as much as they please.”
What that means is that the major labels got snookered. It doesn’t happen often, but it did here, and it means that everyone in the music business will continue sub-standard TikTok payouts as a result.
Whoever thought that YouTube payments would start looking pretty good?