The major record labels have been grousing about the meager royalties that TikTok pays for some time, but now Universal Music has decided to do something about it. The label is pulling its entire catalog from the service after the two companies couldn’t reach an agreement that ended in January. TikTok decided not only to stand pat on some critical issues, but actually push for new parts of an agreement that Universal couldn’t accept.
According to a statement by Universal, it was pressing TikTok in 3 major areas – “appropriate compensation for our artists and songwriters, protecting human artists from the harmful effects of AI, and online safety for TikTok’s users.”
How TikTok Pays Royalties
TikTok currently pays even less than YouTube to artists and labels. The biggest issue here is that you don’t get paid on the number of streams as with all other streaming services – you get paid on the number of videos that use your music! That means that your official TikTok video could get a million plays, but a song that was used on a 1,000 videos that might only have a total of 10,000 streams from all of them will receive a higher royalty.
That’s bad enough, but the biggest sticking point to a new agreement is the use of Ai on the platform. TikTok is beginning to implement a new Ai music generation tool that could decrease the need for popular music in videos. Universal’s statement said that the streaming service, “demanded a contractual right which would allow [AI] content to massively dilute the royalty pool for human artists” while “developing tools to enable, promote and encourage AI music creation on the platform itself.” UMG states this is “nothing short of sponsoring artist replacement by AI.”
The company also felt that TikTok was playing hardball during negotiations by only pushing major Universal artists like Taylor Swift, BTS, Drake, Ariana Grande, The Weeknd, Lady Gaga, Lana Del Rey, Billie Eilish, Eminem, Nicki Minaj, Justin Bieber, Karol G and Post Malone, while ignoring smaller artists on the label.
Considering how popular TikTok is and the amount of video that’s consumed on the platform, Universal Music stated that the income from the service was only about 1% of its bottom line total, which was far less than any other streaming service.
Record labels are often seen as faceless and greedy entities that care more about the bottom line than their artists, a view that’s not altogether untrue. In this case, the label is clearly looking out for itself, but it may be one of the few times when its artists would benefit from a new improved agreement as well.