Songs from the world’s most popular artists, such as Taylor Swift, Harry Styles and Drake, have begun to go silent on TikTok in recent weeks.
The reason? A licensing deal between major music label Universal Music Group and TikTok went awry last month.
Nearly a month later, the two companies, crucial to the entertainment industry at large, continue to be at a standoff. And on Wednesday, TikTok said it would begin pulling music from its platform as the two failed to reach an agreement on payments, artificial intelligence and more.
“Their actions not only impact the songwriters and artists they represent, but now also impact many artists and songwriters not signed to Universal,” TikTok said in a statement, adding that it is still trying to strike a “deal fair” with UMG.
But UMG, on the other hand, has not accepted these efforts as it does not consider TikTok’s offer convincing enough, sources told the Financial Times.
To put the scope of this problem into context: UMG controls a third of the world’s music, with just 1% of its revenue coming from Chinese-owned TikTok (as UMG CEO Lucian Grainge said yesterday, the social media app media was not a “material part” in global music promotion). The short video snippet app has more than 1 billion users globally, with about 20-30% of the top music on its platform coming from UMG and its publishing arm (though analysts estimate double that number ).
But this only applies to some of the biggest artists: TikTok is also a key marketing and promotional tool for creators who rely on the platform to give them visibility on social media. The promise it offers to artists, large and small, is immense, as the app has catapulted singers and songs to viral fame in the past: think Olivia Rodrigo Driver’s license.
The standoff could lead to better compensation for artists in the long term, through a richer licensing deal, which UMG-backed singer Kim Petras says could be worth the current challenge.
“Of course, right now, all of us artists at Universal are facing challenges, but we have to face one for the team,” Petras said the Wall Street Journal. “The intentions behind this initiative are noble and aim to ensure that musicians are fairly compensated for their art. This extends not only to the chart-topping artists, but also to the songwriters and people who work tirelessly behind the scenes.”
A war of words over music
In 2021, UMG and TikTok signed a licensing deal that gave the label no share of the social media platform’s revenue, partly because its advertising business hadn’t yet taken off at the time. But TikTok has since started earning around $20 billion in annual ad revenue, Fortunewrote David Meyer last month. The pandemic-era deal expired at the end of January, after which the companies were unable to reach a new deal.
So, that day, UMG wrote an open letter stating that TikTok’s success depended on the success of music made by artists and songwriters, who were not paid fairly. The music group also highlighted other concerns such as the lack of protection for artists against AI-generated tracks.
“TikTok attempted to force us into accepting a deal that was worth less than the previous one, much less than fair market value and did not reflect their exponential growth,” UMG said at the time.
In response, TikTok wrote a fiery response accusing UMG of putting “its own opinion above the interests of its artists and songwriters” and promoting false rhetoric.
Even though the UMG-TikTok issue has only been around for about a month, the larger debate about music, royalties and fair value has been part of the entertainment industry for a long time. For example, when Spotify debuted a subscription model for music, it changed the dynamics in the music industry. If anything, the conflict between the two giants shows how short video formats, where users can extract parts of an audio and turn them into their own snippet, continue to operate in murky waters.
“We are friendly people… my phone is unfortunately open 24 hours a day and we hope we can find solutions,” UMG CEO Grainge said during the company’s earnings call on Wednesday. “We trade and deal with platforms that together are worth trillions, and we have been able, with all of them, to create win-win solutions.”
It’s unclear how long the battle between UMG and TikTok will continue, leaving the remnants of silent videos behind. But in the meantime, it’s the artists and creators who stand to lose the most from a limited TikTok.
TikTok pointed out Fortune to his public statement on Wednesday when contacted for comment. UMG did not return immediately Fortunerequest for comment.