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TikTok vs Universal Music and The Music Businesses Coming of Age

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Well, it’s definitely been an interesting few weeks, looking across the ballfield of TikTok vs Universal Music. What is heartening to see is that major labels such as Universal Music seem to have finally learned from previous mistakes made initially in the 1980s.

Back then labels gave their music away for free for promotion, which proved to be the genesis of MTV, a new music video format that made hundreds of millions if not a few billion over its lifetime. Subsequently, the labels and their signed artists received nothing of measurable monetary value in return.

Moving forward to the late 90’s and early naughts, the major labels dropped their pants, bent over, and said take whatever you want for free in their negotiations with Apple iTunes. Well maybe not free but that further devalued music and started the domino effect decline of the value of an album as a concept.

Yes, we can diverge to the anarchy of pirate sites like Napster and Grokster, where once again labels missed an opportunity to attain data and leverage its value to drive better revenue opportunities. But there is a valid argument here, that labels should not have to negotiate with businesses that were illegally giving away their rights holders’ content for free.

Now, let’s not forget the labels’ history. Back in the MTV days, they gave away music videos for free, but guess what? The artists still had to pay for it! They got charged from their royalties for content they wouldn’t see a penny from. That’s like taking money straight outta the artists’ pockets to line the labels’ own.

In the naughts, we saw the rise of DIY services and digital distribution as an artist’s centric solution to fighting back against being screwed over by major labels. But let’s not forget Myspace. It’s arguable that without artists helping build its network of users, Myspace would have never grown as big as it did. Artists did get to access their fanbase without being charged, unlike the dirty ‘bake and switch’ antics of Facebook.

Let’s move onto streaming where finally labels were beginning to wake up and understand the value of their rights in the digital realm. Yet they became awfully greedy and made it almost unsustainable for the likes of Spotify who could not afford for music and its business model to be a loss leader, unlike Apple, Google, and Amazon. Interestingly, the 2020’s has become the largest revenue stream (pun intended) for labels by a large margin.

What does all the above tell us?  Whilst formats change, music fans still want access to listen to the music they like. But the real question is, what are fans even paying for? What’s the value of access to music these days? Have the labels figured out the sweet spot between making bank and keeping the fans happy? The jury’s still out on that one.

Now, finally, this year and last we see the likes of Universal Music and other labels and publishers standing up to AI juggernauts, and rightly so. There is a potential new music goldmine if labels do not drop their pants as they did in the 80’s. All current indications are that they’re finally on the right track. If anything, they are in a better negotiating position because these AI steamrollers have been using music content to train their models without the legal right to do so. Potentially, this could lead to billions as a settlement for that illegal use. Then there are the partnership opportunities for the licensed use of labels’ catalogues, which would spark a whole new array of music consumption formats and revenue streams for labels and artists.

 

This leads me to the current TikTok vs Universal Music battle. TikTok is essentially trying to utilise the 80’s free promotion model, paying little to no royalties to rights holders. Universal Music’s pulling of its catalogue is a coming-of-age event.  It states very clearly that labels have learned from past mistakes that all rights holders on all platforms need to be equitably renumerated for the use of their music. There are no more free rides on a label’s music rights.

Hey Tik Tok, your growth has demonstrably benefited from the inclusion of music, it’s essential to acknowledge the financial investment made by rights holders in creating that content. Equitable compensation for the use of licensed music remains a cornerstone of a sustainable and mutually beneficial ecosystem for both platforms and rights holders. Moving forward, transparent and fair licensing agreements will play a vital role in ensuring all parties involved are appropriately recognized and rewarded for their contributions. If anything, TikTok’s platform will lose value to its user base without Universal Music’s catalogue.

There is a clear co-dependency here, but the labels have the upper hand, and rightly so. On a final, note hopefully, Universal Music’s stand on this issue will encourage the other major labels to grow some cajones and stand up to TikTok, resulting in a new music paradigm: no more free use of music.

Author

  • Jakomi Mathews

    Jakomi was the original founder of The Music Void in 2007. His first startup was www.akamedia.net. Where back in 2001 we were able to track audio and audio visual broadcasts. We targeted the music industry performing rights societies as customer but ironically it was the radio broadcast who used our service to prove ads were broadcast to their advertising clients - yet the ironically PRO's started using the service from 2015 when they were dragged kicking and screaming into the 2nd decade of the 21st century. He has deep insights into the inner workings of the music business and digital music generally from working with RWD Magazine and then Rock Sound in the UK during the early 2000's. He was then involved in building some of the first artist mobile apps both before and just after the release of the first iPhone. He also worked with Muse's management for a short time and has managed an assortment of artists from Australia and the UK. He now has a new startup called goto.health which is focused on disrupting the healthcare booking sector on a global basis.

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