Music Licensing Considerations for TikTok  – Brooklyn Sports activities & Leisure Legislation Weblog

The rising reputation of TikTok has concurrently reshaped the music {industry}. Music publishers have expressed points with TikTok’s practices referring to the platform’s inadequate compensation for artists, damaging use of synthetic intelligence, and general security dangers. In January 2024, this battle in the end induced Common Music Group (“UMG”) to discontinue its license with TikTok and take away its catalog from the app.¹[1] An Open Letter to the Artist and Songwriter Neighborhood – Why We Should Name Time Out on TikTok, UNIVERSAL MUSIC GROUP (Jan. 30, 2024), https://www.universalmusic.com/an-open-letter-to-the-artist-and-songwriter-community-why-we-must-call-time-out-on-tiktok/.. After the three-month-long licensing dispute, UMG reinstated the license on TikTok below new phrases for its artists. ^{2[2]2 Common Music Group and TikTok Announce New Licensing Settlement, UNIVERSAL MUSIC GROUP (Could 1, 2024), https://www.universalmusic.com/universal-music-group-and-tiktok-announce-new-licensing-agreement/.} Though the 2 events have come to a mutual settlement, there may be nonetheless concern as as to if TikTok will absolutely resolve these points on an industry-wide degree, particularly concerning its revenue-model. This text will describe the main points of UMG’s licensing dispute and reinstatement, the influence it has had on different music publishers, TikTok’s monetary influence on the music {industry}, and musicians’ needs to maintain their music on the social media platform.

Why UMG Ended Its License with TikTok 

On January 30, 2024, UMG launched a public assertion confirming that it might not renew its licensing settlement with the more and more influential social media platform, TikTok. ³[3]3 Common Music Group, supra observe 1.
UMG’s contract with TikTok was set to run out on January 31, 2024, and the 2 corporations couldn’t come to an settlement on three key points: (1) “applicable compensation for [its] artists,” (2) “defending human artists from the dangerous results of AI,” and (3) “on-line security for TikTok’s customers.” ⁴[4]Id.

First, UMG claims that TikTok needs to middle its platform round music with out pretty compensating musicians for his or her work.⁵[5]Id. UMG’s chief government officer (“CEO”), Lucian Grainge, proposed that TikTok implement UMG’s “Artist-Centric Mannequin,” a brand new streaming royalty plan that has been adopted by a number of massive world platforms.⁶[6]6 Thania Garcia, Common Music Chief Lucian Grainge Praises Firm’s Progress on AI, Artist-Centric Streaming Mannequin in New Yr’s Memo, VARIETY (Jan. 9, 2024), https://selection.com/2024/music/information/universal-lucian-grainge-ai-artist-centric-streaming-1235866258/. This financial mannequin was created to “correctly reward the artist-fan relationship and disincentivize fraud and gaming the system.”⁷[7]Id. Regardless of TikTok’s quickly rising person base and reliance on music-based content material, nevertheless, TikTok has not adopted this financial mannequin and continues to pay artists a “fraction of the speed” of different related social media apps.⁸[8]8 Common Music Group, supra observe 1. To place this into perspective, UMG acknowledged that TikTok accounts for 1% of the music firm’s whole income.⁹[9]Id.

Second, UMG alleges that TikTok promotes AI-generated music that interferes with UMG artists’ rights by “[diluting] the royalty pool for human artists.”¹⁰[10]Id. The truth is, the platform is experimenting with an “AI Music” program that “create[s] songs primarily based on prompts that customers enter,” which consequentially encourages its customers to make AI-generated music.¹¹[11]11 Aisha Malik, TikTok is Experimenting with a Characteristic that Makes use of AI to Create Songs Primarily based on Prompts, TECHCRUNCH (Jan. 19, 2024, 10:29 AM), https://techcrunch.com/2024/01/19/tiktok-is-experimenting-with-a-feature-that-uses-ai-to-create-songs-based-on-prompts/. Below part 115 of the Copyright Act, royalty funds are solely obtainable to a piece’s copyright homeowners.¹²[12]12 Stuart D. Levi, Shannon N. Morgan, MacKinzie M. Neal, US Copyright Workplace Steering on Royalty Eligibility of Musical Works Generated Utilizing AI, OXFORD BUS. L. BLOG (Jun. 23, 2023), https://blogs.regulation.ox.ac.uk/oblb/blog-post/2023/06/us-copyright-office-guidance-royalty-eligibility-musical-works-generated#:~:textual content=Thepercent20MLCpercent20Letterpercent20alsopercent20signals,bypercent2Dcasepercent20basispercent20andpercent20may (citing to 17 U.S.C. § 115). Since AI-generated music “lack[s] the required human authorship,” artists usually are not capable of obtain royalties.¹³[13]Id. Due to this fact, as a result of enhance in AI-generated music on TikTok, the worth of artists’ music might decline and influence the streams from artists’ royalty-eligible work.¹⁴[14]14 Navigating the Authorized Implications of AI-Generated Music & Copyright, UNCHAINED MUSIC (Jul. 14, 2023), https://www.unchainedmusic.io/blog-posts/navigating-the-legal-implications-of-ai-generated-music-copyright.

Third, UMG is anxious about TikTok customers’ general security concerning unfavourable makes use of of AI and bullying.¹⁵[15]Common Music Group, supra observe 1. Not solely does the music writer disapprove of the alleged “hate speech, bigotry, bullying and harassment” from TikTok customers, however UMG additionally believes that the platform itself was strong-arming them “into accepting a deal value lower than the earlier deal, far lower than truthful market worth and never reflective of their exponential development” by selectively eradicating songs from their growing musicians.¹⁶[16]Id.

In response, TikTok stated that it’s “unhappy and disappoint[ed] that [UMG] has put their very own greed above the pursuits of their artists and songwriters,” and believes that their platform “serves as a free promotional and discovery car for his or her expertise.”¹⁷[17]TikTok Assertion in Response to Common Music Group, TIKTOK (Jan. 30, 2024), https://newsroom.tiktok.com/en-gb/tiktok-statement-in-response-to-universal-music-group-uk.

UMG’s License Reinstated on TikTok 

Regardless of UMG and TikTok’s disagreements on the platform’s royalty compensation mannequin, musicians’ rights from AI utilization, and TikTok customers’ security, the 2 corporations introduced on Could 1, 2024, that they’ve agreed upon a “new multi-dimensional licensing settlement that can ship vital industry-leading advantages for UMG’s world household of artists,” and UMG in the end reinstated the license to its music and publishing catalog on TikTok.¹⁸[18]Common Music Group, supra observe 2. Lucian Grainge acknowledged that UMG’s new licensing settlement with TikTok “focuses on the worth of music, the primacy of human artistry, and the welfare of the inventive group.”¹⁹[19]Id. He additional defined that UMG intends on collaborating with TikTok to “additional the pursuits of [its] artists and songwriters and drive innovation in fan engagement whereas advancing social music monetization.”²⁰[20]Id.Furthermore, TikTok’s CEO, Shou Chew, acknowledged that music is an “integral a part of [its] ecosystem” and is happy that the 2 corporations got here to this settlement.²¹[21]Id. Chew emphasised the platform’s need to “drive worth, discovery, and promotion for all of UMG’s wonderful artists and songwriters, and deepen their means to develop, join, and have interaction with the TikTok group.”²²[22]Id.

As a part of this new licensing settlement, UMG and TikTok will collaborate to develop “new monetization alternatives using TikTok’s rising e-commerce capabilities and … on campaigns supporting UMG’s artists.” ²³[23]Id. Moreover, to ensure that artists to see their potential development, TikTok says they plan on “make investments[ing] vital sources into constructing artist-centric instruments,” such because the “Add to Music App” characteristic, improved analytics, and “built-in ticketing capabilities.”²⁴[24]Id. Not solely will these sources assist compensate artists and enhance their world fanbases, however they will even “strengthen on-line security protections for artists and their followers.”²⁵[25]Id. Lastly, TikTok additionally says they plan on eradicating unauthorized AI-generated music to “defend human artistry and the economics that circulation to these artists and songwriters.”²⁶[26]Id.

The Dispute’s Affect on Different Publishers’ Licenses with TikTok 

Though UMG and TikTok have revived their licensing relationship below new phrases, throughout their estrangement, the Nationwide Music Publishing Affiliation (“NMPA”), the “commerce affiliation that represents all American music publishers and their songwriting companions,” adopted UMG’s earlier resolution to discontinue licensing music to TikTok.²⁷[27]Our Mission, NAT’L MUSIC PUBLISHERS’ ASSOC., https://www.nmpa.org/mission/ (final visited Mar. 15, 2024). Based on Billboard, the NMPA notified its members that it might not renew its licensing settlement that expired on April 30, 2024.²⁸[28]Kristin Robinson, Impartial Music Publishers May Go away TikTok in Could, BILLBOARD (Mar. 6, 2024), https://www.billboard.com/enterprise/publishing/tiktok-lose-more-music-music-publishers-license-expires-1235624659/.
Whereas the three main music publishers (UMG, Sony Music Leisure (“SME”), and Warner Music Group (“WMG”)) are members of the NMPA, they don’t use the NMPA’s licensing agreements for his or her artists. Nonetheless, the NMPA licensing mannequin is utilized by many impartial music publishers whose artists will doubtless be affected by this resolution.²⁹[29]Id.

On March 8, 2024, the NMPA launched a public assertion recognizing that TikTok is closely reliant on “in style and industrial music,” and the platform “must evolve their licensing mannequin and embrace this truth and transfer ahead appreciating the songwriters and artists as equal companions in TikTok’s success.”³⁰[30]Id. For instance, whereas TikTok’s present revenue-model compensates musicians primarily based on the variety of video creations, the NMPA advocates for a swap to the music {industry}’s established “per-stream fee,” which compensates artists primarily based on the variety of video views.³¹[31]Id.

On April 30, 2024, the NMPA’s licensing take care of TikTok lapsed and has not but been renewed as of September 2024.³²[32]32 Murray Stassen, The NMPA’s TikTok Deal has Formally Ended. What Does that Imply for Impartial Publishers within the U.S.? MUSIC BUS. WORLDWIDE (Could 1, 2024). Nonetheless, the affiliation urges impartial publishers to totally consider the scenario and determine whether or not they wish to immediately negotiate a license to TikTok with out the NMPA’s involvement.³³[33]Id.

As for the opposite two main music publishers, SME and WMG, there isn’t a indication that both firm plans on discontinuing their licensing agreements with TikTok. The truth is, days after UMG pulled its catalog from TikTok, WMG’s CEO, Robert Kyncl, introduced that he stays pleased with their negotiated licensing deal from final yr, however he hopes for UMG and TikTok to come back to an settlement to reinstate the license.³⁴[34]34 Caitlin Huston, Warner Music CEO Says Their Deal With TikTok Is “Truthful,” Believes Common Deadlock Will Be Resolved, THE HOLLYWOOD REPORTER (Feb. 8, 2024), https://www.hollywoodreporter.com/enterprise/business-news/warner-music-ceo-tiktok-universal-impasse-1235819446/.

TikTok’s Low Payout within the Music Business 

Whereas TikTok doesn’t market itself as a music platform, music has remained a serious side of the app’s content material. Regardless of many TikTok movies and traits being centered round revealed songs, the social media platform doesn’t contribute a lot income to the music {industry}. Based on Music Enterprise Worldwide, TikTok pays an estimated $400 million in royalties to music rightsholders. ³⁵[35]35 Hugh McIntyre, Spotify Paid Out $9 Billion In 2023–How Does TikTok Evaluate?, FORBES (Feb. 9, 2024, 8:30 AM), https://www.forbes.com/websites/hughmcintyre/2024/02/09/spotify-paid-out-9-billion-in-2023how-does-tiktok-compare/?sh=56e2a15c405a. Whereas this appears like a excessive payout, Spotify compensated rightsholders greater than 20 occasions that quantity by paying $9 billion in music royalties in 2023.³⁶[36]Id. Moreover, Spotify is estimated to have 626 million month-to-month customers whereas TikTok is estimated to have practically twice that quantity with over 1 billion month-to-month customers.³⁷[37]About Spotify, SPOTIFY, https://newsroom.spotify.com/company-info/ (final visited Aug. 23, 2024); Brian Dean, TikTok Statistics You Must Know, Backlinko (Jul. 1, 2024), https://backlinko.com/tiktok-users. Despite the fact that TikTok just isn’t technically categorized as a music streaming platform, Spotify’s considerably bigger royalties payout, whereas having practically half the variety of customers, illustrates the inadequacy of TikTok’s direct income contribution to the music {industry}.³⁸[38]38 Forbes, supra observe 38.

TikTok’s present royalty revenue-model closely contributes to this excessive disparity. Based on the obtainable information, TikTok pays artists about $0.03 per video created utilizing their music, whereas Spotify pays artists between $0.003 and $0.005 per stream.³⁹[39] Nadav Peleg, TikTok Royalties Calculator, SOUNDCAMPAIGN, https://soundcamps.com/tiktok-royalties-calculator/ (final visited Mar. 15, 2024).; How A lot Does Spotify Pay Per Stream in 2024, DITTO MUSIC (Dec. 12, 2023), https://dittomusic.com/en/weblog/how-much-does-spotify-pay-per-stream#:~:textual content=Spotifypercent20payspercent20artistspercent20betweenpercent20percent240.003,holderspercent20andpercent2030percent25percent20topercent20Spotify. Since TikTok compensates primarily based on the variety of movies utilizing the tune, fairly than the variety of views or streams the tune receives, rightsholders are inevitably going to be paid a lot much less compared to a platform that makes use of the per-stream mannequin explicitly requested by the NMPA. Though UMG says that their new licensing settlement with TikTok will ship “improved remuneration” for artists, there isn’t a specification as to the change made or whether or not they switched to the per-stream mannequin for UMG artists.⁴⁰[40]Common Music Group, supra observe 2.

Musicians Understanding the Energy of TikTok 

Despite the fact that TikTok doesn’t immediately compensate musicians as a lot as different platforms, TikTok can nonetheless have an excessive influence on artists’ careers. Regardless of receiving low royalty funds from TikTok, a number of “rising and middle-class” UMG artists expressed concern about how the licensing discontinuation would influence their careers.⁴¹[41]41 Ari Herstand, Who’s Getting Damage within the Common Music-TikTok Standoff? Artists and Songwriters, Selection (Mar. 4, 2024, 12:26 PM), https://selection.com/2024/digital/opinion/universal-music-tiktok-battle-hurts-artists-1235929689/. For instance, Conan Grey responded to a query concerning the TikTok and UMG controversy, saying, “I imply my profession’s over for positive. I’m by no means going to have successful tune ever once more at this fee.”⁴²[42]Id. Whereas this query was answered in a joking method, it demonstrates that musicians acknowledge how highly effective of a device TikTok could be when selling their music and inspiring followers to make use of their songs in viral traits. Different UMG artists have responded extra critically and touched on how UMG’s licensing termination with TikTok impacted their psychological well being and made them really feel helpless.⁴³[43]Id.

Conclusion 

Finally, UMG’s reasoning for permitting its license to run out with TikTok demonstrates the writer’s excessive regard for artists’ truthful compensation, human authorship, and web security.⁴⁴[44] Common Music Group, supra observe 1. Nonetheless, as of now, it’s unsure whether or not the brand new monetization alternatives will assure that TikTok will pretty compensate UMG artists, particularly contemplating it doesn’t point out how TikTok is altering its financial mannequin for royalty payouts and doesn’t essentially apply to non-UMG artists.⁴⁵[45]Common Music Group, supra observe 2. The proposed artist-centric instruments will give an perception into the artist’s information and analytics, however these instruments don’t guarantee a better compensation for the artists.⁴⁶[46]Id. Moreover, it’s unknown whether or not TikTok will efficiently take away all of the AI-generated music from its platform, and if it does, additionally it is unsure whether or not this may considerably influence UMG’s security concern for TikTok customers.⁴⁷[47]Id.

Whereas UMG and TikTok got here to a consensus, UMG’s authentic considerations usually are not but absolutely resolved on an industry-wide scale, as seen by the NMPA’s continued unwillingness to resume their license. Since TikTok’s revenue-model doesn’t present artists with a excessive royalty payout, impartial music publishers should weigh the mannequin with the app’s energy to assist construct an artist’s profession to in the end decide whether or not they wish to license their music on the platform. 

Written by: Lauren Slippy

Lauren Slippy is a 2026 J.D. Candidate at Brooklyn Legislation Faculty