Universal artists include Olivia Rodrigo, The Weeknd and Taylor Swift (Image: Tina Tiller)
Universal artists include Olivia Rodrigo, The Weeknd and Taylor Swift (Image: Tina Tiller)

Pop CultureFebruary 3, 2024

What you need to know about the standoff between Universal Music and TikTok

Universal artists include Olivia Rodrigo, The Weeknd and Taylor Swift (Image: Tina Tiller)
Universal artists include Olivia Rodrigo, The Weeknd and Taylor Swift (Image: Tina Tiller)

The world’s biggest music label has pulled its music from the world’s most powerful social platform. It’s the most consequential story yet in culture’s battle with big tech.

The announcement came out of the blue on Wednesday. Universal Music Group, the world’s biggest label, with everyone from Taylor Swift to Drake to the Beatles on its books, released what it called  “an open letter to the artist and songwriter community”. The very next phrase? “Why we must call time out on TikTok.” It went on to detail a breakdown in negotiations with the Chinese-owned social media giant, claiming that TikTok was attempting to bully Universal into accepting a deal which would leave its artists worse off.

The current deal expired at midnight on January 31. From that moment on, all music distributed by Universal disappeared from the platform. Every artist’s page went silent, and any pre-existing content now plays noiselessly. The stakes of this showdown are enormous – TikTok is widely considered the most powerful cultural distribution platform in the world right now, while Universal’s artists, from Swift on down, make some of the most loved and impactful pop culture.

The past few years have seen a multi-front pushback against big tech, with many who create content, from news to film to music, viewing the platforms as having too much power and offering opaque and ever-shifting terms of engagement with comparatively tiny compensation. Universal vs TikTok represents the most high-profile and consequential front yet in this battle, which pits the monoliths of distribution against millions of creators over who creates the value, and how they should be paid.

What’s the basis of Universal’s claim?

You can read the full text of Universal’s letter here, but it boils down to the role of music on TikTok, and how musicians and labels that create such content should be compensated when it’s used. The letter notes that “our analysis confirms that the majority of content on TikTok contains music, more than any other major social platform”. Yet it goes on to suggest that “despite its massive and growing user base, rapidly rising advertising revenue and increasing reliance on music-based content, TikTok accounts for only about 1% of our total revenue”.

Taylor Swift (Photo by Scott Legato/TAS23/Getty Images for TAS Rights Management)

This is backed up by a Goldman Sachs report issued in 2023 which estimated that niche exercise tech company Peloton paid out more to the music industry (US$267m) than TikTok (US$220m) in 2022. Essentially, Universal says that TikTok is unimaginable without music, yet the platform contributes only a tiny proportion of its ballooning revenues to those who create the pop culture that powers it. The letter goes on to detail issues with harmful use of generative AI (which has seen a rash of songs trained on Universal’s artists go viral on the platform) as well as safety for TikTok’s users.

Yet while the latter two issues are no doubt genuine, the biggest thing at stake is the money.

How has TikTok responded?

Within hours of Universal’s letter being released, TikTok put out a statement of its own, one notable for the strength of its language. It opened by saying that it was “sad and disappointing that Universal Music Group has put their own greed above the interests of their artists and songwriters”. It goes on to characterise its platform as a “free promotional and discovery vehicle for their talent”, and point out that it has reached fresh agreements with all the other major labels and groups.

In an interview with Wired magazine, conducted before the standoff but released after, TikTok’s Singaporean CEO Shou Zi Chew delved into his platform’s relationship with music. “I think the net positive that we bring to the industry, of course, is this lowering of the barrier of discoverability… if you look at the music industry as a result of TikTok, I think it’s thriving more than ever.” When challenged about the gulf in revenue between TikTok and artists, he replied that “we are always thinking about providing more tools for musicians and other creators and users to be able to connect with their base.”

Basically, it’s saying that TikTok is akin to radio, which in many countries is considered purely a promotional tool, with little to no money changing hands. What Universal is saying is that music is such a huge part of TikTok’s value to creators and advertisers that artists and labels should be compensated far more for that usage.

What are the stakes?

Losing access to Universal’s music is bad enough, but informed conjecture suggests that this could escalate from recording to the publishing level. The difference is that publishing is about the writers of songs, as opposed to just specific performances. Because many hit songs are collaborations between a number of different writers, the presence of a single artist from Universal’s publishing could lead to the song becoming ineligible to be played on TikTok. Music Business Worldwide, an industry trade news site, suggested this could impact as much as 80% of songs used by TikTok creators – an enormous number which could force a fundamental change to TikTok’s relationship with music.

The backdrop to this turmoil is a growing global movement, driven by content creators, businesses in culture, and governments, that essentially asks whether the tech platforms have undue power. And that they are using that power to drive one-sided deals in their favour – if they make deals at all – with those who create the content which brings people to their platforms.

You can see it in the recent call from New Zealand screen industry group SPADA for global streaming platforms to commission more local productions – a rallying cry linked to similar demands in many other countries. It’s there in the tense battle of wills between the Canadian government and the big tech platforms over news – one which is also replicated in New Zealand, through the news bargaining bill headed for select committee here. 

It’s also evident in the complaints of risible income generated by TikTok’s creator fund, a revenue sharing scheme it killed off in late 2023 after sustained criticism. The EU has a raft of legislation addressing these issues, while India has simply banned TikTok due to the myriad challenges it presents – something Donald Trump, the likely Republican nominee for US president, has mulled on multiple occasions.

Where is all this headed?

What it all comes down to is that streaming and user-generated social media platforms have replaced legacy content distribution mediums like radio, television, CD/DVD, print and cinema. In so doing, they have typically captured a vast proportion of the advertising revenues which accompany that content, while delivering comparatively little back to those who funded or created it in the first place.

The shrinking of the internet to a tiny handful of enormously lucrative and powerful platforms has served to focus the minds of those who make songs, films, journalism and other content forms on whether the current compensation structures represent a fair bargain, or whether negotiation is even possible given the disparity in scale and power. 

Universal has taken a bold stand that TikTok’s app is materially worse without the music of Taylor Swift or The Weeknd. TikTok will be betting that other artists will fill that void. It seems certain that one side will blink, with potentially huge consequences either way for those who want to earn a living creating any type of content.

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