Universal says that, with its TikTok recordings licensed expired, it's focused on working with other rival platforms. These include YouTube/YouTube Shorts, with whom a recent campaign for Karol G (pictured) reached 100 million users, Universal said today
MBW Reacts is a series of analytical commentaries from Music Business Worldwide written in response to major recent entertainment events or news stories. Only MBW+ subscribers have unlimited access to these articles.
“He’s got my number… call us! They know where we are. Stop talking on the f*****g internet and let’s see what you’ve got to say.”
Sir Lucian Grainge did not say this about TikTok CEO, Shou Zi Chew today. It’s actually a comment from Noel Gallagher about his brother’s hopes for an Oasis reunion.
But what Graingedid say about UMG’s escalating licensing spat with TikTok this afternoon (on Universal’s Q4 2023 earnings call) wasn’t a million miles away.
Grainge was asked by Guggenheim analyst Michael Morris whether UMG and TikTok were getting closer, or further away, from a renewed licensing deal that would satisfy UMG’s infamous concerns over the current terms being offered byByteDance.
“Specifically [on the subject of] TikTok... we’re friendly people,” said the UMG boss. “My phone is open, unfortunately, 24 hours a day. We hope that we will be able to find solutions.”
Right now, however, those “solutions” don’t look likely to arrive anytime soon.
‘free’ doesn’t work for UMG…
UMG and Grainge today doubled down on their borderline disgust with the licensing offer/s they’ve received from TikTok in recent months.
“There must not be free rides for massive global platforms such as TikTok that refuse to meaningfully address issues around AI, platform safety, or pay their fair share for our artists and songwriters’ work,” said Grainge on the earnings call.
“The monetization [from Tiktok for UMG’s music] is so poor that a minimal transfer [of TikTok users] to other [social/short-form video] platforms will have a better financial outcome for us.”
He added: “Let me be clear: ‘free’ doesn’t work for us. We have spent years creating a path to digital monetization [for music] in every single category.
“The monetization [from Tiktok for UMG’s music] is so poor that a minimal transfer [of TikTok users] to other [social/short-form video] platforms will have a better financial outcome for us.
“I’m also not prepared to compromise the future of the social category by doing something that completely undermines the economics for us and for everybody else about.”
Speaking of that ‘social category’… Universal brought some financial figures to bolster Grainge’s point.
In Q4 2023, UMG’s recorded music streaming revenues in Q4 (including ad-funded and subscription platforms) hit €1.532 billion, up 12.4% YoY at constant currency.
Guggenheim’s Morris also asked Grainge and his leadership team for detail on how they might “participate financially” from any market-share movement of user engagement away from TikTok and towards rivals (like YouTube Shorts or Instagram Reels).
“We’ve seen mass consumer migration away from TikTok take place before.”
Michael Nash, EVP and Chief Digital Officer of UMG, said: “With consumption shifts from TikTok to other short video platforms like Reels or YouTube Shorts, we believe that we can, in fact, recapture some lost revenue [that is no longer being generated for UMG on TikTok with its music coming off the platform].”
Added Nash: “Keep in mind, over half of TikTok’s monthly active users already also use other short video services; in some markets, that percentage is as high as 70%. These are services that monetize engagement [for music rightsholders] at a much higher rate [than TikTok]. So revenue-positive consumer migration [for UMG] is easily foreseeable.”
Nash cited a “real-world example” of TikTok being banned in India in 2020, when the service had around 200 million users in the territory.
“It was the largest market for ByteDance outside of China,” said Nash, “[but] all that engagement after they were banned went to other global and local platforms. The adoption of short-form video continued its growth unabated. So we’ve seen mass consumer migration away from TikTok take place before.”
A fall in user engagement – but too early for ‘conclusions’…
What about now, though?
With UMG’s 3 million recordings having disappeared from TikTok’s public library on February 1 – and the ~4 million songs in Universal’s publishing portfolio now also starting to get deleted on TikTok – is the service seeing any negative impact amongst its users?
As MBWreported yesterday (February 27), TikTok says not: Sources at the company say that its user numbers have remained solid since the UMG battle began, with one senior figure telling us: “We have not lost users since the removal of UMG’s catalog; millions of people are still creating videos and discovering new music every day on TikTok”.
Aside from the volume of users on TikTok, there is another way to measure consumer interaction with the platform: how engaged users are – i.e. how much time they’re spending on the platform ‘liking’, commenting, or uploading, or sharing videos.
On UMG’s call today, Michael Nash said it was “too early to draw conclusions” from the impact on this metric from the deletion of UMG’s recordings catalog on TikTok.
“Because other platforms in the social video category provide much greater monetization… we’re focused on elevating and accelerating our partnerships with YouTube, Meta, Snap and others.”
Michael Nash, Universal Music Group
Nash did, however, cite data from Apptopia suggesting that total user time spent on TikTok in the second half of February has fallen slightly vs. the same period of the prior year.
This Apptopia data was today cited in a paper on UMG from J.P. Morgan’s Daniel Kerven. It concludes that total time spent on TikTok by users in the period from February 14 – February 26 (2024) declined 3% YoY.
Elsewhere in the same period, says the Apptopia data, YouTube saw a 10% YoYrise in user time, with Instagram at +7% YoY, and Facebook at +8% YoY (see below).
In his paper today, J.P. Morgan’s Daniel Kerven wrote: “While it is too early to draw any conclusions, the time spent on different social media apps (based on Apptopia data) suggests that TikTok has lost some momentum since losing access to UMG’s recorded content at the end of January.”
He added: “We believe that Instagram Reels is the closest substitute and is likely to be the biggest beneficiary of a prolonged dispute, followed by YouTube Shorts.”
UMG sees an uptick…
Taking a more bullish tone on today’s earnings call, Michael Nash said that, in the absence of a deal with TikTok, UMG was now “focused on elevating and accelerating our partnerships with YouTube, Meta, Snap and others” who, he said, “achieve much greater monetization” for Universal.
“Meta has rolled out dozens of [UMG-affiliated] campaigns on their platform since February 1″, said Nash – referencing the date that UMG’s recordings deal with TikTok expired.
These Meta campaigns, said Nash, have featured artists such as Liam Payne, The Weekend, Noah Kahan and Selena Gomez.
Elsewhere, said Nash, “Snapchat is elevating how they value UMG artist music, reflecting what our artists bring to their platform [and] introducing new ways to facilitate deeper connections between artists and ‘superfans’.”
“In fact, we’ve seen a slight uptick in terms of frontline consumption and catalog consumption [from all platforms since UMG’s recordings catalog came down from TikTok].”
Michael Nash, Universal Music Group
He also nodded to a recent “major YouTube Shorts-driven, multi-format campaign” for UMG artist Karol G, which had “helped Karol’s music reach a huge audience of 100 million viewers across the touchpoints of [YouTube’s] platform”.
Nash said that, since UMG’s recorded music has come down from TikTok, the company’s audio digital consumption across platforms has “remained stable globally and regionally, on frontline and catalog”.
Quizzed by Goldman Sachs‘ Lisa Yang on the effect the TikTok takedown might have had on UMG’s own business so far, Nash replied: “We’ve observed no discernible negative impact on our broader digital business [since February 1].
“In fact, we’ve seen a slight uptick in terms of frontline consumption and catalog consumption over this short period of time.”
Tick tock…
There are now just two days until March 1, when Universal Music Publishing Group‘s full 4-million-strong catalog becomes officially unlicensed on TikTok, joining that 3 million-strong UMG recordings catalog.
This evening MBW has been sent a new statement from a TikTok spokesperson on this matter.
“Universal’s actions not only affect the songwriters and artists that they represent, but now also impact many artists and songwriters not signed to Universal.”
TikTok spokesperson
It reads: “We are in the process of carrying out Universal Music Group’s requirement to remove all songs that have been written (or co-written) by a songwriter signed to Universal Music Publishing Group, based on information they have provided. Their actions not only affect the songwriters and artists that they represent, but now also impact many artists and songwriters not signed to Universal.
“We remain committed to reaching an equitable agreement with Universal Music Group. In the meantime, music lovers can continue to enjoy, discover and share millions of tracks from artists, songwriters and labels on TikTok, and we will continue to connect all artists – including those whose music is not currently available on our platform – with their fans.”
So… yeah. As the headline says up there: Don’t bet your house on it happening anytime soon.
But, hey, “committed to reaching an equitable agreement”. That sounds… a little bit promising, right?
An earlier version of this analysis suggested that UMG’s social media ad income from Snap, Meta, TikTok etc. are categorized in the company’s quarterly recorded music financials under ‘License & Other’. In fact they are included under ‘streaming’ as per the below. The article above has been updated with this in mind.
