Today’s big news: Universal Music Group and TikTok, by way of a joint announcement, have confirmed that they have struck a new licensing deal – three months after UMG pulled its recordings catalog from the service.
What does this new deal mean for UMG and its artists and songwriters? Standout headline: More money.
That fact was confirmed and expanded upon in an internal memo from UMG Chairman/CEO, Sir Lucian Grainge, issued to Universal employees this morning (May 2) and obtained by MBW.
Reminder: according to Universal, TikTok’s royalty payouts to UMG prior to this new deal constituted just 1% of UMG’s total revenues.
Grainge writes in today’s memo: “Under the new agreement, artist and songwriter compensation will be greater than under our prior TikTok deal, and the total value UMG’s artists and songwriters garner from this partnership will be more closely aligned with other platforms in the social music category.
“Further, TikTok will implement tools and processes to help address provenance and attribution issues, helping artists and songwriters to more effectively monetize their work.”
The latter part of that statement (on “provenance and attribution issues”) is likely a reference to the so-called “modified audio” that is rife on TikTok.
Monitoring platform Pex has estimated that over 38% of music on TikTok is ‘modified’ – i.e. a sped-up, slowed-down, or otherwise altered version of a previously-existing copyright.
MBW discovered in March that, despite UMG’s official catalog being removed from TikTok, ‘modified’ versions of UMG recordings remained available across the ByteDance platform – uploaded to the service, often without the name of the original artist present, by TikTok users.
Meanwhile, when Grainge talks about pushing TikTok’s payouts closer to “other platforms in the social media category”, he’s probably referring to one company more than any other: Meta.
The Instagram and Facebook owner struck a deal with UMG in 2017 that Grainge now refers to as “the first-ever deal to monetize what had yet to be monetized—the use of music on social platforms”.
Meta and UMG have since built on that agreement with further deals, including a pact inked in 2022 that UMG said at the time “deepens our partnership” while creating “new opportunities around revenue-sharing”.
Discussing music rightsholders’ general relationship with social media platforms in recent years, Grainge says in today’s memo: “Since that first Facebook deal [in 2017], the continued growth of social media and its free-to-consumer music engagement has been remarkable.
“In fact, the revenue streams from this social music engagement generate tens of billions of dollars in advertising revenue for digital platforms. (And that consumer engagement also greatly benefits platforms in another way—it enables them to acquire customers for their other business ventures, such as eCommerce.)
“Given the vast sums that music generates for these platforms, any claim that the ‘free promotion’ they provide would ever be sufficient and fair compensation for the use of that music would be absurd.”
He doesn’t say so explicitly, but Grainge’s “free promotion” point there is almost certainly a dig at a TikTok statement, delivered in late January after Universal first announced that licensing talks between it and the ByteDance platform had broken down.
TikTok said in that January statement: “Despite Universal’s false narrative and rhetoric, the fact is they have chosen to walk away from the powerful support of a platform with well over a billion users that serves as a free promotional and discovery vehicle for their talent.”
Elsewhere in Grainge’s memo today, he addresses another of UMG’s priorities in its negotiations with TikTok: “Protecting Human Artists from the Harmful Effects of AI”.
In particular, Grainge zones in on a potentially dangerous trend for major music companies: Digital services adding AI-made music (including AI-made music that said services create in-house) to the “royalty pool” from which they then pay artists and songwriters.
By way of illustration, here’s a hypothetical nightmare scenario for major music rightsholders: A digital service makes millions of tracks (via gen-AI trained on copyrighted music) and uses the algorithm to continually push its users towards them; this first-party music then takes, say, 20% of all music plays on the platform, which – when calculated as part of the royalty pool – effectively removes a fifth of royalties that would otherwise have been paid out to rightsholders and their human artists/songwriters.
According to Grainge, Universal has won protections against such a scenario in its new deal with TikTok.
“TikTok has now addressed the primary concern we expressed in our open letter that AI generated content would ‘massively dilute the royalty pool for human artists,'” writes Grainge.
“Further, they have made a number of commitments regarding AI that demonstrate respect for our artists’ and songwriters’ works and ‘rights of publicity’, as well as support of UMG’s principles on AI, including on training without consent.”
On the “rights of publicity” point, Grainge confirms that any piece of music on TikTok that “misappropriates the identities of our artists and infringes upon their right of publicity” can now be removed, seemingly at UMG’s behest.
It’s at this point we remind you that a generative AI-made track from ‘Fake Drake’ (aka Ghostwriter) – which clearly replicated Drake’s voice – racked up over 15 million plays on TikTok last year (not including versions that were uploaded by users outside of Ghostwriter’s channel).
Following the new deal, Universal’s music catalog – across both recorded music and music publishing – is expected to begin re-populating TikTok over the next two weeks.
You can read Sir Lucian Grainge’s memo to staff on UMG’s new TikTok agreement, in full, below…
Dear Colleagues:
I’m very pleased to share the good news that our dispute with TikTok has ended with a decidedly positive outcome: they have agreed to key changes in several critical areas (including artificial intelligence, platform safety, remuneration) and we will once again license our music to them.
This agreement marks another significant step we’ve taken to guide the industry’s evolution towards a future where human artistry must be respected, artists and songwriters are treated fairly, and their fans are provided with platforms that better prioritize safety and integrity.
I want to express how grateful we are for the outpouring of support from so many corners of the global music community over the last several months. Artist rights organizations, independent labels, music publishers, music advocacy groups and of course so many individual artists and songwriters were outspoken in their support, recognizing the importance of what we were seeking to achieve. United in purpose, they strengthened our resolve to fight for the result we have achieved: a deal that will benefit not only UMG artists and songwriters but the entire music ecosystem.
As an organization committed to breaking new ground, driving the industry forward, and protecting artists and songwriters from the negative effects of disruptive technology, we expect and even embrace the inevitable conflicts that will result from fulfilling our commitments. But ultimately, the point of engaging in such conflicts is to find higher common ground from which progress can be made. I am enormously proud of what our teams and our artists have been able to achieve with TikTok in finding that common ground on which we will build a foundation for a brighter future.
Three months ago, on January 30, we issued an open letter to the artist and songwriter community that stated plainly that any new deal with TikTok would have to address three critical issues, including:
- Protecting artists and songwriters from the harmful effects of AI, and dilution of royalties by a flood of AI content;
- Improving the compensation paid to artists and songwriters; and
- Prioritizing online safety for both TikTok’s users and our artists.
To convey to you the essence of what we’ve accomplished, I’ll highlight the gains we’ve achieved on all three issues within the context of why these issues have been so important for UMG and all of us as a community.
1) Protecting Human Artists from the Harmful Effects of AI
TikTok has now addressed the primary concern we expressed in our open letter that AI generated content would “massively dilute the royalty pool for human artists.” Further, they have made a number of commitments regarding AI that demonstrate respect for our artists’ and songwriters’ works and “rights of publicity,” as well as support of UMG’s principles on AI, including on training without consent.
AI technology, when used responsibly, offers artists enormous untapped potential, but when used irresponsibly, threatens to cause them deep harm. UMG has been leading the industry in addressing AI’s potentially harmful effects while embracing its opportunities. Our Responsible AI initiative, which was launched last year, puts the protection of artists and the advancement of their interests at the very core of how we think about AI. The goals of that initiative are:
- Protecting human artists from being economically disadvantaged by AI;
- Guarding against the use of AI-generated deepfakes; and
- Requiring transparency in how AI companies train their models.
Our new agreement with TikTok will protect the integrity and value of human artistry and ensure that “fake artist” AI content uploaded by third parties that misappropriates the identities of our artists and infringes upon their right of publicity can be removed. This new deal will extend artist protections even further and promote a better environment for authentic artist/fan engagement.
The deal is only the most recent example of how we are advancing our AI initiative. Over the last year, with artists, as always, at the forefront of our strategy, we developed relationships with a wide array of leading tech companies and entrepreneurs and have been collaborating with a growing number of them on various market-led opportunities and approaches for the responsible use of AI.
2) Improving Compensation for Artists and Songwriters
Under the new agreement, artist and songwriter compensation will be greater than under our prior TikTok deal, and the total value UMG’s artists and songwriters garner from this partnership will be more closely aligned with other platforms in the social music category. Further, TikTok will implement tools and processes to help address provenance and attribution issues, helping artists and songwriters to more effectively monetize their work.
As technology evolves and allows fans to enjoy and consume music in new ways and from new sources, the health and vitality of the music industry requires that artists and songwriters be fairly compensated from the revenue generated by those new sources. Social media is a critical category for advancement of this objective.
In 2017, as the growth of social media was transforming culture, UMG and Facebook entered into the first-ever deal to monetize what had yet to be monetized—the use of music on social platforms. Since that first Facebook deal, the continued growth of social media and its free-to-consumer music engagement has been remarkable.
In fact, the revenue streams from this social music engagement generate tens of billions of dollars in advertising revenue for digital platforms. (And that consumer engagement also greatly benefits platforms in another way—it enables them to acquire customers for their other business ventures, such as eCommerce.) Given the vast sums that music generates for these platforms, any claim that the “free promotion” they provide would ever be sufficient and fair compensation for the use of that music would be absurd.
Revenue streams from several categories that are “free to the consumer” today (such as ad-supported streaming, synch and neighboring rights) account for more than 30% of all revenue for the entire global recorded music industry—almost double what it was a decade ago. For some artists, that can translate into anywhere from 20% to 40% of their income from recordings.
With the commercial significance of this sector in mind, during the last few months, we’ve accelerated engagement with music on other monetized social platforms including Snapchat, Instagram and YouTube Shorts. And, in a recent agreement with Spotify—which will make available a range of new features that were previously found only on social media platforms—we’ve even broadened the very definition of the social music category. In short, the income from social media is increasingly important income to artists, songwriters, labels and publishers, which is why we have pushed hard—and will continue to push hard—to protect and develop it.
3) Providing Online Safety for TikTok’s Users and Artists
Under our new deal, TikTok have agreed to take steps to address our concerns around platform integrity and the negative impact of social media on its users.
The harmful consequences of unmonitored social media have been highly publicized of late. It is a critical part of our mission to work toward promoting the safety and integrity of environments for our artists and their fans.
Some of the concerns on our agenda with TikTok will include safeguards such as policies and tools to prevent and remediate hate speech and bullying. Some of the platform integrity measures include important steps to help address deep-fakes, infringing and unauthorized content and algorithmic manipulation.
I want to close by saying something more about the unprecedented support we received from the music community, especially those individual artists and songwriters who raised their voices in various forums. Of special note are those who signed the recent Artist Rights Alliance open letter which called on tech platforms to employ AI in a responsible manner and not at the expense of recording artists and songwriters. Their widespread support underscored the importance of striking AI protections. In particular, I want to express my deep gratitude to all of UMG’s artists and songwriters who, over the last few months, have had to endure having their music removed from TikTok during the dispute. We appreciate how difficult this may have been for some of them and we are so grateful for their willingness to pursue the path we took. I have no doubt that their advocacy—both publicly and behind the scenes—will positively influence the future of the industry for all artists.
Thank you to all who helped make this possible. This is yet another example of what the music community can accomplish when we work together.
LucianMusic Business Worldwide