Why indie record labels are backing Universal Music Group’s action on TikTok.

This story is going to run and run (well, at least until a deal gets signed).

Last week, as if you needed reminding, Universal Music Group announced that it had not reached a deal with TikTok to re-license its catalog on the video service. As a result, UMG’s vast portfolio of music is now coming down from TikTok. The recorded music catalog of UMG (circa 3 million tracks) is already unlicensed for use on TikTok, while the Universal Music Publishing Group catalog (circa 4 million songs) will become unlicensed if a new deal hasn’t been agreed by the end of February. 

Over a third of the current Top 50 TikTok tracks in the US have – as a result of the UMG situation – already become unavailable in TikTok’s public music library. They include hits such as Muni Long’s Made for Me, Drake’s Rich Baby Daddy, Lana Del Rey’s Let the Light In, Ariana Grande’s Yes, and?, and Sophie Ellis-Bextor’s Murder On The Dancefloor.

In recent days, the likes of Primary Wave, Downtown, Hipgnosis, and the National Music Publishers Association have all publicly backed UMG’s refusal to re-license TikTok for the terms on offer – terms that Universal says do not represent fair value for its music catalog.

Today (February 7), UMG has earned another supporter in this fight: A2IM, the US trade body that represents over 600 independent recorded music companies including Beggars Group, Secretly Group, Partisan, Cinq Music, Better Noise, and Yep Roc.

Here, A2IM’s President & CEO, Dr. Richard James Burgess MBE (pictured), explains why A2IM is backing UMG’s action in its standoff with TikTok, and why he believes that “in an industry that systemically underpays artists and labels, TikTok’s payment methodology is uniquely disadvantageous”…

A2IM supports UMG’s strategic decision to withdraw its catalog from TikTok, which underscores a pressing issue within the music industry: the delicate balance between leveraging digital platforms for marketing and promotional purposes and the crucial need for fair compensation.

This move brings to the fore a longstanding conundrum in the music business — the need for exposure and discoverability versus prioritizing essential revenue streams from recorded music that sustain artists’ careers and the viability of the labels that fund those careers.

Music has been foundational in building and popularizing platforms like TikTok (formerly known as Musical.ly), contributing significantly to their growth and user engagement. Yet, this investment by the music industry has not been rewarded with equitable financial returns. In an industry that systemically underpays artists and labels, TikTok’s payment methodology is uniquely disadvantageous.

The folly here for the music industry lies in sacrificing essential revenue from recorded music for the sake of promotion, exposure, or discoverability.

While marketing and promotional tools are undeniably necessary for artists to reach wider audiences, the current model has undermined the financial sustainability of artists’ careers and labels by under-monetizing the music that, in significant part, fuels the growth of these platforms.

The removal of UMG’s catalog is a stark reminder of the urgent need to reassess this value exchange. It highlights the need for a more balanced approach that does not compromise the revenue from recorded music.

Robust revenue is critical for the sustenance of artists and labels. We can only hope that UMG’s move serves as a catalyst for change, advocating for fairer compensation models that acknowledge the substantial contribution of music to the success of platforms while still leveraging these spaces for effective marketing and promotional activities.

It is high time for a reevaluation of how the music industry engages with tech platforms. Let’s strive for a sustainable equilibrium where marketing and promotional tools do not detract from the vital revenue derived from recorded music.

We have allowed radio to profit from more than 100 years of free recorded music and we repeated that mistake 42 years ago with MTV.

We must stop sowing our seeds in barren soil. The returns artists and labels receive from TikTok are meager and insufficient to sustain their livelihoods. We must advocate for systems where music’s intrinsic value is recognized, ensuring that platforms pay fair rates that reflect music’s role in driving their success and in building these colossal corporations.

Could this be a turning point, a shift towards more equitable practices within the music industry? It certainly highlights the need for sustainable economic models that do not force music creators to choose between fame and money.

Revenue from recorded music sufficient to support a middle class of creators is vital for the development and longevity of artists’ careers and the health of the labels that support them.

Such a recalibration would lead to a more sustainable and prosperous music ecosystem, where creators are fairly compensated for the value they create for digital platforms.Music Business Worldwide

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