On February 1st, Universal Music Group (UMG) allowed its licensing deal with TikTok to expire after accusing the platform of providing insufficient payments to artists. In an angry letter, the music giant said that the video-sharing app was “flooded with A.I.-generated recordings,” which diluted the pool of potential revenue for legitimate artists. As a result, TikTok removed all music affiliated with UMG from its platform, a drastic move that escalated in severity last week. After failing to make any progress on a new deal, Universal activated the so-called “nuclear option,” requiring TikTok to remove any music featuring a songwriter signed to the record company’s publishing division.

This demand could potentially affect 80 percent of the current music market since today’s hit songs often include many different songwriters working across multiple publishers. TikTok claims that only 20 to 30 percent of popular songs could leave the platform as the company continues to reach out to UMG for resolution on this matter. Universal isn’t budging, though, until TikTok strikes an agreement similar to ones made with other video services like Instagram and YouTube. The recording industry knows how important its songs are to TikTok: one recent study found that 85 percent of videos on the platform contain music. “Whatever happens here is going to dramatically affect the next several years of global music revenue,” said Bill Werde, director of Syracuse University’s music business program.

Experts say that TikTok’s parent company ByteDance benefited from friendly music licensing deals when its platform was much smaller. These days, however, the average American teenager spends 14 hours per week watching videos on services like TikTok. The company once argued that its viral videos gave lucrative exposure to artists who could then benefit from increased streaming revenue. But according to record executives, few listeners go on to explore a musician’s back catalog after hearing a 60-second snippet of their music on TikTok. This makes a song’s performance on the platform all the more important for companies like Universal that need to adapt to conditions in an ever-evolving industry. Of course, record companies could receive a vital assist from the government in its fight against TikTok as the House of Representatives considers a bill that could ban the platform in the U.S.

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Sources: Ben Sisario, “Universal Music Group Pulls Songs From TikTok,” The New York Times, February 1, 2024; Anne Steele and Meghan Bobrowsky, “World’s Biggest Music Company Deploys the ‘Nuclear Option’ Against TikTok,” The Wall Street Journal, February 28, 2024.